Exhibit 10.16
EMPLOYMENT
AGREEMENT
As Amended and Restated Effective
January 1, 2009
THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “Agreement”) made as of this 1st day of
January, 2009 (the “Effective Date”), by and between
SUSQUEHANNA BANCSHARES, INC. , a Pennsylvania corporation
(the “Company”), and Michael E. Hough , an adult
individual whose principal residence is at 19102 Rock Maple Drive,
Hagerstown, MD 21742 (the “Employee”), on the other
side.
Background
WHEREAS , the Employee and the Company are parties to an
Employment Agreement made and entered into on March 15, 2007
(“Existing Agreement”);
WHEREAS , the Company desires to induce the Employee to
remain in its employment, and the Employee hereby agrees to accept
continuation of employment with the Company;
WHEREAS , the Company and the Employee desire to amend
the Existing Agreement to comply with the applicable requirements
of Section 409A of the Internal Revenue Code of 1986, as
amended and make other desired changes;
WHEREAS, in consideration of the changes made to the
Existing Agreement contained herein, the Company has agreed to
increase the base salary to be paid to the Employee to a rate of
$286,000 per year; and
WHEREAS , this Agreement replaces and supersedes all
previous employment agreements between the Employee and the Company
or any Affiliate, including the Existing Agreement.
NOW, THEREFORE,
in consideration of the foregoing
Recitals and the mutual promises and covenants herein contained,
and for other good and valuable consideration, the Parties,
intending to be legally bound, agree as follows:
1. Position . The Company
hereby agrees to continue the Employee’s employment and the
Employee hereby agrees to continue employment with the Company, as
Managing Director.
2. Duties .
2.1 The Employee agrees to assume
such duties and responsibilities as may be consistent with the
position of the Managing Director and as may be assigned to the
Employee by the Management of the Company or by the by-laws of the
Company from time to time. No change in the duties of the Employee
shall in any way diminish the compensation payable to him or her
pursuant to the provisions of Paragraph 4 hereof.
2.2 The Employee agrees to devote
his or her full time, skill, attention and energies and his or her
best efforts to the performance of his or her duties under this
Agreement, consistent with practices and policies established from
time to time by the Company. The Employee agrees, in addition to
the covenants concerning Non-Competition contained in Paragraph 10,
that he or she shall not engage in any other business activity
(including, without limitation, participation by the Employee on
any unaffiliated profit or non-profit board of directors) except:
(a) upon the prior written notice to and consent of the Board,
or (b) solely as an investor in real or personal property, the
management of which shall not detract from the performance of his
or her duties hereunder; provided, however, that the engagement by
the Employee in any such business activity shall at all times be in
conformity with the Company’s Code of Ethics, as the same may
be amended or supplemented from time to time. Notwithstanding
anything herein to the contrary, the Employee shall terminate any
such activity upon reasonable request by the Company.
3. Period of Employment
.
3.1 Unless terminated earlier
pursuant to the applicable termination provisions of this
Agreement, the period of employment shall commence on the Effective
Date and end on the second December 31 next following the
Effective Date (as the same may be extended pursuant to this
Paragraph, the “Period of Employment”). If written
election not to renew by either party is not received by the other
party by (a) November 1 of the year of the Effective
Date, or (b) November 1 any subsequent year, if this
Agreement has previously been extended pursuant to this Paragraph
3, then the Period of Employment shall be automatically extended by
one year.
3.2 Notwithstanding anything to the
contrary set forth herein, the Employment Period shall not extend
beyond the Normal Retirement Date.
4. Compensation . For all
services rendered by the Employee under this Agreement, the Company
shall pay to the Employee compensation as provided
below:
4.1 Base Salary . The Company
shall pay the Employee a minimum annual base salary at the rate of
$286,000 per year in accordance with the Company’s normal
payroll practices. In connection with the annual review required by
Subparagraph 4.3 hereof, the Employee’s base salary shall be
reviewed and in light of such review may be increased (but not
decreased), taking into account any change in the Employee’s
responsibilities, performance of the Employee and other pertinent
factors. Payment of any increase in the Employee’s base
salary (if any) shall commence no later than July 1 of the
year in which the increase is granted.
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4.2 Bonus . The Company may,
but shall not be required to, pay to the Employee annual bonus
compensation in such amount as may be determined by the appropriate
board of directors or its designee within guidelines established by
the Company. Such bonus shall not exceed the amount of the
Employee’s annual base salary. The Employee’s bonus (if
any) for a fiscal year shall be paid to him at the time and in the
form and manner provided under the terms of the applicable plan
pursuant to which the bonus is awarded.
4.3 Annual Review . The
determination of compensation payable by the Company hereunder
shall be made by the Compensation Committee or its designee, which
shall perform an annual review of this Agreement, the
Employee’s performance with the Company, and compensation
payable hereunder. The results of such review, including
recommendation as to base salary adjustment and bonus (if any),
shall be reported to the Company and shall be memorialized in the
minutes of the meetings of the Board or held in a confidential file
by the Company’s Human Resources Department.
5. Benefits .
5.1 Life Insurance and Disability
Benefits . The Employee shall be entitled to group term life
insurance insuring the Employee’s life during the term of
employment, disability insurance coverage, and accidental death and
dismemberment benefits, including death benefit, in such amounts
and in such coverage as shall be consistent with the insurance
coverage programs available to other salaried employees of the
Company, as the same may change from time to time. The Employee
shall designate the beneficiary of such policy and
benefits.
5.2 Health Benefits . The
Employee shall be entitled to major medical and health insurance
coverage for the Employee and his or her immediate family on such
terms, in such amounts and in such coverage as shall be consistent
with the insurance coverage programs available to other salaried
employees of the Company generally, as the same may change from
time to time.
5.3 Other Benefits . To the
extent such benefits are not specifically described or duplicated
hereinabove in this Paragraph 5, the Employee shall also be
entitled to participate in any and all thrift, profit sharing,
pension and similar benefit plans (not including severance, change
in control or other similar arrangements), now or hereafter
maintained by the Company and offered by the Company to its
salaried, employees generally, as the same may change from time to
time.
5.4 Car . The Company also
shall provide the Employee during his or her employment under this
Agreement with the full time use of a car selected by the Employee
and comparable to the car available at present. Such car shall be
used by the
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Employee in accordance with any and
all general car policy(ies) as the Company may from time to time
adopt. Such car shall be selected, maintained and replaced in
accordance with the Company’s general policy on cars for
employees having need of a car for such use.
5.5 Expenses . Subject to
such general employee expense account policies as the Company may
from time to time adopt, the Company shall pay or reimburse the
Employee upon presentation of vouchers or invoices for reasonable
expenses incurred by the Employee in the performance of his or her
duties in carrying out the terms and provisions of this Agreement,
including, without limitation, expenses for such items as
entertainment, travel, meals, hotel and similar items. In the event
that any reimbursed expenses are disallowed by the Internal Revenue
Service as deductions to the Company, as the case may be, the
Employee shall retain such reimbursed expense amounts which the
Employee shall treat and report as additional compensation and
which the Company shall treat as deductible salary
expense.
5.6 Vacation . The Employee
shall be entitled to paid vacation annually as specified under the
Company’s vacation policy, to be taken at times reasonably
convenient to the Company.
5.7 Indemnification . To the
extent permitted by law, the Company shall indemnify the Employee
and hold him or her harmless from all liability and claims, whether
meritorious or not, including the cost of defense thereof
(including reasonable attorneys’ fees) which have arisen or
accrued or which hereafter may arise or accrue and are based upon
any act or omission which the Employee has taken or committed or
hereafter may take or commit on behalf of or in connection with the
Company in his or her official capacity, so long as the following
conditions are met with respect to such claim or liability:
(a) if such action was taken in the exercise of reasonable
business judgment and was taken in an area within the scope of
responsibility of the Employee, or (b) if not within the scope
of the Employee’s responsibility, (i) at the time of
such act or omission the Board had knowledge of the facts or
circumstances pursuant to which such act was taken or such omission
occurred and (ii) no written objection to such act or omission
was duly made by the Board.
Actions taken by the Employee which
are covered by this Agreement specifically include (by way of
illustration), but are not limited to, (a) the payment of any
salary, bonus or other compensation to any officer, director, or
employee, (b) the reimbursement or payment of any expenses
incurred by any such officer, director or employee, (c) the
making or retention of any investments (including, without
limitation, loans) by the Company, or (d) injury claims
against the Company or the Employee based on negligence or other
alleged tortious actions and which arise in connection with the
conduct of the Company’s business.
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The Employee shall indemnify the
Company and hold it harmless from all liability and claims, whether
meritorious or not, including the cost of the defense thereof
(including reasonable attorneys’ fees) which have arisen or
accrued or which hereafter may arise or accrue and are based upon
acts taken without the consent or approval of the Board of
Directors of the Company and which represent the Employee’s
deliberate malfeasance or gross negligence.
6. Termination . The Company
may terminate the Employee’s employment without Cause (as
defined below), subject to the requirements of applicable law, on
account of the Employee’s Disability (as defined below), in
either case, at any time, with 90 days’ advance written
notice (or pay in lieu thereof). The Company may terminate the
Employee’s employment for Cause at any time without notice.
The Employee may terminate his or her employment at any time for
any reason, with two months’ advance written notice (or such
shorter notice as the Company shall then accept). Upon termination,
the Employee shall be entitled only to such compensation and
benefits as described in this Paragraph 6.
6.1 Termination by the Company
Without Cause or by the Employee Due to Adverse Change . The
Employee’s employment under this Agreement may be terminated
by the Company at any time without cause during the term provided
in this Employment Agreement or by the Employee within 12 months
following a Change in Control if there occurs an Adverse Change
within such 12 month period. In the event of and in consideration
for all amounts and benefits payable hereunder by reason of a
Change in Control, the Employee acknowledges that the provisions of
Paragraph 10 hereof shall extend to any offices or facilities of
any business that becomes an affiliate of or successor to the
Company on account of such Change in Control. In any such event of
termination under this Subparagraph 6.1, the Company shall pay to
the Employee an amount equal to the greater of the Employee’s
then current monthly salary rate or the rate in effect prior to any
reduction which led to the termination times the greater of
(A) the number of months otherwise remaining in the Period of
Employment set forth in Paragraph 3, or (B) 18 months (either
(A) or (B), whichever as applicable, shall be the
“Payment Period”). The Company shall also provide the
Employee with benefits in accordance with Subparagraph 6.6 hereof.
Subject to Subparagraph 6.6, the severance amounts described in
this Subparagraph 6.1 shall be paid in bi-weekly compensation
continuation payments for the Payment Period, with each payment
equal to 1/26 of the Employee’s then current annual salary
rate or the rate in effect prior to any reduction which led to the
termination.
6.2 Section 409A of the Code
Payment Requirements . Except as otherwise provided in
Paragraph 6, all compensation and benefits shall cease at the time
of such termination and the Company shall have no further liability
or obligation by reason of such termination.
Notwithstanding anything herein to
the contrary, if, at the time of the Employee’s termination
of employment with the Company, the Company has securities which
are publicly traded on an established securities market and the
Employee is a “specified
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employee” (as such term is defined in
section 409A of the Code) and it is necessary to postpone the
commencement of any payments or benefits otherwise payable under
this Agreement as a result of such termination of employment to
prevent any accelerated or additional tax under section 409A of the
Code, then the Company shall postpone the commencement of the
payment of any such payments or benefits hereunder (without any
reduction in such payments or benefits ultimately paid or provided
to the Employee) that are not otherwise paid within the
“short-term deferral exception” under Treas. Reg.
§1.409A-1(b)(4) and/or the “separation pay
exception” under Treas. Reg. §1.409A-1(b)(9)(iii), until
the first payroll date that occurs after the date that is six
months following the Employee’s “separation of
service” with the Company. If any payments are postponed due
to such requirements, such postponed amounts shall be paid in a
lump sum to the Employee on the first payroll date that occurs
after the date that is six months following the Employee’s
“separation of service” with the Company. If the
Employee dies during the postponement period prior to the payment
of postponed amount, the amounts withheld on account of section
409A of the Code shall be paid to the personal representative of
the Employee’ s estate within 60 days after the date of the
Employee’s death. A “specified employee” shall
mean an employee who, at any time during the 12-month period ending
on the identification date, is a “specified employee”
under section 409A of the Code, as determined by the Compensation
Committee or its designee. The determination of specified
employees, including the number and identity of persons considered
specified employees and the identification date, shall be made by
the Compensation Committee or its designee in accordance with the
provisions of sections 416(i) and 409A of the Code and the
regulations issued thereunder.
6.3 Other Terminations . If
the Employee’s employment ceases for any reason other than as
described in Subparagraph 6.1, above (including, but not limited,
to (a) termination by the Company for Cause, (b) as a
result of the Employee’s death or termination by the Company
on account of the Employee’s Disability, (c) resignation
by the Employee in the absence of an Adverse Change or
(d) attainment of the Employee’s Normal Retirement Date
described in Subparagraph 3.2), then the Employee shall receive
payment for his or her accrued and unpaid base salary through the
date of such cessation. All compensation and benefits shall cease
at the time of such termination and, except as otherwise provided
herein or in the applicable employee benefit plans of the Company,
the Company shall have no further liability or obligation by reason
of such termination.
6.4 Claims . Any claims for
benefits under Paragraph 6 of the Agreement shall be governed by
the claims procedures in the Susquehanna Bancshares, Inc. Key
Employee Severance Pay Plan, as amended from time to time. However,
the severance benefit provisions of this Agreement shall govern in
lieu of the severance provisions of such Plan. Except as
specifically provided in this Agreement, the benefits provided
under this Agreement in the case of a termination shall be in lieu
of those provided by the Company and its Affiliates under any other
severance plans.
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6.5 Release . Notwithstanding
any other provision of this Agreement, any severance or termination
payments or benefits herein described are conditioned on the
Employee’s execution and delivery to the Company of an
effective general release and non-disparagement agreement in a form
prescribed by the Company and in a manner consistent with the
requirements of the Older Workers Benefit Protection Act and any
applicable state law.
6.6 Other Rights . Nothing in
this Agreement is intended to limit the Employee’s right to
(a) payment or reimbursement for welfare benefit claims
incurred prior to the cessation of his or her employment under any
group insurance plan, policy or arrangement of the Company in
accordance with the terms of such plan, policy or arrangement,
(b) elect COBRA Benefits in accordance with applicable law, or
(c) receive a distribution of vested accrued benefits from any
employee pension benefit plan in accordance with the terms of that
plan.
6.7 Parachute Payments
.
6.7.1 Anything in this Agreement to
the contrary notwithstanding, in the event that a Change in Control
occurs and it shall be determined that any payment or distribution
by the Company or its Affiliates to or for the benefit of the
Employee, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, would
constitute an “excess parachute payment” within the
meaning of section 280G of the Code (each such pay
