Exhibit 10.7
VALLEY FORGE ASSET MANAGEMENT
CORP.
December 1, 2008
Bernard A. Francis Jr.
P.O. Box 837
Valley Forge, PA 19482
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Re:
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Employment
Agreement Amendment – Section 409A of the Internal
Revenue Code
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Dear Bernie:
You and Valley Forge Asset
Management Corp. (including any successor, “VFAM”),
which is a wholly-owned subsidiary of Susquehanna Bancshares, Inc.
(“SBI”, and collectively with VFAM, the
“Company”) are parties to that certain employment
agreement dated January 1, 2004, as amended January 18,
2005 (the “Existing Agreement”), which provides you
with certain rights as an employee of the Company, including the
right to receive severance payments, as set forth in the Existing
Agreement, should you be involuntarily terminated, including in
certain circumstances, in the event of your resignation on account
of an “adverse change in your circumstances” (as
defined in the Existing Agreement”). As a result of recent
changes to the tax laws, the Existing Agreement is subject to
section 409A of the Internal Revenue Code of 1986, as amended
(“Code”).
In order to comply with section 409A
of the Code, the parties agree that the Existing Agreement is
hereby amended by this letter (“Amendment” which
together with the Existing Agreement will constitute your
“Employment Agreement”) to include the following
provisions:
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1)
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Section 4.2 is amended to add the following
sentence to the end of existing text, as follows:
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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.
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2)
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The last
sentence of Section 7.3 is deleted in its entirety and
replaced, as follows:
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Notwithstanding the preceding,
subject to the requirements of applicable law, if such permanent
disability continues, the Company may terminate the
Employee’s employment and this Agreement on account of the
Employee’s disability. Upon such termination, the Company and
VFAM (i) shall have no further obligation to the Employee
under this Agreement other than in connection with such benefits as
may be available under such disability insurance programs, and
(ii) shall not be obligated to provide or pay for any benefits
under the programs or policies listed in subparagraphs 7.1 and 7.2
above, except to the extent that any of the benefits available
under such programs or policies survive termination of the
Employee’s employment by their express terms, or as required
by law, in which event they shall continue only as required by
their express terms or as required by law, whichever is
applicable.
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3)
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The first
paragraph of Section 10.1 is deleted in its entirety and
replaced, as follows:
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The Employee shall be deemed to have
been given notice of termination (“Notice of
Termination”) for purposes of this subsection 10.1 if this
Agreement is not renewed by the Company and (i) the Employee
elects in a writing delivered to the Company within thirty
(30) calendar days of the termination of the Period of
Employment to treat such failure to renew as Notice of Termination,
effective as of the date of delivery of such election to the
Company, or (ii) the Employee does not exercise his rights
under the immediately preceding clause, effective on the last day
of the twenty-fourth (24th) month following the most recent
renewal date. Notwithstanding anything to the contrary, the terms
of this subjection 10.1 shall apply only if the Company fails to
renew the Agreement in accordance with Section 3 and the
Employee is otherwise willing and able to execute a new contract
providing terms and conditions substantially similar to those in
this Agreement and to continue providing services to the
Company.
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4)
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The second
paragraph of Section 10.1 is deleted in its entirety and
replaced, as follows::
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Upon the effective date of a Notice
of Termination under this subsection 10.1, the Company may request
the Employee to, and if required, the Employee shall continue to
perform his duties as set forth in this Agreement for a period not
to exceed three (3) months from the effective date of the
Notice of Termination. In addition to such period, the Employee
shall be reasonably available for a period of up to nine
(9) additional months for advice and consultation as required
by the Company or VFAM. The Employee shall be entitled to receive
all salary, benefits and such bonus for which the Employee is
eligible for both the three (3) month period referenced above
and the portion of the nine (9) month period during which the
Employee continues to work for VFAM pursuant to the preceding
requirements. The Employee will have a “separation
from
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service” from the Company
within the meaning of section 409A of the Code on the earlier of
(i) the last day of the applicable period described above
during which the Employee continues to be employed by the Company
or VFAM following the effective date of the Notice of Termination,
and (ii) the date on which the Employee obtains other
employment during such twelve (12) month period, at which
point all compensation and benefits shall cease and the Company
shall have no further liability or obligation by reason of such
separation from service.
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5)
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Section 10.2 is deleted in its entirety and
replaced, as follows:
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10.2 This Agreement may be
terminated upon action of the Employee by not less than two
(2) months notice to the Company. The Employee agrees in the
event of termination under this subparagraph to cooperate, advise
and consult the Company as needed to assist in the transition of
Employee’s replacement during such two (2) month period.
On the last day of the two (2) month notice period, the
Employee will have a “separation from service” from the
Company within the meaning of section 409A of the Code and such
date shall be the Employee’s Termination Date for purposes of
this Agreement. Following the Employee’s Termination Date
under this Section 10.1, the Employee agrees to be available
to cooperate, advise and consult the Company as needed for a period
of four (4) months during reasonable time and under reasonable
circumstances, provided, however, that the Employee shall not
during such time provide services at a level that would result in
the Employee not being considered to have had a “separation
from service” under section 409A of the Code on the last day
of the original two (2) month notice period.
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6)
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The first
sentence of Section 10.5(a) is deleted in its entirety and
replaced as follows:
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In addition to termination under
subparagraphs 10.1, 10.2 and 10.3 above, the Employee’s
employment by the Company 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 twelve
(12) months following a Change in Control if their occurs an
adverse change in the Employee’s circumstances within such
twelve (12) month period.
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7)
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Section 10.5(a) is amended to add the
following sentence to the end of existing text, as
follows:
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Subject to Section 10.10, the
severance amounts described in this subparagraph 10.5 shall be paid
in a single lump sum payment 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 10.9.
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8)
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Section 10.5(a)(1) is deleted in its
entirety and replaced, as follows:
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(1) if the Employee participates in
any defined benefit pension plan maintained by the Company or one
of its Affiliates immediately before the Employee’s
termination date (whether such plan is tax qualified or
non-qualified), the Employee shall accrue an additional, fully
vested benefit under the Company’s non-qualified pension plan
(which shall be paid at the time and in the form determined under
the nonqualified pension plan and shall be determined in all
re
