Exhibit 10.12
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT is made and entered into
this 3rd day of April, 2000 by and among David Elias ("Employee"), Elias Asset
Management, Inc., a Delaware corporation (the "Company"), and Community Bank,
National Association, a national banking association ("CBNA").
W I T N E S S E T H:
WHEREAS, the Employee is party to a Stock Purchase Agreement (the
"Purchase Agreement") dated as of January 28, 2000, among the Employee, the
Company, and CBNA, pursuant to which CBNA has agreed to acquire from Employee
all of the outstanding capital stock of the Company. All initially capitalized
terms which are used but not otherwise defined herein shall have the meanings
specified in the Purchase Agreement;
WHEREAS, the Employee is the sole shareholder and a director, officer and
employee of the Company, and, as a result, the Employee has developed valuable
relations with the Company's clients, vendors, and others with which the Company
has business relations and has learned and developed valuable and proprietary
information relating to its business and operations;
WHEREAS, the Employee will continue as an officer and director of the
Company, and to oversee the direction of the operation of the Company, following
the acquisition by CBNA; and
WHEREAS, in order to protect CBNA's interest in the Company, CBNA's
obligation to consummate the transactions contemplated by the Purchase Agreement
is conditioned upon the Employee entering into this Agreement and agreeing to
the covenants contained herein; and
WHEREAS, the Employee, in order to obtain the balance of the purchase
price for the sale of the Company to CBNA, must be provided with necessary
assurances that he would be given appropriate autonomy in directing the
operations of the Company to the extent that such direction is in the shared
interests of the Employee and CBNA to maximize the revenues and earnings of the
Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Employment and Duties. On the terms and subject to the conditions set
forth herein, the Company hereby employs the Employee to serve as the President,
Chief Executive Officer and Chief Investment Officer of the Company. The
Employee shall report to Michael A. Patton, Regional President/Trust Officer of
CBNA or, in his absence, Sanford A. Belden, President and Chief Executive
Officer of CBNA. The Employee shall perform the regular duties of his position
and such other incidental and customary duties commensurate with his position,
as well as any other duties consistent with his position, duties and
responsibilities prior to the date of this Agreement, as from time to time
reasonably assigned to the Employee by the Board of Directors of the Company,
and have the requisite power and authority to fulfill his obligations which are
consistent with his general authority, power, duties and responsibilities prior
to the date of this Agreement. Additionally, Employee shall be requested to
serve on the Board of Directors of the Company throughout his employment tenure.
Consistent with his responsibilities prior to the date of the Agreement,
Employee's duties shall include the oversight of overall direction of the
Company, including serving as the Chief
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Investment Officer and lead sales person for Company; the promotion and
retention of client relationships; the training, selection and education of
staff; administrative duties consistent with his position; and serving as lead
person for business development and consideration of future acquisitions by the
Company. The Employee shall perform his duties to the best of his abilities and
devote his full working time and attention (except for reasonable activities
with professional and civic organizations consistent with his position and past
practice) to the business and affairs of the Company, and act in good faith in
the Company's best interests but consistent with his objective of receiving the
portion of the Purchase Price for the Shares that has been withheld pursuant to
the Purchase Agreement. The Company shall maintain its principal office in the
Amherst-Williamsville, New York area, and in no event will the Employee be
required to relocate from that area without his consent, provided, that the
Company may move its principal office in the greater Buffalo, New York area if
there is a substantial business reason to do so.
2. Base Salary. The Employee shall receive a base salary of $300,000 per
year, payable by the Company in accordance with its usual payroll policies for
the term of this Agreement. The amount of base salary will be reviewed annually
to determine any appropriate increases but will not be decreased during the term
of this Agreement (as adjusted, the "Base Salary").
3. Incentive Compensation. The Employee shall be entitled to receive
incentive compensation in accordance with the following provisions:
(a) Annual Incentive Bonus. The Employee shall be entitled to an
annual incentive bonus during his employment under this Agreement based on a
percentage of the Company's "Annual Adjusted Net Income" calculated as follows:
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(i) For each fiscal calendar year including and following the
Closing Date, the Company shall budget and allocate an amount equal to 40% of
the "Gross Revenues of the Company" (defined below), which amount shall be
available for distribution to the Company's parent ("CBNA Revenue Portion");
(ii) Upon the completion and delivery by independent auditors
of Community Bank System, Inc., a Delaware corporation and the parent bank
holding company of CBNA ("CBSI"), of the annual audited consolidated financial
statements of CBSI and its subsidiaries (the "Audited Financial Statements") but
no later than April 5th of each fiscal calendar year, Employee shall be entitled
to an annual incentive bonus equal to the following percentages of the Company's
"Annual Adjusted Net Income" (defined below):
"Annual Adjusted Net Income" Employee CBNA (Parent)
---------------------------- -------- -------------
First $500,000 100% None
Above $500,000 60% 40%
Employee shall be deemed to have earned such bonuses, if at all, on the
first day of the calendar fiscal year (or the first day immediately succeeding
the applicable Interim Period) after the calendar fiscal year (or the Interim
Period) to which each such bonus relates.
If at any time during the term of this Agreement, there shall occur a
substantial change in the business of the Company (including without limitation,
as a result of any material corporate restructuring of the Company) as compared
to the business conducted by it during the five-year period immediately
preceding the Closing Date, which change as a whole Employee reasonably believes
would materially and adversely affect the ability of the Employee to earn all or
any
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portion of the annual incentive bonuses, then CBNA and Employee shall negotiate
in good faith for the determination of whether adjustments to the calculation of
Annual Adjusted Net Income and the percentages in the table above to equitably
account for any such change in the business of the Company are warranted and, if
so, the amount of such adjustments, provided that no such adjustments, as a
whole, shall adversely affect the ability of Employee to earn annual incentive
bonuses in any material respects. In the event that the Company and Employee
cannot agree on whether such an adjustment is warranted or on the amount of such
adjustment within sixty (60) days of the consummation of such a substantial
change, the dispute shall be submitted to a mutually acceptable nationally
recognized independent accounting firm (other than a firm then used by the
Company or Employee or their respective affiliates, unless otherwise agreed to
by the parties) (the "Firm"). The parties shall instruct the Firm to determine,
no later than sixty (60) days after submission, whether appropriate adjustments
to the calculation of Annual Adjusted Net Income and the percentages in the
table above are warranted and, if so, the amount of such adjustments, to
equitably account for such change in the business of the Company. The
determination of the Firm shall be binding upon the parties. The Employee and
the Company shall each pay one-half of the fees and expenses of the Firm
incurred in connection with such determination.
In addition, in the event that, as a result of any such change in the
business of the Company, the Company proposes to modify the duties and
responsibilities of the Employee such that the Employee is reasonably expected
to devote substantially more working time in his performance of such duties and
responsibilities as compared to those before such modification, then the Company
and Employee shall negotiate in good faith with respect to such modification
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(and the Company shall not so modify except with the consent of the Employee)
and, to the extent that Employee's duties and responsibilities hereunder are
substantially modified, for adjustments to the Base Salary under this Agreement
to properly compensate the Employee for such modification.
(iii) "Annual Adjusted Net Income" for purposes on this
Agreement shall mean the Company's net income as determined consistent with its
past practice in connection with the preparation of its financial statements
(subject to the change in the Company's accounting methods to the accrual basis
and the related adjustments) in accordance with generally accepted accounting
principles ("GAAP") consistently applied, but with the following adjustments
being made:
(1) A deduction shall be made in an amount equal to CBNA
Revenue Portion (defined in Section 3(a)(i)) for the applicable fiscal year in
calculating the Annual Adjusted Net Income;
(2) No deduction will be made in the calculation of the
net income (i) with respect to the amortization of goodwill or other intangible
assets (if any) arising from, or costs incurred by the Company in connection
with, the acquisition of the Company by CBNA, (ii) for income taxes applicable
to the Company's operations, or (iii) for the accrual or payment of any annual
incentive bonuses payable to Employee, or grant by CBSI of options or stock to
Employee;
(3) No expense will be charged in the calculation of net
income with respect to premiums for key-man life and disability insurance
policies;
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(4) Only an amount equal to the incremental increase in
policy premiums resulting from the extension of coverage under CBSI's D&O and
professional liability insurance policies to directors, officers, and employees
of the Company but in no event more than $5,500 per annum will be charged to the
Company's net income during the first two years of this Agreement (thereafter,
any increase in such amount shall be based solely upon loss experience and the
growth of the business of the Company); and
(5) No deduction shall be made for any inter-company
charge made by CBNA (or any of its affiliates) to the Company, to the extent
that such charge exceeds the arm's-length charge for the same or similar goods
or services.
(iv) "Gross Revenues of the Company" for purposes of this
Agreement shall mean all revenues of the Company as determined in accordance
with GAAP consistently applied, recognizing the need for transitional
adjustments to be made by the parties in the first year in order to cause the
accounting of the Company to conform to the requirements of GAAP. In determining
Gross Revenues of the Company, reimbursement for closed accounts and fees paid
in fee sharing arrangements shall be excluded.
(v) Unless partially or fully deferred by Employee pursuant to
Section 3(b) below, the annual incentive bonus determined above shall be paid to
Employee no later than April 5th of the calendar year following the applicable
calendar year of determination. (For example, the Annual Incentive Bonus for
calendar year 2000 shall be paid no later than April 5, 2001.)
(vi) Notwithstanding anything to the contrary in this Section,
the amount of the annual incentive bonus, if any, with respect to (A) the period
between the Closing
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Date and the end of the calendar year in which the Closing takes place, or (B)
except as otherwise expressly provided in this Agreement, any period during the
term of this Agreement where the remaining term shall be less than a full
calendar year (each period described in clause (A) or (B), an "Interim Period"),
shall be determined by adjusting on a consistent basis all of the figures and
parameters used in the calculation set forth in this Section, as well as the
amount of annual incentive bonuses, on a pro rata basis, based upon the number
of days in the Interim Period in question and 365 days per calendar year (366
days if any Interim Period shall occur in calendar year 2000 or 2004).
(b) Deferral of Payments. At the option of Employee, he may elect to
defer receipt of all or part of the annual incentive bonus determined in Section
3(a) by filing with Employer a written election to defer receipt of the bonus,
provided that the written deferral election is received by the Company prior to
the applicable year during which the bonus will be earned. (For example, to
defer receipt of annual incentive bonus payable with respect to calendar year
2001, Employee must file a written deferral election with Employer prior to
January 1, 2001.) Amounts deferred pursuant to this subsection may be invested
in such vehicles and upon such terms as are generally available to senior
management officers of CBNA or CBSI through its Deferred Compensation Plan for
Executives.
(c) Incentive Stock Options and Awards. The Employee shall
participate in CBSI's 1994 Long-Term Incentive Compensation Program ("Program"),
as amended or replaced from time-to-time and as administered by the Personnel
Committee. Awards shall be made in such amounts and under such terms and
conditions as determined solely by the Personnel Committee pursuant to the terms
of the Program, and awards ordinarily will reflect Employee's
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Base Salary in effect at the time of the award. Employee shall be eligible to
receive stock options and other incentive compensation awards starting in
January, 2001 consistent with the current administration of the Program.
4. Fringe Benefits.
(a) Benefit Plans The Employee shall be entitled to participate in
all standard employee benefit plans offered to full-time management employees of
CBNA and CBSI. The Employee's eligibility for and participation in such plans
shall be governed by and subject to the terms and conditions of the official
plan documents of each plan except that for all purposes of this Agreement and
for eligibility, vesting and benefit accruals under CBSI's and CBNA's employee
benefit and welfare plans, Employee shall be given past service credit for
previous service with the Company.
(b) Expenses. The Company shall reimburse the Employee for
reasonable business expenses incurred by the Employee in the performance of his
duties hereunder upon submission of expense statements or vouchers and such
other reasonable supporting information as may be required. Reimbursed expenses
may be reviewed by the Company's Board of Directors on a quarterly basis.
(c) Other Benefits. During the term of this Agreement, Employee
shall also be entitled to receive the following benefits:
(i) Paid vacation of four weeks during each calendar year
(with no carry over of unused vacation to a subsequent year) and any public
holidays provided to employees of the Company in accordance with its holiday
policy;
(ii) Reasonable sick leave;
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(iii) Reimbursement of membership fees incurred by Employee at
clubs to which Employee currently belongs, consisting of the Buffalo Club, Union
Club of Cleveland (non-resident member fees only), Canterbury Golf Club
(non-resident member fees only) and the Country Club of Buffalo;
(iv) The use of a Company owned or leased automobile similar
to his current vehicle, with the selection of a comparable replacement being
subject to the consent of the President and CEO of CBSI; and
(v) The rights to continue health coverage for the Employee
and his spouse under the health insurance plan in effect prior to the date
hereof, namely Traditional Blue Cross / Blue Shield.
5. Term and Termination.
(a) The Employee's employment under the terms set forth shall
commence on the date hereof and shall continue for a period of five (5) years;
provided, however, that the Employee's employment shall terminate earlier upon
the occurrence of (i) the Employee's death; (ii) the Employee's Disability (as
defined below); (iii) the Company's termination of the Employee's employment for
Cause (as defined below); (iv) the Company's termination of the Employee's
employment without Cause, (v) the Employee's voluntary termination of his
employment for any reason upon thirty (30) days' prior written notice to the
Company; or (vi) Employee's termination for Good Reason (as defined below).
(b) For purposes of this Agreement:
(i) "Cause" means (A) the Employee's material breach of any
material provision of this Agreement; (B) the Employee's fraud, dishonesty,
theft or embezzlement
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involving any material injury to the Company, including without limitation, its
reputation; (C) the Employee's willful and knowing misconduct in performing his
duties hereunder that results or could result in material harm to the Company;
(D) the Employee's refusal to perform or substantial neglect of any duties
hereunder; (E) the Employee's violation of any reasonable written directions of
the Company's Board of Directors consistent with the terms of this Agreement;
(F) knowing participation (whether before or after execution of this Agreement)
in a violation of the Investment Advisers Act of 1940, as amended, or the rules
and regulations thereunder, which results in material injury to the Company,
including without limitation, its reputation, and/or (G) the Employee's
indictment, conviction, guilty plea or plea of nolo contenders of a crime
punishable as (1) a felony or misdemeanor involving conversion,
misappropriation, larceny, theft, embezzlement or (2) any other felony which
could reasonably be expected to cause a material injury to the Company
(including without limitation, its reputation), in case of either clause (1) or
(2), regardless of whether such crime involves the Company; provided, however,
that the Company shall not be entitled to terminate the Employee for Cause under
clauses (A), (C), (D) or (E) above unless it has provided the Employee with
written notice specifying the nature of the activity or omission constituting
Cause and the Employee has failed to commence, within 15 days after receipt of
such notice, his good faith, reasonable effort to cure the same, or has failed
to complete the cure within 60 days after receipt of such notice; it being
understood that, with respect for any specific circumstance or fact constituting
a reason for termination for Cause, the Company shall only be obligated to
provide notice and an opportunity to cure only one time under this Agreement;
and
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(ii) "Disability" means (A) being declared physically or
mentally disabled by either a disability insurance carrier which provides
disability insurance for the Employee or by a licensed physician who has
examined or is treating the Employee, and such disability continues for a total
of 180 days in any 12-month period, and subject to any statutory duty to
reasonably accommodate Employee's disability; or (B) the Employee being, for any
physical or mental reason, unable to maintain full-time active participation in
the Company's business for a total of 180 days in any 12-month period; provided,
however, that nothing in this Agreement shall require, result in or permit
termination by reason of Disability in violation of applicable law, including,
without limitation, the Americans with Disabilities Act and any statutory duty
to reasonably accommodate Employee's disability.
(iii) "Good Reason" means resignation by the Employee based on
the occurrence of one of the following events, in each case without the consent
of Employee, with respect to which event Employee gave written notice of the
existence of facts or circumstances forming the basis thereof, and the Company
shall have failed to begin its good faith, reasonable efforts to cure the same
within 15 days of receipt of the notice or failed to complete the cure within 60
days of the receipt of the notice:
(A) a material change in the nature or scope of Employee's
authority or responsibility (as compared to his authority or responsibility
prior to such change) or removal from the Company's Board of Directors, or
(B) a reduction in Employee's total compensation (including
Base Salary, incentive bonus, and benefits) which Employee is entitled to under
the term of this Agreement, or
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(C) a change in the general location where employee is
required to perform services, unless the location of the Company's principal
offices is moved pursuant to Section 1, in which case the general location where
Employee shall perform his duties and responsibilities under this Agreement
shall be at the new location of such principal offices, or
(D) any material breach of this Agreement by the Company, or
(E) the relocation of the Company's principal office from
Amherst-Williamsville, New York, except as permitted by Section 1; or
(F) any diminution in the title of Employee, or
(G) if Employee does not report directly to either Messrs.
Belden or Patton, or neither of such persons hold executive positions with CBSI,
CBNA or their respective successors, except as a result of the death of Messrs.
Belden or Patton.
(c) If Employee's employment is terminated pursuant to Section
5(a)(i), (ii), (iii) or (v), the Employee shall be paid hereunder only for the
period up to the date of such termination (the "Termination Date") as well as
compensation, including incentive bonuses, that is vested, accrued or earned and
not previously paid and/or as provided in the benefit plans referred to in
Section 4 above.
(d) If Employee's employment is terminated by the Company without
Cause pursuant to Section 5(a)(iv) or if Employee terminates his employment with
the Company for Good Reason pursuant to Section 5(a)(vi), the Company shall, at
its sole option, either (1) pay Employee severance pay equal to the Base Salary
and Estimated Incentive Bonuses (as defined below) that Employee would have
otherwise received during the remaining term of this Agreement (the "Severance
Period"), which severance shall be paid commencing with the date of
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termination at the times and in the amounts such Base Salary and annual
incentive bonuses would have been paid in accordance with the Company's normal
payroll practices or pursuant to this Agreement, or (2) the Company shall
unconditionally release Employee from the obligations under Section 7(a) of this
Agreement. As used in this Agreement, "Estimated Incentive Bonus" means the
average annual incentive bonuses per annum paid by the Company to Employee in
respect of the previously completed fiscal calendar year(s) or, if none, an
amount provided in Section 6(a)(ii). Notwithstanding anything to the contrary,
in the event that Employee shall breach Section 7 hereof, in addition to any
other remedies the Company may have, all of the Company's obligations to make
payments pursuant to this Section 5(d) shall cease and Employee's rights thereto
shall immediately terminate and shall be forfeited in all respects. Payment made
in accordance with this Section 5(d) shall operate to fully discharge and
release the Company and its affiliates and agents from any further liability or
obligation with respect to Employee's employment and termination of employment.
The payment of amounts under this Section 5(d) shall be conditioned upon the
delivery by the Employee to the Company of a release in form and substance
reasonably satisfactory to the Company.
6. Change of Control.
(a) In the event that Employee's employment with the Company is
terminated during the term of this Agreement for Good Reason by Employee or
without Cause by the Company, in each case within 2 years following a "Change of
Control" (defined in Section 6(c) below), then, subject to the limitation in
Section 6(b) below, the Company shall:
(i) Pay the Employee an amount equal to 2.9 times his Base
Salary in effect at the time of the Employee's termination under this
Section 6(a);
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(ii) Pay the Employee an amount equal to 2.9 times the average
annual incentive bonus earned by Employee pursuant to Section 3(a) during
the term of this Agreement prior to Employee's termination under this
Section 6(a) (any annual incentive bonus earned with respect to an Interim
Period shall be annualized on a per diem basis for the purposes of this
Section 6(a)(ii)); provided, however, that if such termination occurs
prior to July 1, 2002, the average annual incentive bonus shall be deemed
to be THREE HUNDRED THOUSAND DOLLARS ($300,000) per annum;
(iii) Provide Employee with benefits, or cash equivalent of
such benefits, which were being provided to Employee for a period of 2
years following Employee's termination under this Section 6(a); and
(iv) Fully vest, and treat as immediately exercisable, all
unexpired stock options in CBSI common stock that are not otherwise
exercisable or that have not been exercised.
Amounts payable under this Section 6(a) shall be paid to Employee in a
lump sum (subject to any applicable payroll or other taxes required to be
withheld) as soon as practicable following his termination.
(b) If any portion of the amounts paid to, or value received by,
Employee following a "Change of Control" (whether paid or received pursuant to
this Section or otherwise), constitutes an "excess parachute payment" within the
meaning of Internal Revenue Code Section 280G, then the parties shall negotiate
a restructuring of payment dates and/or methods (but not
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payment amounts) to minimize or eliminate the application of Internal Revenue
Code Section 280G. If an Agreement to restructure payments cannot be reached
within 60 days of the date the first payment is due under this Section, then
payment amounts shall be limited to the extent necessary to avoid application of
Internal Revenue Code Section 280G.
(c) For purposes of this Section, a "Change of Control" shall be
deemed to have occurred if:
(i) Any person, including a group as determined in accordance
with Section 13(d)(3) of the Securities Exchange Act of 1934 ("Exchange Act"),
is or becomes the beneficial owner, directly or indirectly, of securities of
CBSI representing 30% or more of the combined voting power of CBSI's then
outstanding securities;
(ii) As a result of, or in connection with, any tender offer
or exchange offer, merger or other business combination (a "Transaction"), the
persons who were directors of CBSI before the Transaction shall cease to
constitute a majority of the Board of Directors of CBSI or any successor to
CBSI;
(iii) CBSI is merged or consolidated with another corporation
and as a result of the merger or consolidation less than 70% of the outstanding
voting securities of the surviving or resulting corporation shall then be owned
in the aggregate by the former stockholders of CBSI (other than affiliates
within the meaning of the Exchange Act, or any party to the merger or
consolidation);
(iv) A tender offer or exchange offer is made and consummated
for the ownership of securities of CBSI representing 30% or more of the combined
voting power of CBSI's then outstanding voting securities;
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(v) CBSI transfers substantially all of its assets to another
corporation that is not controlled by CBSI; or
(vi) The control or ownership of a majority of the stock or
substantial portion of the assets or business of the Company is transferred to
an entity which is not controlled by or under common control of CBSI.
(d) The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise.
The Change of Control payments provided for in this Section shall be in lieu of
any and all other severance benefits which Employee might be entitled to under
any severance policy applicable to employees of the Company in general.
(e) The non-compete provisions of Section 7(a) shall not be
applicable if Employee's employment with the Company is terminated by Employee
for Good Reason or by the Company without Cause, in each case within 2 years of
a Change of Control under Section 6(a).
7. Non-Competition and Non-Solicitation.
(a) Non-Compete. The Employee agrees that during the term of this
Agreement and (1) for a period of 12 months following the date of termination of
his employment under this Agreement (the "Date of Termination") for any reason
(other than for Good Reason, whether or not there was a Change of Control within
2 years thereof, or without Cause), (2) if Employee was terminated by the
Company without Cause or if Employee terminated his employment hereunder for
Good Reason, and in each case the Company elected to make payments under Section
5(d), then for a period equal to the duration of the Severance Period, or
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(3) if the parties do not renew this Agreement, and the Employee ceases to be
employed by the Company, then for so long as the Company is making severance
payments under Section 12, the Employee shall not, directly or indirectly, own,
manage, operate, control or participate in the ownership (except for an equity
interest of less than 5% in a publicly traded entity, provided that he is not a
director or officer thereof), management, operation or control of, or be
connected as an officer, employee, partner, director, individual proprietor,
lender, consultant or otherwise with, or have any financial interest in, or aid
or assist anyone else in the conduct of, any entity or business (a "Competitive
Operation") which competes in the business conducted by the Company in any area
or market where such business is being conducted on the Date of Termination,
unless authorized in writing by the Board of Directors of CBNA; provided,
however, if termination of his employment for any reason occurs after the fifth
anniversary of the date of this Agreement, the covenant shall expire, unless
otherwise expressly provided herein. If requested from time to time by the Board
of Directors of the CBNA and to the extent reasonably necessary or desirable to
determine the violation of this Section 7 by Employee, Employee shall inform the
Board with respect to any activity, interest, or investment that he is aware of
in a Competitive Operation within the banking or investment industry in
reasonable detail. The parties agree that public speaking, writing and
communications regarding investments and economic activities do not constitute
per se a Competitive Operation, so long as Seller is not providing management,
investment or advisory services to any other Person (as such term is defined in
the Purchase Agreement) (other than tax-exempt not-for-profit organizations)
which conducts any business similar to the business then conducted by the
Company, without regard to the area or market in which such business is being
conducted by such Person.
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(b) Non-Soflicitation. The Employee shall not directly or indirectly
(i) hire any employee of the Company, CBNA, or CBSI (or any affiliated entity of
CBNA or CBSI), or induce or attempt to induce any such employee to leave the
employ of his or her employer, or in any way interfere with the relationship
between the Company, CBNA or CBSI, or affiliate of CBNA or CBSI and any employee
thereof; or (ii) induce or attempt to induce any client, customer, supplier,
licensee, licensor, distributor or other entity with a business relation with
the Company to cease doing business with the Company or in any way interfere
with the relationship between any such customer, supplier, licensee ,
distributor or business relation and the Company (including, without imitation,
making any negative statements or communications about the Company) or, for a
period of two (2) years after the termination of Employee's employment hereunder
for any reason, directly or indirectly, conduct business in a Competitive
Operation with any client or customer of the Company or any other prospective
client or customer specifically and individually solicited by the Company (or
its employees or agents) at any time during the one-year period immediately
preceding the date of termination. For purposes of this Section 7(b)(i),
Employee's spouse shall not be deemed an employee of the Company.
(c) In the event of (i) a material breach by the Company of its
obligations under this Agreement provided that the Employee has not materially
breached this Agreement, and (ii) the Company's material breach is not cured
within 30 days after the Company receives written notice from the Employee of
such material breach (provided that if such material breach relates to the
payment of compensation, the Company shall have only 3 days after its receipt of
written notice from Employee to cure such breach), in each case after giving
effect to any cure
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period afforded to the Company with respect to such breached obligation under
this Agreement, the Employee, in addition to all other remedies available to
him, shall be relieved of his obligations under Section 7(a) with respect to any
portion of the non-competition period, provided that any issue raised by the
Company as to whether a material breach under this Section has occurred has been
the subject of a final adjudication by expedited arbitration, pursuant to the
rules of the American Arbitration Association for commercial arbitration.
(d) The Employee acknowledges that the restrictions set forth in
Section 7 are reasonable in scope and essential to the preservation of the
operations and proprietary interests of the Company.
(e) Nothing contained in this Agreement shall in any event limit the
duration and enforceability of the non-competition provisions of the Purchase
Agreement, which provisions were critical to the Company's determination to
enter into the Purchase Agreement and to consummate the transactions
contemplated by the Purchase Agreement.
8. Revision. If, at the time of enforcement of this Agreement, a court
shall hold that the duration, scope, geographic area or other restrictions
stated herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope, geographic area or other restrictions
deemed reasonable under such circumstances by such court shall be substituted
for the stated duration, scope, geographic area or other restrictions. If the
court shall hold that such a provision is wholly unenforceable, then such
provision shall be severed from this Agreement, and the Agreement shall be
enforced as if such provision never existed.
9. Remedies. The Employee recognizes and agrees that in the event of a
breach of Section 7 of this Agreement, money damages would be inadequate and the
Company would have
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no adequate remedy at law. Accordingly, the Employee agrees that the Company
shall have the right, in addition to any other rights and remedies existing in
its favor, to enforce its rights and the Employee's obligations under this
Agreement not only by an action or actions for damages, but also by an action or
actions for specific performance, injunctive and/or other equitable relief, in
either case without posting a bond or other security, in order to enforce or
prevent any violations of Section 7 of this Agreement.
10. Key Man Life Insurance. CBNA has heretofore obtained key man life
insurance coverage on the life of Employee, subject to the consummation of the
transaction contemplated by the Purchase Agreement. Employee shall cooperate and
take all necessary and appropriate actions to maintain such coverage during the
term of this Agreement. The premiums for such insurance shall be borne by CBNA
and not included as an expense of the Company in the calculation of "Annual
Adjusted Net Income" as set forth in Section 3(a)(iii).
11. Rules, Regulations and Policies. The Employee shall abide by and
comply with all reasonable rules, regulations and policies of the Company
applicable to executives, including without limitation compliance with all laws
and regulations to the extent the same are consistent with the terms of this
Agreement.
12. Renewal. Beginning no later than six months prior to the expiration of
this Agreement, the parties shall commence good faith negotiations, to be
completed by the expiration of this Agreement, for the Employee's continued
employment by the Company. If Employee and Company cannot agree on the terms of
Employee's continued employment by the expiration of this Agreement, and
Employee ceases to be employed by Company, Employee shall be entitled to be paid
as severance compensation and as additional consideration for the non-compete
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provisions set forth in Section 7 (the sufficiency of which is hereby
acknowledged), one year of Base Salary based on the last full year of employment
payable in equal installments in accordance with the Company's regular payroll
practice over the year following termination of employment. In such event, the
Employee shall also be entitled to receive an amount equal to one year of the
Estimated Incentive Bonus, which amount shall be payable in a lump sum as soon
as practicable after the termination of employment. If Employee's employment by
Company is not continued after expiration of this Agreement as a result of
Employee's decision not to accept a "bona fide offer" from Company, or Employee
provides written notice of a lack of interest in extending the term of this
Agreement, the Company shall not be obligated to continue to pay Employee's Base
Salary as severance compensation. A "bona fide" offer from the Company shall be
defined as a one year agreement with renewal option under substantially the same
terms and substantially the same total compensation as provided for under the
final year of this Agreement. Payments of Base Salary as severance compensation
pursuant to this Section shall be reduced dollar for dollar to the extent
Employee receives wages or self-employed income during the severance
compensation period. For any period during which Employee's Base Salary is
continued as severance compensation, Employee shall be eligible to continue to
participate in Company's group-term life insurance plan and group health benefit
plan as if Employee were an active, full-time employee of the Company.
Employee's right to "COBRA" continuation coverage under Company's group health
benefit plan shall commence as of the end of the period during which Base Salary
is continued as severance compensation.
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13. Miscellaneous.
(a) Assignment; Binding Agreement. This Agreement is personal to
each of the parties hereto, and neither party may assign or delegate any of its
rights or obligations hereunder without the prior written consent of the other
party, except that the Agreement shall be binding upon both parties and inure to
the benefit of the Company's successor through a merger or corporate
reorganization. Subject to the foregoing, this Agreement shall be binding upon
the parties hereto and their respective heirs, administrators, legal
representatives, successors, and assigns.
(b) Waiver. No delay or omission in the exercise of any right, power
or remedy hereunder shall impair any such right, power or remedy or be construed
to be a waiver or any default or any acquiescence therein.
(c) Entire Agreement; Amendment. This instrument and the
non-competition provisions set forth in the Purchase Agreement contain the
entire agreement of the parties with regard to the subject matter hereof, and
this Agreement may not be amended except by an agreement in writing signed by
the parties hereto.
(d) Notices and Other Communications. All notices or other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally (including delivery by courier service),
transmitted by telecopy, or mailed by registered or certified mail, postage
prepaid, return receipt requested, as follows:
(i) If to the Company or CBNA, notice shall be provided to the
President and CEO of CBNA at:
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Community Bank, NA
5790 Widewaters Parkway
Dewitt, New York 13214
Telephone: (315) 445-2282
Facsimile: (315) 495-2997
Attention: Sanford A. Belden, President and CEO
with a copy to:
Bond, Schoeneck & King, LLP
One Lincoln Center
Syracuse, New York 13202
Attention: George J. Getman, Esq.
Telephone: (315) 422-0121
Facsimile (315) 422-3598
(ii) If to the Employee, to:
Mr. David Elias
31 Halston Parkway
E. Amherst, New York 14051
Telephone: (716) 688-4491
Facsimile: same as above (call first)
with a copy to:
Phillips, Lytle, Hitchcock, Blaine & Huber LLP
3400 HSBC Center
Buffalo, New York 14203
Attention: Frederick G. Attea, Esq.
Telephone: (716) 847-8400
Facsimile: (716) 852-6100
or to such other address as the party to whom notice is to be given may have
previously furnished to the other party in writing in accordance herewith.
Notice shall be deemed given on the date received (or if receipt thereof is
refused, on the date of such refusal).
(e) Return of Property. Upon termination of this Agreement, Employee
shall forthwith return to Employer all documents and other property of any
nature belonging to the Company.
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(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to its
conflict of law rules.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
EMPLOYEE:
______________________________________
David Elias
COMMUNITY BANK, NA
By: __________________________________
Name: Sanford A. Belden
Title: President and CEO
ELIAS ASSET MANAGEMENT INC.
By: __________________________________
Name: David Elias
Title: President and Chief Investment
Officer
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