EXHIBIT 10.8
EMPLOYMENT AGREEMENT
AGREEMENT made this 29th day of October, 1997, by and between COMMUNITY
BANKS, INC., a Pennsylvania corporation, ("Community"), THE PEOPLES STATE BANK,
a Pennsylvania state chartered banking institution ("Peoples") and ANTHONY N.
LEO, an adult individual (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by Peoples, as Peoples' Chief
General Counsel, pursuant to a certain Employment Agreement between Peoples and
Executive, dated May 3, 1994; and
WHEREAS, Community and Peoples have entered into a certain Agreement and
Plan of Reorganization of even date (the "Merger Agreement") whereby Peoples
will be merged with and into PSB Interim Bank, a Pennsylvania state chartered
banking institution, as of the Effective Date of the Merger (as defined therein)
and, upon the Effective Date of the Merger, PSB Interim Bank shall change its
name to The Peoples State Bank; and
WHEREAS, as of the Effective Date of the Merger, Peoples will be a
wholly-owned subsidiary of Community; and
WHEREAS, for purposes of the Agreement, Community and Peoples are referred
to collectively as the "Company."
WHEREAS, the Company wishes to employ Executive and Executive wishes to be
employed by Company, as an Executive Vice President and the Chief Administrative
Officer of Peoples, upon the terms set forth below, as of the Effective Date of
the Merger; and
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Length of Employment. Company agrees to employ Executive for a
rolling term of two (2) years commencing on the Effective Date of the Merger. On
each anniversary date of the Effective Date of the Merger, the term of this
Agreement shall automatically renew and extend for an additional one (1) year
period unless either party shall have provided notice of its intent not to renew
within sixty (60) days prior to such anniversary date. Upon the date of any
Change in Control (as defined in Paragraph 8) should occur, the term of this
Agreement shall automatically renew and be extended for two (2) years from such
date.
2. Position and Responsibilities. During the course of his employment,
Executive shall (i) perform the duties and responsibilities of an Executive Vice
President of Company and Chief Administrative Officer of Peoples, (ii) perform
such other senior management duties and responsibilities as the Board of
Directors and CEO may direct, and (iii) shall be afforded the title and
privileges associated with being at least an Executive Vice President of the
Company.
3. Performance of Responsibilities, Loyalty.
a. Executive shall devote his full time to the performance of his
responsibilities hereunder. Executive shall at all times faithfully,
industriously and to the best of his abilities perform all duties necessary
to carry out his responsibilities.
b. Throughout the term hereof, Executive shall not at any time or
place, either directly or indirectly engage in any business or activity in
competition with or adverse to the interests of Company.
4. Compensation.
a. During the initial calendar year of the term of this Agreement,
Company shall pay to Executive a base salary of not less than $90,000.00.
During successive calendar years, the Company may, in its discretion,
adjust the base salary; provided that it shall at no point be reduced below
the initial base salary. This salary shall be paid in regular,
substantially equal installments in accordance with the regular payroll
practices of the Company, less any and all applicable deductions for taxes,
medical benefits, etc.
b. In addition to base salary, during the term of this Agreement,
Company shall provide Executive with an automobile, including all related
maintenance, repairs, insurance and other costs. In lieu of providing
Executive with an automobile, Company may provide Executive with a
reasonable allowance on a monthly basis, which allowance shall cover
Executive's costs associated with an automobile, including without
limitation, lease or installment payments, maintenance, repairs, insurance
and other costs.
5. Benefits.
a. Executive shall receive employee benefits from Company no less
favorable than the employee benefits he received as an employee of Peoples
and, in addition, shall be eligible to participate in all employee benefit
plans generally available to executive officers of Company, including
without limitation, health and dental insurance plans, group life insurance
plans, retirement plans, incentive compensation plans, supplemental
executive retirement plans and stock option, grant or appreciation rights
plans. The participation of Executive in each benefit plan described in
this paragraph shall be subject to the terms of the applicable plan and to
procedures generally applicable to Company officers; provided, however,
that Executive shall receive credit for years of service with Peoples for
vesting purposes only. Nothing in this paragraph shall obligate the Company
to offer any such plans.
b. Executive shall be provided holiday pay, personal days, sick leave,
short-term disability and long-term disability in accordance with Company
policy for officers of similar position performing similar duties.
Executive shall be entitled to at least four (4) weeks paid vacation each
calendar year.
c. The Company shall pay the reasonable costs of Executive attending
continuing education seminars and banking conventions and meetings.
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6. Relocation. Company shall not, without the prior consent of
Executive, transfer or relocate the office in which Executive performs the bulk
of his duties to any location more than thirty (30) miles from East Berlin,
Pennsylvania without an increase in duties and responsibilities and commensurate
compensation. In the event Executive is so transferred or relocated, Company
shall pay all reasonable out-of-pocket expenses incurred by Executive in
connection with such relocation. Company shall not require Executive to move
from his residence.
7. Termination of Employment. This Agreement may be terminated during
the term hereof as follows:
a. (1) At any time by mutual agreement of Executive and Company.
(2) If this Agreement is terminated pursuant to subparagraph (a)(1)
of this Paragraph 7, neither party shall have further obligation or
liability to the other hereunder, except that Executive shall be entitled
to accrued and unpaid salary.
b. (1) By Company, at any time for Cause. "Cause" shall include
Executive's personal dishonesty, willful misconduct, breach of fiduciary
duty involving personal profit, incompetence, intentional failure to
perform stated duties, willful violation of any law, rule or regulation
(other than traffic violations or offenses not involving moral turpitude),
final cease and desist order of any government agency having jurisdiction
over Company, or material breach of this Agreement, following Company's
notice thereof to Executive and Executive's failure to cure same within
thirty (30) days of such notice.
(2) If this Agreement is terminated pursuant to subparagraph (b)(1)
of this Paragraph 7, Company shall have no further obligation or liability
to Executive hereunder, except that Executive shall be entitled to accrued
and unpaid salary.
c. (1) Automatically, if Executive is removed and/or permanently
prohibited from participating in the conduct of Company's affairs by an
order issued by an appropriate regulatory agency under Section 8(e) of the
Federal Deposit Insurance Act, as amended, or any similar state or federal
law.
(2) If this Agreement is terminated pursuant to subparagraph (c)(1)
of this Paragraph 7, Company shall have no further obligation or liability
hereunder, except that Executive shall be entitled to accrued and unpaid
salary.
d. (1) By Company at any time, if in its sole judgment and discretion
the continued employment of Executive would no longer be beneficial or
desirable.
(2) In the event that Executive's employment is terminated pursuant
to this subparagraph (d)(1) of this Paragraph 7, Executive shall not be
obligated to perform any services on behalf of Company and Company shall be
obligated to continue Executive's salary and those benefits set forth in
Paragraph 5(a) hereof for the remaining term of this Agreement; provided,
however, that in no event shall this provision obligate Company to make any
further increase to Executive's salary above his salary on the date of such
termination, or continue Executive's participation in any incentive
compensation plan, or stock option, grant or appreciation rights plan, or
any similar incentive based compensation plan.
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(3) Notwithstanding the provisions of subparagraph (d)(2) of this
Paragraph, in the event that Executive's employment is terminated pursuant
to subparagraph (d)(1) of this Paragraph 7 subsequent to a Change in
Control, or the Company shall breach any provision of this Agreement
subsequent to a Change in Control, Executive may elect, which election may
be made in Executive's sole discretion, to receive from Company a single
payment upon such termination amounting to any salary to which Executive
would be entitled pursuant to subparagraph (d)(2), such single payment
being in lieu of the pay ments and benefits set forth in subparagraph
(d)(2). As used in this paragraph, "Change in Control" shall have the
meaning defined in Paragraph 8 hereof.
e. (1) By Executive upon a Change in Control.
(2) In the event that Executive terminates his employment pursuant
to subparagraph (e)(i) of this Paragraph 7, Executive may elect, which
election may be made in Executive's sole discretion, to receive from
Company a single payment upon such termination amounting to any salary to
which Executive would be entitled pursuant to subparagraph (d)(2) of this
Paragraph 7, such single payment being in lieu of the payments and benefits
set forth in subparagraph (d)(2) of this Paragraph 7.
f. By Executive at any time, upon thirty (30) days prior notice to
Company; provided, however, that if this Agreement shall be terminated
pursuant to this subparagraph (f) of this Paragraph 7, Company shall not be
further ob ligated or liable under this Agreement, except for the payment
of accrued and unpaid salary.
8. Definition of Change of Control. For purposes of this Agreement,
the term "Change of Control" shall mean:
a. An acquisition by any "person" or "group" (as those terms are
defined or used in Section 13(d) of the Exchange Act, as enacted and in
force on the date hereof) of "beneficial ownership" (within the meaning of
Rule 13d-3 under the Exchange Act, as enacted and in force on the date
hereof) of securities of Company representing 24.99% or more of the
combined voting power of Company's securities then outstanding;
b. A merger, consolidation or other reorganization of Company, except
where the resulting entity is controlled, directly or indirectly, by
Company;
c. A merger, consolidation or other reorganization of Company, except
where shareholders of Company immediately prior to consummation of any such
transaction continue to hold as least a majority of the voting power of the
outstanding voting securities of the legal entity resulting from or
existing after any transaction and a majority of the members of the Board
of Directors of the legal entity resulting from or existing after a
transaction are former members of Com pany's Board of Directors;
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d. A sale, exchange, transfer or other disposition of substantially
all of the assets of Company to another entity, except to an entity
controlled, directly or indirectly, by Company or a corporate division
involving Company;
e. A contested proxy solicitation of Company's shareholders that
results in the contesting party obtaining the ability to cast twenty-five
percent (25%) or more of the votes entitled to be cast in an election of
directors of Company.
f. During any period of two (2) consecutive years during the term of
this Agreement and any renewal hereof, individuals who at the beginning of
such period constitute the Board of Directors of Company cease for any
reason (other than for health, disability or other medical incapacity or
voluntary re tirement) to constitute at least a majority thereof.
g. The termination of employment of the Chief Executive Officer of
Company, other than for Cause pursuant to Section 6(c) or voluntary
termination under Section 6(e) of a certain Employment Agreement between
Eddie L. Dunklebarger and Company of even date, during the period com
mencing on the Effective Date of the Merger and ending two (2) years
thereafter.
9. Suspension. If Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice served in
accordance with law by an appropriate regulatory agency, the Company's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, Company shall (i) pay Executive all of the compensation withheld
while its contract obligations were suspended and (ii) reinstate any of its
obligations which were suspended.
10. Death or Disability. In the event that Executive is rendered
unable to complete the terms of this Agreement due to death or disability
continuing in excess of ninety (90) days, this Agreement shall be terminated and
Company shall have no further liability, obligations or responsibilities
hereunder except as set forth in Paragraph 5(b) hereof.
11. Covenant Not to Compete. In the event Executive terminates his
employment with Company pursuant to Paragraph 7(f), he agrees that, for a period
of one (1) year following such termination, he shall not (i) solicit any Company
employees or officers to leave Company to accept employment by Executive or his
new employer; and (ii) solicit or encourage any Company customers to cease doing
business with the Company and/or to transfer any or all of their business
relationships to any institution which Executive may found or to Executive's new
employer.
12. Entire Agreement. As of the Effective Date of the Merger, this
Agree ment and a certain Salary Continuation Agreement between Executive and
Peoples shall constitute the entire agreement between the parties and no prior
promises, agreements or warranties, verbal or written, shall be of any force
unless embodied herein. No modification of this Agreement shall be of any force
or effect unless reduced to writing and signed by both parties. As of the
Effective Date of the Merger, the existing Employment Agreement between Peoples
and Executive shall be terminated, with no further rights or obligations
thereunder due to or from either party, and this Agreement shall supersede same.
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13. Miscellaneous.
a. This Agreement shall be binding upon and inure to the benefit of
the parties hereto, their respective heirs, successors and assigns. b. This
Agreement shall not be modified or changed in any way except by a written
agreement signed by the parties hereto. c. No waiver by any party hereto of
any provision of this Agreement shall be deemed a waiver of said provision
or any other provisions of this Agreement. d. This Agreement shall be
interpreted, construed and governed in accordance with the laws of the
Commonwealth of Pennsylvania. 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.
IN WITNESS WHEREOF, the parties have set their hands and seals.
ATTEST: COMMUNITY BANKS, INC.
/S/ Patricia E. Hoch By:/S/ Thomas L. Miller
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THE PEOPLES STATE BANK
/S/ Carole L. Parr By:/S/ Eddie L. Dunklebarger
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WITNESS: EXECUTIVE:
/S/ Carole L. Parr /S/ Anthony N. Leo
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Anthony N. Leo
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AGREEMENT TO MODIFY EMPLOYMENT AGREEMENT
THIS AGREEMENT TO MODIFY EMPLOYMENT AGREEMENT ("Employment Agreement
Modification") is entered into on this 11th day of January, 2002, by COMMUNITY
BANKS, INC., a Pennsylvania corporation ("Community"), COMMUNITY BANKS, a bank
and trust company organized and existing under the laws of the Commonwealth of
Pennsylvania, formerly known as The Peoples State Bank ("Bank"), and ANTHONY N.
LEO (the "Executive"). BACKGROUND
_____A. Community, Bank and Executive entered into an Employment Agreement
("Agreement") on or about October 29, 1997.
B. The parties wish to modify the identification of Executive's job title
in the
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and intending to
be legally bound, the parties hereby agree as follows:
1. Modification of Job Title. Effective March 30, 2001, Executive's job
title shall be "Managing Director - Financial Services and Administrative
Division", in addition to his title of Executive Vice President of the Bank and
the Corporation.
2. No Other Changes. Except as specifically modified herein, all terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Executive and duly authorized officers of Community
and Bank have signed this Employment Agreement Modification.
EXECUTIVE:
/S/ Anthony N. Leo
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Anthony N. Leo
WITNESS/ATTEST: COMMUNITY BANKS
/S/ Patricia E. Hoch By /S/ Eddie L. Dunklebarger
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Title President & CEO
----------------------------
WITNESS/ATTEST: COMMUNITY BANKS, INC.
/S/ Patricia E. Hoch By /S/ Eddie L. Dunklebarger
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