Exhibit 10.11
EMPLOYMENT
AGREEMENT
THIS AGREEMENT made as of this 16th
day of November, 2007, by and among SUSQUEHANNA BANCSHARES,
INC ., a Pennsylvania corporation (the “Company”),
SUSQUEHANNA BANK PA , a bank and trust company organized
under the Pennsylvania Banking Code of 1965 and a wholly-owned
subsidiary of the Company (the “Bank”) and JEFFREY
M. SEIBERT , an adult individual whose principal residence is
at 1317 Moulstown Road N, Hanover, PA 17331 (the
“Employee”).
Background
Employee is currently employed by
Community Banks, Inc. (“Community”) as its Executive
Vice President, Managing Director of Community and CommunityBanks,
a bank and trust company organized under the Pennsylvania Banking
Code of 1965 and a wholly-owned subsidiary of Community
(“CommunityBanks”). The Company and Community have
entered into that certain Agreement and Plan of Merger dated as of
April 30, 2007, as amended (the “Merger
Agreement”) pursuant to which (a) CommunityBanks shall
merge with and into the Bank, with the Bank constituting the
surviving bank and (b) Community shall merge with and into the
Company, with the Company constituting the surviving corporation
(collectively, the “Merger”). In connection with the
Merger, the Company desires to induce the Employee to commence
employment, and the Employee hereby agrees to commence employment
with the Company, effective on the closing date of the Merger as
defined in the Merger Agreement (the “Closing Date”),
on the terms and subject to the conditions hereinafter set forth.
As additional consideration to induce the Employee to enter into
this Agreement, the Company has offered to enhance the benefits
payable to Employee in connection with certain control transactions
involving the Company that occur after the Closing Date. The
Company, the Bank and the Employee each agree that these benefits
are all conditional on the Employee’s agreement to sign this
Agreement. Except as provided in this Agreement, this Agreement
supersedes and replaces that certain employment agreement by and
between Community, CommunityBanks and Employee dated January 1,
2004 (the “Community Employment Agreement”),
Restrictive Covenants Agreement entered into by and between the
Company and the Employee dated as of April 30, 2007, including
the Summary of Terms for Employment for Jeffrey M. Seibert attached
thereto as Exhibit A (the “Restrictive Covenants
Agreement”). This Agreement is subject in all respect to
consummation of the Merger pursuant to the Merger Agreement and
shall be void and of no effect if the Merger is not consummated.
Paragraph 18 sets forth certain defined terms used in this
Agreement.
1. Position . The Company
hereby agrees to cause the Bank to employ the Employee, the Bank
hereby agrees to employ the Employee, and the Employee hereby
agrees to commence employment with the Bank, as Executive Vice
President and Chief Operating Officer of the Bank effective as of
the Closing Date.
2. Duties .
2.1 The Employee agrees to assume
such duties and responsibilities as may be consistent with the
position of the Executive Vice President and Chief Operating
Officer of the Bank and as may be assigned to the Employee by the
Board of Directors of the Bank or the President or Chief Executive
Officer of the Bank or by the by-laws of the Bank from time to
time. No change in the duties of the Employee shall in any way
diminish the compensation payable to him pursuant to the provisions
of paragraph 4 hereof.
2.2 The Employee agrees to devote
his full time, skill, attention and energies and his best efforts
to the performance of his duties under this Agreement, consistent
with practices and policies established from time to time by the
Bank. The Employee agrees, in addition to the covenants concerning
Non-Competition contained in paragraph 15, that he 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: (i) upon the prior
written notice to and consent of the Board of Directors of the
Bank, or (ii) solely as an investor in real or personal property,
the management of which shall not detract from the performance of
his duties hereunder; provided, however, that the engagement by the
Employee in any such business activity shall at all times be in
conformity with the Bank’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 Bank.
3. Period of Employment
.
3.1 The period of employment shall
commence on the Closing Date and end on the third anniversary
thereof (the “Termination Date”). If written election
not to renew by either party is not received by the other party by
the sixtieth day prior to the Termination Date (or the sixtieth day
prior to any anniversary thereof if this Agreement has previously
been extended pursuant to this paragraph 3), then the Period of
Employment shall be automatically extended to the next anniversary
of the Termination Date. This Agreement shall cease to further
renew upon delivery by either party of a Notice of Termination in
accordance with subparagraph 19.2.
3.2 Notwithstanding anything to the
contrary set forth herein, the Period of Employment shall not
extend beyond:
3.2.1 the last business day in the
calendar year in which the Employee attains the age of 65 (the
“Normal Retirement Date”), or
3.2.2 if a Change in Control has
occurred prior to the Normal Retirement Date, the later of
(a) the Normal Retirement Date, or (b) the first
anniversary of that Change in Control.
4. Compensation . For all
services rendered by the Employee under this Agreement, the Bank
shall pay to the Employee compensation as provided
below:
4.1 Base Salary . The Bank
shall pay the Employee a minimum annual base salary at the rate of
$250,000.00 per year. In connection with the annual review required
by
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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 1st of the year in which the increase is
granted.
4.2 Bonus . The Bank may, but
shall not be required to, pay to the Employee annual bonus
compensation in such amount as may be determined by the Board of
Directors of the Bank or its designee within guidelines established
by the Bank. Such bonus shall not exceed the amount of the
Employee’s base compensation. The Employee’s bonus (if
any) for a fiscal year shall be paid to him in a single lump sum
payment between January 1 and March 15 of the calendar
year following the end of the fiscal year for which the bonus was
earned.
4.3 Annual Review . The
determination of compensation payable by the Bank hereunder shall
be made by the Compensation Committee, or its nominee, which shall
perform an annual review of this Agreement, the Employee’s
performance with the Bank, and compensation payable hereunder. In
such annual review, the Compensation Committee shall consider the
recommendations of the Board of Directors of the Bank. The results
of such review, including recommendation as to salary adjustment
and bonus, 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 Bank’s or the Company’s
Human Resources Department.
4.4 Change in Control Payment
. The Bank shall pay to the Employee $807,500, which with the
payment described in the next sentence and except as provided in
paragraphs 7.4 and 10.1.3, constitutes all amounts due to the
Employee under the Community Employment Agreement in consideration
for the termination of the Community Employment Agreement as of the
Closing Date, which amount shall be paid on January 2, 2008.
For the period beginning on the Closing Date and ending on
January 2, 2008, the foregoing payment amount shall be
credited with interest at an annual rate of 4%. In addition, the
parachute tax gross-up provision of Section 8 of the Community
Employment Agreement shall apply with respect to any excise tax
imposed on the Employee under Code section 4999 as a result of the
Merger; provided that any parachute tax gross-up payment hereunder
shall be paid no later than the end of the calendar year next
following the calendar year in which the Employee or Company (as
applicable) remits the taxes for which the parachute tax gross-up
payment is being made.
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5. Employee Expenses .
Subject to such general employee expense account policies as the
Bank may from time to time adopt, the Bank shall pay or reimburse
the Employee upon presentation of vouchers or invoices for
reasonable expenses incurred by the Employee in the performance of
his 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 Bank, the Employee shall
retain such reimbursed expense amounts which the Employee shall
treat and report as additional compensation and which the Bank
shall treat as deductible salary expense.
The Bank shall provide the Employee
during his 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 Employee in
accordance with any and all general car policy(ies) as the Bank may
from time to time adopt. Such car shall be selected, maintained and
replaced in accordance with the Bank’s general policy on cars
for employees having need of a car for such use.
In addition, during
Executive’s employment under this Agreement, the Bank shall
reimburse the Employee for country club dues (including any
initiation fees) associated with Employee’s membership at one
country club selected by the Executive and approved by the Bank,
according to the Bank’s executive reimbursement
policy.
6. Vacations . The Employee
shall be entitled to paid vacation annually as specified under the
Bank’s Vacation Policy, to be taken at times reasonably
convenient to the Bank.
7. Benefits .
7.1 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
benefits, in such amounts and in such coverage as shall be
consistent with the insurance coverage programs available to other
salaried employees of the Bank, as the same may change from time to
time. The Employee shall designate the beneficiary of such policy
and benefits.
7.2 The Employee shall be entitled
to major medical and health insurance coverage for the Employee and
his 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 Bank
generally, as the same may change from time to time.
7.3 To the extent such benefits are
not specifically described or duplicated hereinabove in this
paragraph 7, the Employee shall also be entitled to participate in
any and all thrift, profit sharing, pension, equity, non-qualified
retirement and similar benefit plans (not including severance,
change in control or other similar arrangements), now or hereafter
maintained by the Company, the Bank, or their Affiliates and
offered by the Company, the Bank or their Affiliates to salaried,
management employees of the Bank generally, as the same may change
from time to time.
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7.4 The Company expressly agrees to
assume, or to cause the Bank to assume, all obligations of
Community to the Employee under the Survivor Income Agreement
(including the Split Dollar Addendum) by and between Community and
Employee dated February 5, 1999, the Amended and Restated
Salary Continuation Agreement dated January 1, 2004 and the
Community Banks, Inc. Deferred Compensation Plan as in effect
immediately prior to the Closing Date, in each case, subject in all
respects to the terms of those agreements and plan and any rights
the Company or the Bank shall succeed to thereunder and subject in
all respects to Community fulfilling its required obligations under
Sections 4.12(c) and 7.8(c) of the Merger Agreement. In addition,
option grants as described in Section 1.6(b) of the Merger
Agreement shall be assumed and terms and conditions shall continue
to apply as provided in such Section 1.6(b). Except as
provided by the terms of this Agreement, the Company and the Bank
agree not to take any action to accelerate the timing of the
payments under the foregoing agreements without the
Employee’s prior consent.
8. Confidential Information .
During the term of employment, and at any time thereafter, the
Employee shall not, without the consent of a senior officer of the
Company, disclose to any person, firm or corporation (except,
during the term of his employment, to the extent necessary to
perform his duties hereunder) any customer lists, trade secrets,
reports, correspondence, mailing lists, manuals, price lists,
employee lists, prospective employee lists, letters, records or any
other confidential information relating to the business of the
Company, the Bank or any of their Affiliates and shall not, without
the consent of a senior officer of the Company, deliver any oral
address or speech or publish, or knowingly permit to be published,
any written matter in any way relating to confidential information
regarding the business of the Company, the Bank or any of their
Affiliates.
9. Property Rights . The
Employee agrees that all literary work, copyrightable material or
other proprietary information or materials developed by the
Employee during the term of this Agreement and relating to, or
capable of being used or adopted for use in, the business of the
Company, the Bank or any of their Affiliates shall inure to and be
the property of the Company, the Bank and their Affiliates and must
be promptly disclosed to the Bank. Both during employment by the
Bank and thereafter, the Employee shall, at the expense of the
Company or the Bank, execute such documents and do such things as
the Company or the Bank reasonably may request to enable the
Company, the Bank or their nominee (i) to apply for copyright
or equivalent protection in the United States. Canada and elsewhere
for any literary work hereinabove referred in this paragraph, or
(ii) to be vested with any such copyright protection in the
United States, Canada and elsewhere.
10. Termination . The Bank
may terminate the Employee’s employment without Cause or as a
result of a Disability at any time, with 90 days’ advance
written notice (or pay in lieu thereof). The Bank may terminate the
Employee’s employment for Cause at any time without notice.
The Employee may terminate his employment at any time for any
reason, with 90 days’ advance written notice (or such shorter
notice as the Bank shall then accept). Upon
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termination, the Employee shall be entitled only
to such compensation and benefits as described in this paragraph 10
and the Employee shall immediately resign his position as Executive
Vice President and Chief Operating Officer of the Bank, and from
the board of directors of any Affiliate of which he is a
director.
10.1 Termination without Cause or
Resignation due to an Adverse Change . If the Employee’s
employment ceases due to a termination by the Bank without Cause or
a resignation by the Employee due to an Adverse Change, the
Employee shall be entitled to the following payments and benefits,
to be paid or provided in the manner described below:
10.1.1 payment of an amount equal to
three (3) times the Employee’s average annual salary and
bonus (based on the three calendar years preceding the calendar
year in which the Employee’s termination date occurs), which
amount shall be paid in regular payroll installments over the
three-year period following the Employee’s termination
date;
10.1.2 if the Employee participates
in a tax-qualified defined benefit plan maintained by the Company,
the Bank, or one of their Affiliates immediately before the
Employee’s termination date, the Employee shall continue to
accrue an additional benefit under the applicable tax-qualified
defined benefit plan by taking into account the Employee’s
severance compensation as compensation for purposes of the
applicable plan and increasing the Employee’s years of
benefit service under the applicable plan by three years, subject
in all events to the terms of the tax-qualified defined benefit
plan;
10.1.3 continued coverage under the
applicable health plan of the Company, the Bank or one of their
Affiliates pursuant to Code section 4980B for the Employee, his
spouse and eligible dependents, for the period commencing on the
Employee’s termination date and continuing for the 18-month
period following Employee’s termination date, subject to the
requirement that the Employee remit the employee portion of premium
cost associated with the foregoing coverage. On the first payroll
date following the expiration of the foregoing 18-month coverage
period, the Bank shall pay to Employee a lump sum payment in an
amount equal to 100% of the premium cost of COBRA continuation
coverage under the applicable health plan of the Company, the Bank
or one of their Affiliates pursuant to Code section 4980B for the
Employee, his spouse and eligible dependents, for the period
commencing as of the first day of the first month next following
the expiration of the foregoing 18-month coverage period and
continuing until the Employee’s attainment of age 65, at the
COBRA rate in effect as of the expiration of the foregoing 18-month
coverage period (as reasonably determined by the Bank) (less the
employee portion of the premium cost for the active plan) and
assuming an annual 10% increase in the amount of such COBRA premium
over the period described in this subparagraph 10.1.3;
10.1.4 a lump sum payment within 30
days after the Employee’s termination date in an amount equal
to 150% of the Bank’s actual premium cost of providing group
term life insurance coverage to Executive for the three year period
following the Employee’s termination date; and
10.1.5 payment for all accrued but
unused vacation days.
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The Employee shall be responsible for the
payment of any taxes he may incur as a result of receiving the
payments and benefits contemplated by this subparagraph 10.1, and
the amount of the cash payments contemplated hereunder shall be
reduced by the amount which would be deducted from the
Employee’s wages if he were participating in the employee
benefit plans and programs (if any) of the Company, the Bank or
their Affiliates and no provision of this Agreement shall limit the
Company’s or the Bank’s authority to modify its
employee benefit plans and programs (including, without limitation
the reduction of benefits) or increase the amount that employees
must contribute to the plans during the applicable period
hereunder. All payments and benefits provided under this
subparagraph 10.1 shall be made subject to applicable tax
withholding, and the Bank shall withhold from any payments all
federal, state and local taxes as the Bank is required to withhold
pursuant to any law or governmental rule or regulation.
Except as otherwise provided in
subparagraphs 4.4, 10.1 and 7.4, all compensation and benefits
shall cease at the time of such termination and the Bank shall have
no further liability or obligation by reason of such termination.
The separation benefits described in this subparagraph 10.1 shall
be paid (or in the case of the payments described in subparagraph
10.1.1 shall begin to be paid) within 30 days after the
Employee’s termination date, subject to the Employee’s
execution and delivery of an effective release as described below
in subparagraph 10.5.
Notwithstanding any provision of
this Agreement to the contrary, if, at the time of the
Employee’s termination of employment with the Bank, the
Company’s securities are publicly traded on an established
securities market and the Employee is a “specified
employee” (as defined in Code section 409A), any payments or
benefits made pursuant to this Agreement shall be postponed to the
minimum extent necessary so that such payments are not subject to
the provisions of Code section 409A(a)(l). Any amounts that are
postponed pursuant to Code section 409A shall be paid in a lump sum
payment within 10 days after the end of the postponement period. If
the Employee dies during the postponement period prior to the
payment of postponed amount, the amounts withheld on account of
Code section 409A 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 Code section 409A, 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 Code sections 416(i) and 409A and the regulations
issued thereunder.
10.2 Other Terminations .
Subject to the requirements of Code section 409A as described in
subparagraph 10.1, if the Employee’s employment ceases for
any reason other than as described in subparagraph 10.1, above
(including, but not limited, to (a) termination for Cause,
(b) as a result of the Employee’s death or Disability,
(c) resignation by the Employee in the absence of an Adverse
Change or (d) a retirement described in subparagraph 3.2),
then the Employee shall receive payment for his accrued and unpaid
base salary through the date of such cessation and the payment
described in subparagraph 10.1.3, provided, however, that in the
event of the Employee’s death, the payment described in
subparagraph 10.1.3 shall be paid in a lump
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sum in an amount equal to 100% of
the premium cost of COBRA continuation coverage under the
applicable health plan of the Company or its Affiliates pursuant to
Code section 4980B for the Employee’s (i) surviving
spouse for the period commencing as of the first day of the first
month next following the Employee’s death and continuing
until the Employee would have attained age 65 and
(ii) dependent children for the period commencing as of the
first day of the first month next following the Employee’s
death and continuing until the earlier of (A) the date the
Employee would have attained age 65 or (B) the date such
dependent children cease to be “qualifying children”
under Code section 152(c), at the COBRA rate in effect as of the
date of the Employee’s death (as reasonably determined by the
Company) (less the employee portion of the premium cost for the
active plan) and assuming an annual 10% increase in the amount of
such COBRA premium over the applicable periods described in this
sentence. 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 and the Bank, the
Bank shall have no further liability or obligation by reason of
such termination.
10.3 Non-Disparagement . Upon
termination of employment hereunder, the Employee shall not malign,
criticize or otherwise disparage the Company, the Bank, any of
their Affiliates or any of their respective officers, employees or
directors.
10.4 Claims . Any claims for
benefits under paragraph 10 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 provisions of subparagraph 10.1 and paragraph 11 of this
Agreement shall govern in lieu of the severance provisions of such
Plan. Except as specifically provided in this Agreement, the
payments and benefits provided under this paragraph 10 are in lieu
of, not in addition to, those provided by the Company, the Bank and
their Affiliates under any other severance plan or
arrangement.
10.5 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
Bank of an effective general release and non- disparagement
agreement in a form prescribed by the Bank and in a manner
consistent with the requirements of the Older Workers Benefit
Protection Act and any applicable state law.
10.6 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 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.
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11. Change in Control
.
11.1 Effect of a Change in
Control .
11.1.1 Effect on LTI/STI
Rights . With respect to any long-term, short- term or any
similar incentive program cycle in effect at the time of a Change
in Control:
(a) Employee shall become fully and
immediately vested in his incentive awards upon the occurrence of
the Change in Control; and
(b) such incentive awards shall be
payable at target levels and shall be paid to the Employee in a
single lump sum payment between January 1 and March 15 of
the calendar year following the end of the incentive program cycle
for which the incentive award was earned, without regard to whether
Employee remains employed by the Bank and without regard to the
performance of Employee during those incentive program
cycles.
11.1.2 Effect on Pension
Rights . In the event of a termination of employment providing
for payment of benefits under subparagraph 10.1, the Employee shall
accrue an additional, fully vested benefit under the Bank’s
non-qualified pension plan (which shall be paid at the time and in
the form determined under the non-qualified plan and shall be
subject in all respects to the terms of the tax-qualified defined
benefit pension plan) equal to the difference between:
(a) the benefit that the Employee
would have accrued under all tax-qualified defined benefit pension
plans of the Company, the
