Pennsylvania
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333-90273
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23-3017653
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(State or other
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(Commission
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(IRS Employer
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jurisdiction of
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File Number)
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Identification No.)
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incorporation)
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Blakely and Drinker Streets, Dunmore, PA
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18512
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(Address of principal executive offices)
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(Zip Code)
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ITEM
5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements with Certain Officers
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1.
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Mr. Santaniello shall serve as President and Chief Executive Officer of the Company and the Bank, and Mr. O’Brien shall serve as Senior Executive Vice President of the Bank.
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2.
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The initial terms of each agreement is three (3) years beginning on January 1, 2011. Each Agreement shall automatically renew for additional one (1) year terms at the end of the first year of the Agreement and on each anniversary date unless notice to terminate is given by either party at least one hundred and eighty (180) days prior to the anniversary date of the Agreement. If notice to terminate is given, the agreement shall expire three (3) years after the next anniversary date.
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3.
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Each agreement shall terminate automatically:
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a.
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For “Cause”, as defined in each agreement, and upon written notice from the Board of Directors of Company or Bank to the executive; or,
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b.
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Upon voluntary termination of each agreement by the executive for “Good Reason”, as defined in the agreement.
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c.
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If the executive becomes disabled.
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4.
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If either agreement is terminated without “Cause”, involuntarily within one year after “Change in Control” or voluntarily by the executive for “Good Reason”, the executive shall be entitled to receive one (1) times his annual base salary if terminated prior to the first anniversary of the agreement and continuation of all life, disability, medical insurance and other normal health and welfare benefits for one (1) year.
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5.
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If either agreement is terminated without “Cause”, involuntarily within one year after “Change in Control” or voluntarily by the executive for “Good Reason”, the executive shall be entitled to receive and two (2) times his annual base salary if terminated on or after the first anniversary of the agreement and continuation of all life, disability, medical insurance and other normal health and welfare benefits for two (2) years.
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6.
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If the executive terminates his agreement without “Good Reason”, all of the executive’s rights terminate under the agreement except for arbitration.
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7.
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Mr. Santaniello shall receive an annual base salary of $205,000, subject to customary withholdings and taxes, which may be increased from time to time. Mr. O’Brien shall receive an annual base salary of $175,000, subject to customary withholdings and taxes, which may be increased from time to time.
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8.
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Each executive is entitled to be considered for bonuses each year, as determined in the Bank’s sole discretion, vacation and/or paid time off, as well as is entitled to participate in employee benefit plans.
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9.
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Upon termination of either agreement for any reason, each executive is subject to certain customary confidentiality and non-competition provisions for two (2) years.
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1.
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The term of the agreement begins March 23, 2011 and continues until any party gives notice of termination of employment for any reason, unless an agreement to effect a “Change in Control” as defined in the agreement, has been executed, and then the agreement only terminates if the executive is terminated for “Cause”, as defined in the agreement.
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2.
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If the executive is terminated or certain other changes in employment occur, as identified in the agreement, after a “Change in Control”, the executive shall be entitled to receive a lump sum equal to one (1) times his annual base salary and continuation of all life, disability, medical insurance and other normal health and welfare benefits for one (1) year.
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3.
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If the executive is terminated without cause and no change of control occurs, he shall be entitled to receive a lump sum equal to six (6) months of this annual base salary and continuation of all life, disability, medical insurance and other normal health and welfare benefits for six (6) months.
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4.
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The Agreement contains certain customary confidentiality and non-competition provisions.
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Exhibit Number
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Description
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99.1
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Employment Agreement between Fidelity D & D Bancorp, Inc., Fidelity Deposit and Discount Bank and Daniel J. Santaniello dated as of March 23, 2011.
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99.2
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Employment Agreement between Fidelity D & D Bancorp, Inc., Fidelity Deposit and Discount Bank and Timothy P. O’Brien dated as of March 23, 2011.
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99.3
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Change in Control and Severance Agreement Fidelity D & D Bancorp, Inc., Fidelity Deposit and Discount Bank and John T. Piszak dated as of March 23, 2011.
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FIDELITY D & D BANCORP, INC.
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(Registrant)
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Dated: March 29, 2011
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/s/ Salvatore R. DeFrancesco, Jr.
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Salvatore R. DeFrancesco, Jr.
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Treasurer and Chief Financial Officer
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EXHIBIT NO. | ||
99.1
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Employment Agreement between Fidelity D & D Bancorp, Inc., Fidelity Deposit and Discount Bank and Daniel J. Santaniello dated as of March 23, 2011.
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99.2
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Employment Agreement between Fidelity D & D Bancorp, Inc., Fidelity Deposit and Discount Bank and Timothy P. O’Brien dated as of March 23, 2011.
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99.3
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Change in Control and Severance Agreement Fidelity D & D Bancorp, Inc., Fidelity Deposit and Discount Bank and John T. Piszak dated as of March 23, 2011.
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1.
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Employment
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The Corporation and the Bank hereby employ Executive and Executive hereby accepts employment with the Corporation and the Bank, under the terms and conditions set forth in this Agreement.
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2.
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Duties of Executive
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Executive shall serve as the Chief Executive Officer and President of the Corporation and of the Bank reporting only to the Boards of Directors of the Corporation and the Bank. Executive shall have such other duties and hold such other titles as may be given to him from time to time by the Boards of Directors of the Corporation and the Bank provided that such duties are consistent with the Executive’s position as Chief Executive Officer and President.
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3.
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Engagement in Other Employment
. Executive shall devote all of his working time, ability and attention to the business of the Corporation and the Bank and/or their subsidiaries or affiliates, during the term of this Agreement. The Executive shall notify the Boards of Directors of the Corporation and of the Bank in writing before the Executive engages in any other business or commercial duties or pursuits, including but not limited to, directorships of other companies. Under no circumstances may the Executive engage in any business or commercial activities, duties or pursuits which compete with the business or commercial activities of the Corporation, the Bank and/or any of their subsidiaries or affiliates nor may the Executive serve as a director or officer or in any other capacity in a company which competes with the Corporation, the Bank and/or any of their subsidiaries or affiliates. Executive shall not be precluded, however, upon written notification to the Boards of Directors, from engaging in voluntary or philanthropic endeavors, from engaging in activities designed to maintain and improve his professional skills, or from engaging in activities incident or necessary to personal investments, so long as they are, in the Boards’ of Directors reasonable opinion, not in conflict with or detrimental to the Executive’s rendition of services on behalf of the Corporation, the Bank and/or any of their subsidiaries or affiliates.
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4.
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Term of Agreement
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(a)
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This Agreement shall be for a three (3) year period (the “Employment Period”) beginning January 1, 2011, and if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end three (3) years later (the “Initial Term”). The Employment Period shall be extended automatically for one (1) additional year on the first annual anniversary date of the commencement of the Initial Term (the date first above written), and then on each anniversary date of this Agreement thereafter, unless the Corporation, the Bank or Executive gives contrary written notice to the other not less than one hundred eighty (180) days before any such anniversary date so that upon the anniversary date if notice had not been previously given as provided in this Section 4(a), the Employment Period shall be and continue for a three (3) year period thereafter. References in the Agreement to “Employment Period” shall refer to the Initial Term of this Agreement and any extensions to the initial term of this Agreement. It is the intention of the parties that this Agreement be “Evergreen” unless (i) either party gives written notice to the other party of his or its intention not to renew this Agreement as provided above or (ii) this Agreement is terminated pursuant to Section 4(b) hereof.
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(b)
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Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically for Cause (as defined herein) upon written notice from the Board of Directors of the Corporation or the Bank to Executive. As used in this Agreement, “Cause” shall mean any of the following:
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(c)
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Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Executive’s voluntary termination of employment for Good Reason. The term “Good Reason” shall mean (i) the assignment of duties and responsibilities inconsistent with Executive’s status as Chief Executive Officer and President of the Corporation or of the Bank, (ii) a reassignment which requires Executive to move his principal residence or his office more than fifty (50) miles from the Bank’s principal executive office immediately prior to this Agreement, (iii) any reduction in the Executive’s Annual Base Salary as in effect on the date hereof or as the same may be increased from time to time unless such reduction is the result of a national financial depression or national or bank emergency or such reduction is part of a reduction applicable to all employees, or (iv) any failure of the Bank to provide the Executive with benefits at least as favorable as those enjoyed by the Executive during the Employment Period under any of the pension, life insurance, medical, health and accident, disability or other employee plans of the Bank, or the taking of any action that would materially reduce any of such benefits unless such reduction is part of a reduction applicable to all employees.
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(d)
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Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Executive’s Disability and Executive’s rights under this Agreement shall cease as of the date of such termination; provided, however, that Executive shall nevertheless be entitled to receive any amount payable under any disability plan of the Bank for which he is eligible. Disability shall have the meaning provided in Code Section 409A and the regulations promulgated thereunder.
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(e)
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In the event that Executive terminates his employment without Good Reason as defined in Section 4(c), all of Executive’s rights under this Agreement shall cease as of the effective date of such termination, except for the rights under Paragraph 20 hereof with respect to arbitration.
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(f)
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Upon the expiration of the Employment Period and this Agreement, all of Executive’s rights under this Agreement shall cease; however, the provisions of Paragraphs 9 and 10 shall survive the expiration of the Employment Period and the termination of this Agreement.
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(g)
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Executive agrees that in the event his employment under this Agreement is terminated, Executive shall resign as a director of the Corporation and the Bank, or any affiliate or subsidiary thereof, if he is then serving as a director of any of such entities.
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5.
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Employment Period Compensation
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(a)
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Annual Base Salary
. For services performed by Executive under this Agreement, the Bank shall pay Executive an Annual Base Salary during the Employment Period at the rate of $205,000 per year, minus applicable withholdings and deductions, payable at the same times as salaries are payable to other executive employees of the Bank. The Bank may, from time to time, increase Executive’s Annual Base Salary or in the event of a result of a national financial depression or national or bank emergency or a reduction applicable to all employees reduce Executive’s Annual Base Salary, and any and all such increases or reductions shall be deemed to constitute amendments to this Section 5(a) to reflect the increased or reduced amounts, effective as of the date established for such increases or reductions by the Board of Directors of the Bank or any committee of such Board.
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(b)
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Bonus
. For services performed by Executive under this Agreement, the Bank may, from time to time, pay a bonus or bonuses to Executive as the Bank or an affiliate thereof, in its sole discretion, deems appropriate. The payment of any such bonuses shall not reduce or otherwise affect any other obligation of the Bank to Executive provided for in this Agreement.
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(c)
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Paid Time-off
. During the term of this Agreement, Executive shall be entitled to paid time-off in accordance with the manner and amount provided under the paid time-off plan currently in effect.
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(d)
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Employee Benefit Plans
. During the term of this Agreement, Executive shall be entitled to participate in or receive the benefits of any employee benefit plan currently in effect at the Bank, subject to the terms of said plan, until such time that the Board of Directors of the Bank authorize a change in such benefits. The Bank shall not make any changes in such plans or benefits which would adversely affect Executive’s rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of the Bank and does not result in a proportionately greater adverse change in the rights of or benefits to Executive as compared with any other executive officer of the Bank. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 5(a) hereof.
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(e)
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Business Expenses
. During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him, which are properly accounted for, in accordance with the policies and procedures established by the Board of Directors of the Bank for its executive officers.
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(f)
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Automobile
. Executive shall be provided with a company-owned or leased vehicle during the Employment Period. The vehicle is to be used for Corporation or Bank business and/or business development; provided, however, that Executive may also employ such vehicle for personal use in accordance with applicable tax rules and at Executive’s expense.
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(g)
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Club Memberships
. Corporation shall provide payment of annual dues and monthly business development expenses for Executive in connection with a club membership to a golf club that shall be mutually determined by the parties.
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6.
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Termination of Employment Following Change in Control
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(a)
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If a Change in Control (as defined in Section 6(b) of this Agreement) shall occur and Executive experiences an involuntary separation of service as defined in Code Section 409A (“Separation of Service”) without Cause within one year of the Change of Control, then the provisions of Section 7 of this Agreement shall apply.
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(b)
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As used in this Agreement, “Change in Control” shall mean the change in ownership or effective control of the Corporation as further defined by Treasury Regulation §1.409a-3(i)(5). A change in control of the Bank shall not constitute a change in control under this Agreement.
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7.
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Rights in Event of Termination Following a Change in Control
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(a)
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In the event that Executive is involuntarily terminated without Cause after a Change in Control (as defined in Section 6(b) of this Agreement) and such termination of employment constitutes a Separation of Service, Executive shall be entitled to receive the compensation and benefits set forth below:
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(b)
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Executive shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefit provided for in this Section 7 shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.
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8.
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Rights in Event of Termination of Employment Absent Change in Control
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(a)
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In the event that Executive’s employment is involuntarily terminated by the Corporation and the Bank without Cause and no Change in Control shall have occurred at the date of such termination and such termination constitutes a Separation of Service, and
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(b)
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Executive shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefit provided for in this Section 8 shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.
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9.
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Covenant Not to Compete
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(a)
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Executive hereby acknowledges and recognizes the highly competitive nature of the business of the Corporation and the Bank and accordingly agrees that, during and for two years regardless of the reason for termination, Executive shall not, except as otherwise permitted in writing by the Bank:
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(b)
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It is expressly understood and agreed that, although Executive and the Corporation and the Bank consider the restrictions contained in Section 9(a) hereof reasonable for the purpose of preserving for the Corporation and the Bank and their subsidiaries their good will and other proprietary rights, if a final judicial determination is made by a court having jurisdiction that the time or territory or any other restriction contained in Section 9(a) hereof is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of Section 9(a) hereof shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.
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10.
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Unauthorized Disclosure
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During the term of his employment hereunder, or at any later time, the Executive shall not, without the written consent of the Board of Directors of the Bank or a person authorized thereby, knowingly disclose to any person, other than an employee of the Corporation or the Bank or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of the Bank, any material confidential information obtained by him while in the employ of the Bank with respect to any of the Corporation’s and the Bank’s services, products, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure of which could be or will be damaging to the Corporation or the Bank; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or any person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by the Corporation and the Bank or any information that must be disclosed as required by law.
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11.
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Work Made for Hire.
Any work performed by the Executive under this Agreement should be considered a “Work Made for Hire” as the phrase is defined by the Copyright Act of 1976 and shall be owned by and for the express benefit of Bank and its subsidiaries and affiliates. In the event it should be established that such work does not qualify as a Work Made for Hire, the Executive agrees to and does hereby assign to Bank, and its affiliates and subsidiaries, all of his rights, title, and/or interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and propriety rights.
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12.
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Return of Company Property and Documents.
The Executive agrees that, at the time of termination of his employment, regardless of the reason for termination, he will deliver to Bank and its subsidiaries and affiliates, any and all company property, including, but not limited to, keys, security codes or passes, mobile telephones, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, software programs, equipment, other documents or property, or reproductions of any of the aforementioned items developed or obtained by the Executive during the course of his employment.
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13.
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Liability Insurance
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The Bank shall use its best efforts to obtain liability insurance coverage for the Executive under an insurance policy with similar terms as that which is currently covering officers and directors of Bank against lawsuits, arbitrations or other legal or regulatory proceedings.
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14.
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Notices
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Except as otherwise provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Executive’s residence, in the case of notices to Executive, and to the principal executive office of the Bank, in the case of notices to the Bank.
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15.
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Waiver
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No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and an executive officer specifically designated by the Board of Directors of the Bank. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this 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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16.
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Assignment
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This Agreement shall not be assignable by any party, except by the Corporation or the Bank to any successor in interest to its respective businesses.
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17.
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Entire Agreement
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This Agreement supersedes any and all agreements, either oral or in writing, between the parties with respect to the employment of the Executive by the Bank and/or Corporation, including the Executive Employment Agreement among Fidelity D&D Bancorp, Inc., Fidelity Deposit and Discount Bank and Daniel J. Santaniello dated February 28, 2008. This Agreement contains all the covenants and agreements between the parties with respect to employment.
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18.
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Successors; Binding Agreement
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The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses and/or assets of Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Bank would be required to perform it if no such succession had taken place. Failure by Bank to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute a breach of this Agreement and the provisions of Section 7 of this Agreement shall apply. As used in this Agreement, “Corporation” and “Bank” shall mean Corporation and Bank, as defined previously and any successor to their respective businesses and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
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(b)
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This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If Executive should die after a Change in Control or following termination of Executive’s employment without Cause, and any amounts would be payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or, if there is no such designee, to Executive’s estate.
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19.
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Code Section 409A
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(a)
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Any payments made pursuant to this Agreement, to the extent of payments made from the date of termination through March 15th of the calendar year following such date, are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) and thus payable pursuant to the “short-term deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4); to the extent such payments are made following said March 15th, they are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) made upon an involuntary termination from service and payable pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), to the maximum extent permitted by said provision.
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(b)
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The parties hereto intend that any and all post-employment compensation under this Agreement satisfy the requirements of Section 409A or an exception or exclusion therefrom to avoid the imposition of any accelerated or additional taxes pursuant to Section 409A. Any terms not specifically defined shall have the meaning as set forth in Section 409A.
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(c)
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If when the Executive’s employment terminates, the Executive is a “specified employee,” as defined in Code Section 409A(a)(2)(B)(i), then despite any provision of this Agreement or other plan or agreement to the contrary, the Executive will not be entitled to the payments until the earliest of: (a) the date that is at least six months after the Executive’s Separation from Service for reasons other than the Executive’s death, (b) the date of the Executive’s death, or (c) any earlier date that does not result in additional tax or interest to the Executive under Code Section 409A. As promptly as possible after the end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a single lump sum with any remaining payments to commence in accordance with the terms of this Agreement or other applicable plan or agreement.
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(d)
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Notwithstanding the foregoing, no payment shall be made pursuant to this Agreement unless such termination of employment is a “separation of service” as defined in Code Section 409A.
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20.
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Arbitration
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The Bank and Executive recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement (except for any enforcement sought with respect to Sections 9, 10, 11 or 12 which may be litigated in court, including an action for injunction or other relief) are to be submitted for resolution, in Dunmore, Pennsylvania, to the American Arbitration Association (the “Association”) in accordance with the Association’s National Rules for the Resolution of Employment Disputes or other applicable rules then in effect (“Rules”). Bank or Executive may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. Bank and Executive may, as a matter of right, mutually agree on the appointment of a particular arbitrator from the Association’s pool. The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the Commonwealth of Pennsylvania but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, Bank and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein or any enforcement sought with respect to Sections 9, 10, 11 or 12 of this Agreement, including an action for injunction or other relief.
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21.
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Code Sections 280G and 4999
. In the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result in the imposition of an excise tax under Section 4999 of the Code, such payments shall be retroactively reduced to the extent necessary to avoid such excise tax imposition. Upon written notice to Executive, together with calculations of Corporation’s independent auditors, Executive shall remit to Corporation the amount of the reduction plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to the Executive is determined to be non-deductible pursuant to the regulations promulgated under Section 280G of the Code, then Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G.
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22.
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Validity
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The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
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23.
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Applicable Law
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This Agreement shall be governed by and construed in accordance with the domestic, internal laws of the Commonwealth of Pennsylvania, without regard to its conflicts of laws principles.
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24.
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Headings
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The section headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
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ATTEST:
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FIDELITY D & D BANCORP, INC.
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/s/ Salvatore R. DeFrancesco
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By
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/s/ Patrick J. Dempsey
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Patrick Dempsey
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Chairman
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ATTEST:
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FIDELITY DEPOSIT AND DISCOUNT BANK
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/s/ Salvatore R. DeFrancesco
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By
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/s/ Patrick J. Dempsey
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Patrick Dempsey
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Chairman
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WITNESS:
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EXECUTIVE
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/s/ Debra L. Alimenti
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/s/ Daniel J. Santaniello
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Daniel J. Santaniello
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1.
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Employment
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The Bank hereby employs Executive and Executive hereby accepts employment with the Bank, under the terms and conditions set forth in this Agreement.
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2.
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Duties of Executive
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Executive shall serve as the Senior Executive Vice President of the Bank reporting only to the Chief Executive Officer of the Corporation and the Bank. Executive shall have such other duties and hold such other titles as may be given to him from time to time by the Chief Executive Officer or the Boards of Directors of the Corporation and the Bank provided that such duties are consistent with the Executive’s position as Senior Executive Vice President.
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3.
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Engagement in Other Employment
. Executive shall devote all of his working time, ability and attention to the business of the Corporation and the Bank and/or their subsidiaries or affiliates, during the term of this Agreement. The Executive shall notify the CEO and President of the Corporation and of the Bank in writing before the Executive engages in any other business or commercial duties or pursuits, including but not limited to, directorships of other companies. Under no circumstances may the Executive engage in any business or commercial activities, duties or pursuits which compete with the business or commercial activities of the Corporation, the Bank and/or any of their subsidiaries or affiliates nor may the Executive serve as a director or officer or in any other capacity in a company which competes with the Corporation, the Bank and/or any of their subsidiaries or affiliates. Executive shall not be precluded, however, upon written notification to the CEO and President, from engaging in voluntary or philanthropic endeavors, from engaging in activities designed to maintain and improve his professional skills, or from engaging in activities incident or necessary to personal investments, so long as they are, in the CEO and President’s reasonable opinion, not in conflict with or detrimental to the Executive’s rendition of services on behalf of the Corporation, the Bank and/or any of their subsidiaries or affiliates.
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4.
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Term of Agreement
.
|
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(a)
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This Agreement shall be for a
three (3) year period
(the “Employment Period”) beginning January 1, 2011, and if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end three (3) years later (the “Initial Term”). The Employment Period shall be extended automatically for one (1) additional year on the first annual anniversary date of the commencement of the Initial Term (the date first above written), and then on each anniversary date of this Agreement thereafter, unless the Corporation, the Bank or Executive gives contrary written notice to the other not less than one hundred eighty (180) days before any such anniversary date so that upon the anniversary date if notice had not been previously given as provided in this Section 4(a), the Employment Period shall be and continue for a three (3) year period thereafter. References in the Agreement to “Employment Period” shall refer to the Initial Term of this Agreement and any extensions to the initial term of this Agreement. It is the intention of the parties that this Agreement be “Evergreen” unless (i) either party gives written notice to the other party of his or its intention not to renew this Agreement as provided above or (ii) this Agreement is terminated pursuant to Section 4(b) hereof.
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(b)
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Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically for Cause (as defined herein) upon written notice from the Board of Directors of the Corporation or the Bank to Executive. As used in this Agreement, “Cause” shall mean any of the following:
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(c)
|
Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Executive’s voluntary termination of employment for Good Reason. The term “Good Reason” shall mean (i) the assignment of duties and responsibilities inconsistent with Executive’s status as Senior Executive Vice President of the Corporation or of the Bank, (ii) a reassignment which requires Executive to move his principal residence or his office more than fifty (50) miles from the Bank’s principal executive office immediately prior to this Agreement, (iii) any reduction in the Executive’s Annual Base Salary as in effect on the date hereof or as the same may be increased from time to time unless such reduction is the result of a national financial depression or national or bank emergency or such reduction is part of a reduction applicable to all employees, or (iv) any failure of the Bank to provide the Executive with benefits at least as favorable as those enjoyed by the Executive during the Employment Period under any of the pension, life insurance, medical, health and accident, disability or other employee plans of the Bank, or the taking of any action that would materially reduce any of such benefits unless such reduction is part of a reduction applicable to all employees.
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(d)
|
Notwithstanding the provisions of Section 4(a) of this Agreement, this Agreement shall terminate automatically upon Executive’s Disability and Executive’s rights under this Agreement shall cease as of the date of such termination; provided, however, that Executive shall nevertheless be entitled to receive any amount payable under any disability plan of the Bank for which he is eligible. Disability shall have the meaning provided in Code Section 409A and the regulations promulgated thereunder.
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(e)
|
In the event that Executive terminates his employment without Good Reason as defined in Section 4(c), all of Executive’s rights under this Agreement shall cease as of the effective date of such termination, except for the rights under Paragraph 20 hereof with respect to arbitration.
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(f)
|
Upon the expiration of the Employment Period and this Agreement, all of Executive’s rights under this Agreement shall cease; however, the provisions of Paragraphs 9 and 10 shall survive the expiration of the Employment Period and the termination of this Agreement.
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(g)
|
Executive agrees that in the event his employment under this Agreement is terminated, Executive shall resign as a director of the Corporation and the Bank, or any affiliate or subsidiary thereof, if he is then serving as a director of any of such entities.
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5.
|
Employment Period Compensation
.
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(a)
|
Annual Base Salary
. For services performed by Executive under this Agreement, the Bank shall pay Executive an Annual Base Salary during the Employment Period at the rate of $175,000 per year, minus applicable withholdings and deductions, payable at the same times as salaries are payable to other executive employees of the Bank. The Bank may, from time to time, increase Executive’s Annual Base Salary or in the event of a result of a national financial depression or national or bank emergency or a reduction applicable to all employees reduce Executive’s Annual Base Salary, and any and all such increases or reductions shall be deemed to constitute amendments to this Section 5(a) to reflect the increased or reduced amounts, effective as of the date established for such increases or reductions by the Board of Directors of the Bank or any committee of such Board.
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(b)
|
Bonus
. For services performed by Executive under this Agreement, the Bank may, from time to time, pay a bonus or bonuses to Executive as the Bank or an affiliate thereof, in its sole discretion, deems appropriate. The payment of any such bonuses shall not reduce or otherwise affect any other obligation of the Bank to Executive provided for in this Agreement.
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(c)
|
Paid Time-off
. During the term of this Agreement, Executive shall be entitled to paid time-off in accordance with the manner and amount provided under the paid time-off plan currently in effect.
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(d)
|
Employee Benefit Plans
. During the term of this Agreement, Executive shall be entitled to participate in or receive the benefits of any employee benefit plan currently in effect at the Bank, subject to the terms of said plan, until such time that the Board of Directors of the Bank authorize a change in such benefits. The Bank shall not make any changes in such plans or benefits which would adversely affect Executive’s rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of the Bank and does not result in a proportionately greater adverse change in the rights of or benefits to Executive as compared with any other executive officer of the Bank. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 5(a) hereof.
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(e)
|
Business Expenses
. During the term of this Agreement, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by him, which are properly accounted for, in accordance with the policies and procedures established by the Board of Directors of the Bank for its executive officers.
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6.
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Termination of Employment Following Change in Control
.
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(a)
|
If a Change in Control (as defined in Section 6(b) of this Agreement) shall occur and Executive experiences an involuntary separation of service as defined in Code Section 409A (“Separation of Service”) without Cause within one year of the Change of Control, then the provisions of Section 7 of this Agreement shall apply.
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(b)
|
As used in this Agreement, “Change in Control” shall mean the change in ownership or effective control of the Corporation as further defined by Treasury Regulation §1.409a-3(i)(5). A change in control of the Bank shall not constitute a change in control under this Agreement.
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7.
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Rights in Event of Termination Following a Change in Control
.
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(a)
|
In the event that Executive is involuntarily terminated without Cause after a Change in Control (as defined in Section 6(b) of this Agreement) and such termination of employment constitutes a Separation of Service, Executive shall be entitled to receive the compensation and benefits set forth below:
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(b)
|
Executive shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefit provided for in this Section 7 shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.
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8.
|
Rights in Event of Termination of Employment Absent Change in Control
.
|
|
(a)
|
In the event that Executive’s employment is involuntarily terminated by the Corporation and the Bank without Cause and no Change in Control shall have occurred at the date of such termination and such termination constitutes a Separation of Service, and
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(b)
|
Executive shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. Unless otherwise agreed to in writing, the amount of payment or the benefit provided for in this Section 8 shall not be reduced by any compensation earned by Executive as the result of employment by another employer or by reason of Executive’s receipt of or right to receive any retirement or other benefits after the date of termination of employment or otherwise.
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9.
|
Covenant Not to Compete
.
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|
(a)
|
Executive hereby acknowledges and recognizes the highly competitive nature of the business of the Corporation and the Bank and accordingly agrees that, during and for two years regardless of the reason for termination, Executive shall not, except as otherwise permitted in writing by the Bank:
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(b)
|
It is expressly understood and agreed that, although Executive and the Corporation and the Bank consider the restrictions contained in Section 9(a) hereof reasonable for the purpose of preserving for the Corporation and the Bank and their subsidiaries their good will and other proprietary rights, if a final judicial determination is made by a court having jurisdiction that the time or territory or any other restriction contained in Section 9(a) hereof is an unreasonable or otherwise unenforceable restriction against Executive, the provisions of Section 9(a) hereof shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.
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10.
|
Unauthorized Disclosure
.
During the term of his employment hereunder, or at any later time, the Executive shall not, without the written consent of the Board of Directors of the Bank or a person authorized thereby, knowingly disclose to any person, other than an employee of the Corporation or the Bank or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive of the Bank, any material confidential information obtained by him while in the employ of the Bank with respect to any of the Corporation’s and the Bank’s services, products, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure of which could be or will be damaging to the Corporation or the Bank; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive or any person with the assistance, consent or direction of the Executive) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by the Corporation and the Bank or any information that must be disclosed as required by law.
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11.
|
Work Made for Hire.
Any work performed by the Executive under this Agreement should be considered a “Work Made for Hire” as the phrase is defined by the Copyright Act of 1976 and shall be owned by and for the express benefit of Bank and its subsidiaries and affiliates. In the event it should be established that such work does not qualify as a Work Made for Hire, the Executive agrees to and does hereby assign to Bank, and its affiliates and subsidiaries, all of his rights, title, and/or interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and propriety rights.
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12.
|
Return of Company Property and Documents.
The Executive agrees that, at the time of termination of his employment, regardless of the reason for termination, he will deliver to Bank and its subsidiaries and affiliates, any and all company property, including, but not limited to, keys, security codes or passes, mobile telephones, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, software programs, equipment, other documents or property, or reproductions of any of the aforementioned items developed or obtained by the Executive during the course of his employment.
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13.
|
Liability Insurance
.
The Bank shall use its best efforts to obtain liability insurance coverage for the Executive under an insurance policy with similar terms as that which is currently covering officers and directors of Bank against lawsuits, arbitrations or other legal or regulatory proceedings.
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14.
|
Notices
.
Except as otherwise provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Executive’s residence, in the case of notices to Executive, and to the principal executive office of the Bank, in the case of notices to the Bank.
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15.
|
Waiver
.
No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and an executive officer specifically designated by the Board of Directors of the Bank. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this 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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16.
|
Assignment
.
This Agreement shall not be assignable by any party, except by the Corporation or the Bank to any successor in interest to its respective businesses.
|
17.
|
Entire Agreement
.
This Agreement supersedes any and all agreements, either oral or in writing, between the parties with respect to the employment of the Executive by the Bank and/or Corporation, including the Executive Employment Agreement among Fidelity D&D Bancorp, Inc., Fidelity Deposit and Discount Bank and Timothy P. O’Brien dated January 3, 2008. This Agreement contains all the covenants and agreements between the parties with respect to employment.
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18.
|
Successors; Binding Agreement
.
|
|
(a)
|
The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the businesses and/or assets of Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Bank would be required to perform it if no such succession had taken place. Failure by Bank to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute a breach of this Agreement and the provisions of Section 7 of this Agreement shall apply. As used in this Agreement, “Corporation” and “Bank” shall mean Corporation and Bank, as defined previously and any successor to their respective businesses and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise.
|
|
This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If Executive should die after a Change in Control or following termination of Executive’s employment without Cause, and any amounts would be payable to Executive under this Agreement if Executive had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee, or other designee, or, if there is no such designee, to Executive’s estate.
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19.
|
Code Section 409A
|
|
(a)
|
Any payments made pursuant to this Agreement, to the extent of payments made from the date of termination through March 15th of the calendar year following such date, are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) and thus payable pursuant to the “short-term deferral” rule set forth in Treas. Reg. §1.409A-1(b)(4); to the extent such payments are made following said March 15th, they are intended to constitute separate payments for purposes of Treas. Reg. §1.409A-2(b)(2) made upon an involuntary termination from service and payable pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), to the maximum extent permitted by said provision.
|
|
(b)
|
The parties hereto intend that any and all post-employment compensation under this Agreement satisfy the requirements of Section 409A or an exception or exclusion therefrom to avoid the imposition of any accelerated or additional taxes pursuant to Section 409A. Any terms not specifically defined shall have the meaning as set forth in Section 409A.
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|
(c)
|
If when the Executive’s employment terminates, the Executive is a “specified employee,” as defined in Code Section 409A(a)(2)(B)(i), then despite any provision of this Agreement or other plan or agreement to the contrary, the Executive will not be entitled to the payments until the earliest of: (a) the date that is at least six months after the Executive’s Separation from Service for reasons other than the Executive’s death, (b) the date of the Executive’s death, or (c) any earlier date that does not result in additional tax or interest to the Executive under Code Section 409A. As promptly as possible after the end of the period during which payments are delayed under this provision, the entire amount of the delayed payments shall be paid to the Executive in a single lump sum with any remaining payments to commence in accordance with the terms of this Agreement or other applicable plan or agreement.
|
|
(d)
|
Notwithstanding the foregoing, no payment shall be made pursuant to this Agreement unless such termination of employment is a “separation of service” as defined in Code Section 409A.
|
20.
|
Arbitration
.
The Bank and Executive recognize that in the event a dispute should arise between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement (except for any enforcement sought with respect to Sections 9, 10, 11 or 12 which may be litigated in court, including an action for injunction or other relief) are to be submitted for resolution, in Dunmore, Pennsylvania, to the American Arbitration Association (the “Association”) in accordance with the Association’s National Rules for the Resolution of Employment Disputes or other applicable rules then in effect (“Rules”). Bank or Executive may initiate an arbitration proceeding at any time by giving notice to the other in accordance with the Rules. Bank and Executive may, as a matter of right, mutually agree on the appointment of a particular arbitrator from the Association’s pool. The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the Commonwealth of Pennsylvania but shall be bound by the substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper jurisdiction. Following written notice of a request for arbitration, Bank and Executive shall be entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein or any enforcement sought with respect to Sections 9, 10, 11 or 12 of this Agreement, including an action for injunction or other relief.
|
21.
|
Code Sections 280G and 4999
. In the event the payment described herein, when added to all other amounts or benefits provided to or on behalf of the Executive in connection with his termination of employment, would result in the imposition of an excise tax under Section 4999 of the Code, such payments shall be retroactively reduced to the extent necessary to avoid such excise tax imposition. Upon written notice to Executive, together with calculations of Corporation’s independent auditors, Executive shall remit to Corporation the amount of the reduction plus such interest as may be necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing or any other provision of this contract to the contrary, if any portion of the amount herein payable to the Executive is determined to be non-deductible pursuant to the regulations promulgated under Section 280G of the Code, then Corporation shall be required only to pay to Executive the amount determined to be deductible under Section 280G.
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22.
|
Validity
.
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
|
23.
|
Applicable Law
.
This Agreement shall be governed by and construed in accordance with the domestic, internal laws of the Commonwealth of Pennsylvania, without regard to its conflicts of laws principles.
|
24.
|
Headings
.
The section headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
|
ATTEST:
|
FIDELITY D & D BANCORP, INC.
|
||
/s/ Lynn Hollenbeck
|
By
|
/s/ Daniel J. Santaniello
|
|
Daniel J. Santaniello
|
|||
President & Chief Executive Officer
|
|||
ATTEST:
|
FIDELITY DEPOSIT AND DISCOUNT BANK
|
||
/s/ Lynn Hollenbeck
|
By
|
/s/ Daniel J. Santaniello
|
|
Daniel J. Santaniello
|
|||
President & Chief Executive Officer
|
|||
WITNESS:
|
EXECUTIVE
|
||
/s/ Debra L. Alimenti
|
/
s/ Timothy P. O’Brien
|
||
Timothy P. O’Brien
|
ATTEST:
|
Fidelity D&D Bancorp, Inc.
|
||
/s/ Debra L. Alimenti
|
By
|
/s/ Daniel J. Santaniello
|
|
Daniel J. Santaniello
|
|||
President & Chief Executive Officer
|
|||
The Fidelity Deposit and Discount Bank
|
|||
/s/ Debra L. Alimenti
|
By
|
/s/ Daniel J. Santaniello
|
|
Daniel J. Santaniello
|
|||
President & Chief Executive Officer
|
|||
WITNESS:
|
Executive
|
||
/s/ Debra L. Alimenti
|
/s/ John T. Piszak
|
||
John T. Piszak
|