UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
July 15, 2022
Date of Report (Date of earliest event reported)
PENNS WOODS BANCORP, INC.
(Exact name of registrant as specified in its charter)
| Pennsylvania | 000-17077 | 23-2226454 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Ident. No.) | ||
| 300 Market Street, P.O. Box 967, Williamsport, Pennsylvania | 17703-0967 | |||
| (Address of principal executive offices) | (Zip Code) | |||
|
(570) 322-1111 Registrant’s telephone number, including area code | ||||
| N/A | ||||
| (Former name or former address, if changed since last report.) | ||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $5.55 par value | PWOD | The Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreement Amendment – Richard A. Grafmyre
On July 15, 2022, Penns Woods Bancorp, Inc. (the “Company”) and Richard A. Grafmyre, Chief Executive Officer of the Company, entered into an Amendment, dated July 15, 2022 (the “Grafmyre Employment Agreement Amendment”), to Mr. Grafmyre’s existing Amended and Restated Employment Agreement, dated March 9, 2021 (the “Grafmyre Employment Agreement”). The Grafmyre Employment Agreement Amendment amends the Grafmyre Employment Agreement to: (i) require the Company to provide an automobile for Mr. Grafmyre’s use upon his request; (ii) provide that, upon termination of Mr. Grafmyre’s employment for any reason other than Cause (as defined in the Agreement), the Company will take such actions necessary to cause any outstanding stock options previously granted to Mr. Grafmyre to be exercisable for the remaining term of such options; (iii) provide that, upon termination of employment for any reason, Mr. Grafmyre will be permitted to retain the cellular telephone provided to him by the Company, including the cellular telephone number; and (iv) provide for continued health care benefits (or an amount equal to the cost of obtaining such benefits if he is no longer eligible to participate in the applicable plan) for a period of 24 months following termination of employment in the event that Mr. Grafmyre’s employment is terminated without Cause (as defined in the Agreement) in the absence of a Change in Control (as defined in the Agreement).
Except as modified by the Grafmyre Employment Agreement Amendment, the Grafmyre Employment Agreement remains in effect in accordance with its terms.
A copy of the Grafmyre Employment Agreement Amendment is attached hereto as Exhibit 10.2. The foregoing description of the Amendment is qualified by reference to the Amendment.
Employment Agreement Amendment – Brian L. Knepp
On July 15, 2022, the Company and Brian L. Knepp, President and Chief Financial Officer of the Company, entered into an Amendment, dated July 15, 2022 (the “Knepp Employment Agreement Amendment”) to Mr. Knepp’s existing Amended and Restated Employment Agreement, dated December 31, 2018 (the “Knepp Employment Agreement”). The Knepp Employment Agreement Amendment amends the Knepp Employment Agreement to: (i) provide for a term expiring on July 14, 2024, with annual renewal thereafter absent notice of non-renewal by either party at least 60 days prior to an annual renewal date; (ii) update the Agreement to insert Mr. Knepp’s current annual base salary of $257,500; (iii) provide that, upon termination of employment for any reason, Mr. Knepp will be permitted to retain the cellular telephone provided to him by the Company, including the cellular telephone number; and (iv) provide for continued health care benefits (or an amount equal to the cost of obtaining such benefits if he is no longer eligible to participate in the applicable plan) for a period of 24 months following termination of employment in the event that Mr. Knepp’s employment is terminated by the Company without Cause (as defined in the Agreement), or by Mr. Knepp for Good Reason (as defined in the Agreement), following a Change in Control (as defined in the Agreement).
Except as modified by the Knepp Employment Agreement Amendment, the Knepp Employment Agreement remains in effect in accordance with its terms.
A copy of the Knepp Employment Agreement Amendment is attached hereto as Exhibit 10.4. The foregoing description of the Knepp Employment Agreement Amendment is qualified by reference to the Amendment.
Repurchase of Certain Outstanding Stock Options Issued to Employees for Cash
On July 15, 2022, the Company repurchased for cash 346,725 outstanding stock options previously granted under the Company’s equity compensation plans from 36 employees pursuant to a voluntary program made available to option holders, including Mr. Grafmyre, Mr. Knepp, Aron M. Carter, Senior Vice President - Chief Risk Officer of the Company, and Michelle M. Karas, Senior Vice President, Secretary, & Chief Data Officer of the Company. Repurchased options had exercise prices ranging from $28.02 to $30.67 per share, and were subject to cliff vesting periods of either three or five years from grant date. The Company utilized a Black Scholes valuation methodology for determining the value of each repurchased option, resulting in prices ranging from$1.4770 to $3.3685 for each option repurchased depending on the applicable exercise price and other characteristics of the applicable option. Repurchased options have been cancelled and will not be available for re-issuance under any of the Company’s equity compensation plans or programs. Employees who participated in the option repurchase are required to repay all or a portion of the cash payment received in the event that their employment terminates prior to July 1, 2024 for reasons other than retirement, disability, or death, or termination by the Company without cause: termination prior to July 1, 2023 – repayment of 100% of amount received; termination after July 1, 2023 and prior to July 1, 2024 – repayment of 50% of amount received. The Company’s board of directors approved the stock option repurchase following the recommendation of the Compensation Committee based on the view that the decrease in the Company’s stock price since the original grant date resulted primarily from factors outside the Company’s control, including the economic downturn following the pandemic and related industry trends, and that accordingly the stock options subject to repurchase were not properly fulfilling the purpose of motivating and retaining key employees in the current competitive employment landscape.
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Of the total options repurchased, the following amounts were repurchased from Mr. Grafmyre, Mr. Knepp, Mr. Carter, and Ms. Karas: Mr. Grafmyre – a total of 15,000 stock options for an aggregate amount of $50,527; Mr. Knepp -- a total of 57,300 stock options for an aggregate amount of $185,990; Mr. Carter -- a total of 12,300 stock options for an aggregate amount of $40,004; and Ms. Karas -- a total of 14,400 stock options for an aggregate amount of $46,692.
After giving effect to the option repurchase, as of July 15, 2022, 919,250 stock options remain outstanding under the Company’s equity compensation plans.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits: |
| 10.2 | Amendment to Employment Agreement, dated July 15, 2022, between Penns Woods Bancorp, Inc. and Richard A. Grafmyre. |
| 10.4 | Amendment to Employment Agreement, dated July 15, 2022, between Penns Woods Bancorp, Inc. and Brian l. Knepp. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PENNS WOODS BANCORP, INC. | |||
| Dated: July 21, 2022 | |||
| By: | /s/ Brian L. Knepp | ||
| Brian L. Knepp | |||
| President and Chief Financial Officer | |||
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Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT, made as of the 15th day of July 2022, by and between PENNS WOODS BANCORP, INC. (“Penns Woods”), a Pennsylvania business corporation, and RICHARD A. GRAFMYRE, and adult individual (“Executive”).
BACKGROUND
1. Penns Woods and Executive are presently parties to an amended and restated employment agreement, dated as of March 9, 2021, as amended (the “Employment Agreement”).
2. Penns Woods and Executive desire to amend the Employment Agreement in certain respects as set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:
1. Amendment of Section 4(f) of the Employment Agreement. Section 4(f) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“(f) Automobile. Promptly upon Executive’s written request, Penns Woods shall provide Executive with a vehicle selected by Executive (which shall be owned or leased by Penns Woods) for the Executive’s business and personal use. Penns Woods will cover all repairs and operating expenses of said vehicle, including the cost of liability insurance, comprehensive and collision insurance. If use of an automobile has been provided to Executive pursuant to this Section 4(f), then upon termination of Executive’s employment hereunder for any reason, Executive shall either immediately return the vehicle to Penns Woods or purchase the vehicle (or assume the lease) in accordance with the vehicle purchase policy of Penns Woods. Upon request by Penns Woods, Executive shall submit to Penns Woods on a timely basis documentation which defines the percentage of Executive’s use of the vehicle which was for business purposes.”
2. Addition of New Section 4(h) to the Employment Agreement. The Employment Agreement is hereby amended to add a new Section 4(h) to read in its entirety to read as follows:
“(h) Term of Stock Options. In the event of a termination of employment for any reason (other than for Cause), the Company agrees to take such actions are necessary to cause all of the Executive’s outstanding stock options as of the date of such termination of employment to continue to be exercisable for the entire remaining term of each stock option.”
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3. Addition of New Section 4(i) to the Employment Agreement. The Employment Agreement is hereby amended to add a new Section 4(i) to read in its entirety to read as follows:
“(i) Cellular Phone and Phone Number. In the event that Executive’s employment with Penns Woods terminates for any reason, Executive shall be permitted to retain the cellular telephone provided by the Company to Executive, including the cellular phone number. Expenses related to use of any cellular telephone retained by Executive following a termination of employment shall be paid by Executive.
4. Amendment of Section 6(a) of the Employment Agreement. Section 6(a) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“(a) Benefits. In the event that Executive’s employment is involuntarily terminated by Penns Woods during the Employment Period without Cause (other than by reason of Section 3(d)) absent a Change in Control, Penns Woods shall continue to pay Executive’s then current annual base salary under Section 4(a) for the greater of: (i) the number of full months remaining in the Employment Period as of the date of termination of employment or (ii) six (6) months. With respect to clause (i) of this Section, a final pro-rated payment shall be made for any fraction of a month remaining in the Employment Period as of the date of his termination of employment. In addition, during the twenty four (24) month period following Executive’s termination of employment that is subject to this Section 6(a), Executive shall be permitted to continue participation in, and Penns Woods shall maintain the same level of contribution for, Executive’s participation in the medical/health insurance plan or program in effect with respect to Executive during the one (1) year period prior to his termination of employment, or, if Penns Woods is not permitted to provide such benefits because Executive is no longer an employee or as a result of any applicable legal requirement, Executive shall receive a dollar amount, on or within thirty (30) days following the date of termination, equal to the cost to Executive of obtaining such benefits (or substantially similar benefits).”
5. Ratification of Agreement. Except as otherwise provided in this Amendment to Employee Agreement, all terms and conditions of the Employment Agreement remain in full force and effect, and nothing contained in this Amendment to Employment Agreement shall be deemed to alter or amend any provision of the Employment Agreement except as specifically provided herein. References in the Employment Agreement to the “Agreement” shall be deemed to be references to the Agreement as amended hereby.
6. Waiver. No provision of this Amendment to Employment Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and Penns Woods. No waiver by any party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Amendment to Employment Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
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7. Assignment. This Amendment to Employment Agreement shall not be assignable by any party, except by Penns Woods to any affiliated company or to any successor in interest to its businesses.
8. Entire Agreement. This Amendment to Employment Agreement contains the entire agreement of the parties relating to the subject matter hereof.
9. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws principles.
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IN WITNESS WHEREOF, the parties have executed this Amendment to Employment Agreement as of the date first above written.
| PENNS WOODS BANCORP, INC. |
| By: | /s/ Christine M. Barto |
| Name: Christine M. Barto | |
| Title: Senior Vice President/Chief Human Relations Officer |
| (“Penns Woods”) |
| /s/ Richard A. Grafmyre | |
| Richard A. Grafmyre |
| (“Executive”) |
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Exhibit 10.4
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT TO EMPLOYMENT AGREEMENT, made as of the 15th day of July 2022, by and between PENNS WOODS BANCORP, INC. (“Penns Woods”), a Pennsylvania business corporation, and BRIAN L. KNEPP, and adult individual (“Executive”).
BACKGROUND
1. Penns Woods and Executive are presently parties to an amended and restated employment agreement, dated as of December 31, 2018 (the “Employment Agreement”).
2. Penns Woods and Executive desire to amend the Employment Agreement in certain respects as set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:
1. Amendment to Section 2 of Employment Agreement. Section 2 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“Titles and Duties of Executive. Executive shall perform and discharge well and faithfully such management and administrative duties as an executive officer of Penns Woods as may be assigned to him from time to time by the Board of Directors of Penns Woods, as applicable, and which are consistent with his positions set forth in the following sentence. Executive shall be employed as President and Chief Financial Officer of Penns Woods. Executive shall report directly to the Chief Executive Officer of Penns Woods. Executive shall devote his full time, attention and energies to the business of Penns Woods and its affiliated companies during the Employment Period (as defined in Section 3); provided, however, that this section shall not be construed as preventing Executive from (a) investing his personal assets in enterprises that do not compete with Penns Woods or any of its majority-owned subsidiaries (except as an investor owning less than 5% of the stock of a publicly-owned company), or (b) being involved in any civic, community or other activities with the prior approval of the Board of Directors of Penns Woods.”
2. Amendment to Section 3(a) of Employment Agreement. Section 3(a) of the Employment Agreement is hereby amended and restated in its entirety as follows:
“(a) This Agreement shall be for a period (the “Employment Period”) commencing on the date of this Agreement and ending on July 14, 2024; provided, however, that, commencing on July 15, 2024 and on July 15 of each succeeding year (each an “Annual Renewal Date”), the Employment Period shall be automatically extended for one (1) additional year from the applicable Annual Renewal Date, unless Penns Woods or Executive shall give written notice of nonrenewal to the other party at least sixty (60) days prior to an Annual Renewal Date, in which event this Agreement shall terminate at the end of the then existing Employment Period. Neither the expiration of the Employment Period, nor the termination of this Agreement, shall affect the enforceability of the provisions of Sections 7, 8 and 9.”
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3. Amendments to Sections 3(b)(ii) and 3(b)(iii) of Employment Agreement. The references to “CFG” in Sections 3(b)(ii) and 3(b)(iii) are hereby deleted.
4. Amendment to Section 4(a) of Employment Agreement. Section 4(a) of the Employment Agreement is hereby amended and restated in its entirety as follows:
“(a) Salary. During the Employment Period, Executive shall be paid a base salary at the rate of $257,500 per year, payable bi-weekly at such times as salaries are paid to other executive officers of Penns Woods. The Board of Directors of Penns Woods, or applicable Board Committee, shall review Executive’s base salary annually and may, from time to time, in its discretion increase Executive’s base salary. Any and all such increases in base salary shall be deemed to constitute amendments to this subsection to reflect the increased amounts, effective as of the dates established for such increases by appropriate corporate action.”
5. Amendment of Section 4(f) of the Employment Agreement. Section 4(f) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“(f) Cellular Phone and Phone Number. In the event that Executive’s employment with Penns Woods terminates for any reason, Executive shall be permitted to retain the cellular telephone provided by the Company to Executive, including the cellular phone number. Expenses related to use of any cellular telephone retained by Executive following a termination of employment shall be paid by Executive.”
6. Amendment of Section 5(a) of the Employment Agreement. Section 5(a) of the Employment Agreement is hereby amended and restated in its entirety to read as follows:
“(a) Benefits. If a Change in Control (as defined below) shall occur and concurrently therewith or during a period of twenty-four (24) months thereafter Executive’s employment hereunder is terminated by Penns Woods without Cause (other than for the reasons set forth in Section 3(d)) or by Executive with Good Reason (as defined below), Executive shall be entitled to receive a lump-sum cash payment, no later than thirty (30) days following the date of such termination, in an amount equal to two (2.0) times the sum of (i) Executive’s annual base salary then in effect (or immediately prior to any reduction resulting in a termination for Good Reason) and (ii) the average of the last three (3) annual bonuses paid to Executive. In addition, during the twenty four (24) month period following Executive’s termination of employment that is subject to this Section 6(a), Executive shall be permitted to continue participation in, and Penns Woods shall maintain the same level of contribution for, Executive’s participation in the medical/health insurance plan or program in effect with respect to Executive during the one (1) year period prior to his termination of employment, or, if Penns Woods is not permitted to provide such benefits because Executive is no longer an employee or as a result of any applicable legal requirement, Executive shall receive a dollar amount, on or within thirty (30) days following the date of termination, equal to the cost to Executive of obtaining such benefits (or substantially similar benefits).”
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7. Ratification of Agreement. Except as otherwise provided in this Amendment to Employee Agreement, all terms and conditions of the Employment Agreement remain in full force and effect, and nothing contained in this Amendment to Employment Agreement shall be deemed to alter or amend any provision of the Employment Agreement except as specifically provided herein. References in the Employment Agreement to the “Agreement” shall be deemed to be references to the Agreement as amended hereby.
8. Waiver. No provision of this Amendment to Employment Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by Executive and Penns Woods. No waiver by any party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Amendment to Employment Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
9. Assignment. This Amendment to Employment Agreement shall not be assignable by any party, except by Penns Woods to any affiliated company or to any successor in interest to its businesses.
10. Entire Agreement. This Amendment to Employment Agreement contains the entire agreement of the parties relating to the subject matter hereof.
11. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflict of laws principles.
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IN WITNESS WHEREOF, the parties have executed this Amendment to Employment Agreement as of the date first above written.
| PENNS WOODS BANCORP, INC. |
| By: | /s/ Christine M. Barto |
| Name: Christine M. Barto | |
| Title: Senior Vice President/Chief Human Resource Officer |
| (“Penns Woods”) |
| /s/ Brian L. Knepp |
| Brian L. Knepp |
| (“Executive”) |
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