AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "
Agreement "), is made and entered into as of July 1, 2003,
by and between COMMERCIAL NATIONAL BANK OF PENNSYLVANIA, a national
banking association (the "Bank"), and GREGG E. HUNTER ("
Executive ").
RECITALS
The Bank desires to assure itself of the
services of Executive as an executive officer of the Bank and
certain Affiliates of the Bank for the period provided in this
Agreement, and Executive is willing to serve in the employ of the
Bank pursuant to the terms of this Agreement.
NOW THEREFORE, in consideration of these
premises and the mutual promises contained herein, and intending to
be legally bound hereby, the parties agree as follows:
SECTION
1.
Definitions .
1.1. "
Affiliate " means, with respect to the Bank, a corporation,
partnership, trust, association, joint venture, limited liability
company or other entity, directly or indirectly controlling,
controlled by or under common control with the Bank. As of the date
of this Agreement, the Affiliates of the Bank are the Holding
Company, Commercial National Insurance Services, Inc, and Gooder
Agency, Inc.
1.2. "
Benefits " means the benefits described in Sections 3.3
and 3.4 .
1.3. "
Board " means the Board of Directors of the Bank.
1.4. "
Cause " means the occurrence of any of the
following:
(a) Executive's
material breach of any of his obligations under this Agreement or
any fiduciary duty owned to the Bank, or any of its Affiliates, and
his failure to cure such breach within 30 days after written notice
thereof from the Bank;
(b) Executive's
failure, refusal or inability (other than due to mental or physical
disability) to perform, in any material respect, his duties to the
Bank or any of its Affiliates, which failure continues for more
than fifteen (15) days after written notice thereof from the
Bank;
(c) Executive's abuse
of alcohol or use of illegal drugs (other than in accordance with a
physician's prescription);
(d) Executive's
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Bank or any of its Affiliates
including, without limitation, fraud, embezzlement, theft or proven
dishonesty in the course of his employment; or
(e) Executive's
conviction of, or entry of a plea of guilty or nolo
contendere to a misdemeanor involving moral turpitude, a
felony, or any other crime which has an adverse effect on the Bank
or any of its Affiliates, or the reputation of any of
them.
1.5. "
Change of Control " means any of the following
events:
(a) any individual,
corporation, partnership, association, trust or other entity (other
than Executive and his associates) becomes the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of securities of the Bank or the Holding
Company representing 50% or more of the combined voting power of
the Bank's or the Holding Company's then outstanding voting
securities;
(b) the individuals
who as of the date of this Agreement are members of the Board or
the Board of Directors of the Holding Company (the "Incumbent
Boards"), cease for any reason to constitute at least a majority of
the Board or the Board of Directors of the Holding Company,
provided, however, that if the election, or nomination for election
by the Bank's or the Holding Company's shareholders, of any new
director was approved by a vote of at least a majority of the
Incumbent Boards, such new director will be considered to be a
member of the Incumbent Boards;
(c) an agreement by
the Bank or the Holding Company to consolidate or merge with any
other entity pursuant to which the Bank or the Holding Company will
not be the continuing or surviving corporation or pursuant to which
shares of the common stock of the Bank or the Holding Company would
be converted into cash, securities or other property, other than a
merger of the Bank or the Holding Company in which holders of the
common stock of the Bank or the Holding Company immediately prior
to the merger would have the same proportion of ownership of common
stock of the surviving corporation immediately after the
merger;
(d) an agreement of
the Bank or the Holding Company to sell, lease, exchange or
otherwise transfer in one transaction or a series of related
transactions substantially all the assets of the Bank or the
Holding Company;
(e) the adoption of
any plan or proposal for a complete or partial liquidation or
dissolution of the Bank or the Holding Company; or
(f) an agreement to
sell more than 50% of the outstanding voting securities of the Bank
or the Holding Company in one or a series of related
transactions.
1.6. "
COBRA " means 29 U.S.C. §§ 1161-1169.
1.7. "
Code " means the Internal Revenue Code of 1986, as
amended.
1.8. "
Good Reason " means that any of the following has occurred
with respect to the Executive:
(a) the
assignment to Executive of any duties inconsistent in any material
respect with Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 2 of this
Employment Agreement, or any other action by the Bank which results
in a material diminution in such position, authority, duties or
responsibilities;
(b) a diminution by
the Bank in Executive's Annual Salary, or incentive or other forms
of compensation, provided that (i) a reduction in Executive's
Annual Salary as part of an across-the-board reduction of salaries
of all officers of the Bank shall not constitute Good Reason; and
(ii) a reduction in Executive's performance bonus from year to year
which is related to achievement of performance goals and consistent
with how performance goals had been interpreted prior to any Change
of Control shall not constitute Good Reason;
(c) Executive's loss
of membership on the Board other than as a result of or in
connection with (i) Executive's death, disability or voluntary
resignation from the Board or (ii) termination of Executive's
employment by the Bank for Cause;
(d) relocation of
Executive's job location to a place which is more than 50 miles
from the Bank's current headquarters in Latrobe, Pennsylvania,
without Executive's agreement; or
(e) a material breach
of this Agreement by the Bank which is not cured within 30 days
after delivery of written notice thereof.
1.9. "
Holding Company " means Commercial National Financial
Corporation, a Pennsylvania corporation.
1.10. "
Intellectual Property " means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, (b) all trademarks,
service marks, trade dress, logos, trade names, fictitious names,
brand names, brand marks and corporate names, together with all
translations, adaptations, derivations, and combinations thereof
and including all goodwill associated therewith, and all
applications. registrations, and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f)
all computer software (including data, source codes and related
documentation), (g) all other proprietary rights, (h) all copies
and tangible embodiments thereof (in whatever form or medium), or
similar intangible personal property which have been or are
developed or created in whole or in part by Executive: (i) at any
time and at any place while Executive is employed by the Bank and
which are related to or used in connection with the business of the
Bank or its Affiliates, or (ii) as a result of tasks assigned to
Executive by the Bank or its Affiliates.
1.11. "
Proprietary Information " means confidential, proprietary,
business and technical information or trade secrets of the Bank or
of any Affiliate of the Bank. Such Proprietary Information shall
include, but shall not be limited to, the following items and
information relating to the following items: (a) information
acquired from, or about, third parties
such as the
Bank's customers, including, but not limited to, account, general
banking and financial information relating thereto, (b) business
research, studies, procedures and costs, (c) financial data, (d)
marketing data, methods, plans and efforts, (e) the identities of
the Bank's actual and prospective customers, (f) the terms of
contracts and agreements with customers, contractors and suppliers,
(g) the needs and requirements of, and the Bank's course of dealing
with, actual or prospective customers, contractors and suppliers,
(h) personnel information, (i) customer and vendor credit
information, and (j) any Intellectual Property of the Bank (whether
developed by Executive or others). Failure by the Bank to mark any
of the Proprietary Information as confidential or proprietary shall
not affect its status as Proprietary Information under the terms of
this Agreement.
1.12. "
Restrictive Covenants " means the provisions contained in
Section 5.1 of this Agreement.
1.13. "
Total After-Tax Payments " means the total of all "parachute
payments" (as that term is defined in Section 280G(b)(2) of the
Code) made to or for the benefit of Executive (whether made
hereunder or otherwise), after reduction for all applicable federal
taxes (including, without limitation, the tax described in Section
4999 of the Code).
SECTION
2.
Employment, Term and Duties .
2.1.
Employment and Term . The Bank hereby employs Executive and
Executive hereby accepts employment with the Bank as its Chief
Executive Officer, and shall serve as an officer and/or director of
the Bank and such of the Bank's Affiliates as the Board may
determine for a period continuing until June 30, 2012 (the "Term");
provided, however, that if written notice not to extend the
Term by either party is not received at least 120 days prior to
June 30, 2012 (or any subsequent anniversary of June 30, 2012, if
this Agreement is extended pursuant to this Section 2.1), then the
Term will be automatically extended to the next anniversary of June
30, 2012.
2.2.
Duties . Executive will render his services
hereunder to the Bank, and its Affiliates and shall use his best
efforts, judgment and energy in the performance of the duties
assigned to him. During the Term, Executive will devote
substantially all of his business time and services to the Bank and
its Affiliates to perform such duties as may be customarily
incident to his position and as may reasonably be assigned from
time to time by the Board. During the Term, Executive will not
serve as a director of any corporation other than the Bank and any
of its Affiliates, without the prior consent of the Bank;
provided, however, that Executive may, at his discretion,
serve as a director of a family-owned, charitable, community and
other not-for-profit entities, subject to Executive's duty to
inform the Bank of his assumption of any such
directorship.
SECTION
3.
Compensation and Benefits .
3.1.
Annual Salary . Executive hereby agrees to
accept, as compensation for all services rendered by Executive in
any capacity hereunder and for the Restrictive Covenants made by
Executive in Section 5 hereof, a base salary as set on an
annual basis by the Executive Compensation Committee of the Board
(as the same may hereafter be increased, the "
Annual Salary" ) commencing on the date hereof
and continuing until expiration or termination of the Term. The
Annual Salary and all other payments made by the Bank to Executive
will be inclusive of all applicable income, social security and
other taxes and charges which are required by law to be withheld by
the Bank, which taxes and other charges will be withheld and paid
in accordance with the Bank's normal payroll practices from time to
time in effect. The Annual Salary will be reviewed on an annual
basis by the Executive Compensation Committee of the Board and may
be adjusted, as determined by such Executive Compensation
Committee.
3.2.
Bonus . The Executive Compensation Committee of the Board
may, but shall not be required to, award Executive a performance
bonus based on the performance of the Bank and Executive. The
Executive Compensation Committee of the Board shall have sole
discretion to determine whether to pay a performance bonus to
Executive and to determine the amount of any such bonus.
3.3.
Benefits . Executive will be entitled to receive the same
benefits enjoyed by other executive officers of the Bank from time
to time (as determined by the Executive Compensation Committee in
good faith, in its absolute discretion), as well as the benefits
described below in Section 3.4 . Such benefit plans shall
include participation in the Bank's Profit-Sharing Plan, health
coverage, life insurance and disability (short and long term)
benefits, each on the same basis as offered to the other
executive-level employees of the Bank.
3.4.
Vacation . Executive will be entitled to five
weeks of vacation per calendar year. Executive shall
also be entitled to 6 incidental days per calendar
year. Executive shall not be entitled to receive any
payment for unused vacation days or incidental days (together
"benefit days"). Executive shall be entitled to carry
over a total of five (5) unused benefit days to the next calendar
year and must use these five (5) carried over benefit days within
the first quarter of such next calendar year or they become
void.
SECTION
4.
Payment of Expenses . The Bank will pay or reimburse all
reasonable and necessary expenses incurred by Executive in the
performance of his duties hereunder, in accordance with the Bank's
practices and policies regarding the payment or reimbursement of
expenses from time to time in effect.
SECTION
5.
Non-Compete; Confidentiality; Non-Solicitation .
5.1.
Restrictive Covenants . These Restrictive Covenants will
survive the expiration of this Agreement or the termination of
Executive's employment; provided, however, that the Restrictive
Covenants will not apply following a termination by the Bank
without Cause pursuant to Section 6.1(d) or a termination by
Executive after the occurrence of a Change of Control pursuant to
Section 6.2(c) .
(a)
Non-Compete . Executive shall not, during the
Term and for a period of one (1) year thereafter (the "
Restricted Period "), in any city, town or county in which
the Executive's normal business office is located or the Bank or
any of its Affiliates has an office or has filed an application for
regulatory approval to establish an office, determined as of the
effective date of such termination, do any of the following,
directly or indirectly, without the prior written consent of the
Bank (except in Executive's capacity as an employee of the Bank,
and in the best interests of the Bank):
(i) work for or
advise, consult, serve with, or otherwise become interested in (as
owner, stockholder, lender, partner, co-venturer, director,
officer, employee, agent or consultant), directly or indirectly,
any person, firm, corporation, association or other entity whose
business materially competes with the depository, lending or other
b
