EXECUTIVE EMPLOYMENT CONTRACT
MADE this 3 day of January 2012, by and between CNB FINANCIAL CORPORATION, a Pennsylvania business corporation and CNB BANK, a state banking institution organized under the laws of the Commonwealth of Pennsylvania, with principal office at One South Second Street, P.O. Box 42, Clearfield, Pennsylvania, 16830, (hereinafter collectively referred to as CNB);
JOSEPH B. BOWER, JR., an adult individual, residing at 125 Zion View Drive, Clearfield, Pennsylvania, 16830, (hereinafter MR. BOWER).
WHEREAS, MR. BOWER became the President and CEO of both CNB Bank and CNB Financial Corporation, effective January 1, 2010; and,
WHEREAS, MR. BOWER previously served as CNB Financial Corporations Secretary and Treasurer, and as the Executive Vice-President & Cashier and Chief Operating Officer of CNB Bank; and,
WHEREAS, the Parties entered previous Executive Employment Contracts on the basis of MR. BOWERS preceding capacities with CNB; and,
WHEREAS, the Parties wish to terminate their earlier agreements and replace them with this Agreement, and to memorialize their contractual relationship.
The Parties for themselves, their heirs, successors and assigns, in consideration of their mutual promises contained herein, intending to be legally bound, hereby agree to the following terms and conditions.
1. PRIOR AGREEMENTS: The Parties terminate all prior written and verbal employment agreements between them effective as of the date hereof.
2. EMPLOYMENT: CNB will employ MR. BOWER as the President of CNB Financial Corporation and the President and CEO of CNB Bank, MR. BOWER agrees to serve in those capacities. MR. BOWER promises that during the term of this Agreement he shall dedicate his full time, attention and energies to his employment with CNB. MR. BOWER further promises that he will report to CNBs Board of Directors, carry out its decisions and otherwise abide by and enforce the policies of CNB.
MR. BOWER shall also perform such other reasonable duties as may hereafter be assigned to him by CNB consistent with his abilities and position, including but not limited to services to CNBs parent CNB Financial Corporation and its other subsidiaries.
MR. BOWER will not engage in any other employment during the term of this Agreement, nor shall he engage in self-employed activities.
MR. BOWER also recognizes that CNBs success and recognition depend on his involvement with charitable and social organizations. In this regard, MR. BOWER agrees to engage in such social and charitable activities or organizations as are consistent with his personal responsibilities and with his position with CNB.
MR. BOWER shall also comply with all other CNB procedures and polices now or hereafter in effect.
MR. BOWER further agrees that he and the members of his family shall comport themselves at all times in a manner that reflects upon CNB in a positive fashion.
3. TERM: The term of this Agreement shall be for four (4) years, commencing on January 1, 2012, and ending on December 31, 2015, unless terminated sooner pursuant to the other provisions of this Agreement.
However, the provisions of paragraphs 6 and 7 shall continue in force and in accordance with the provisions therein and shall survive the expiration or terminatation of the term of employment.
4. COMPENSATION: MR. BOWERs salary shall be established by the Board of Directors. MR. BOWER may also receive such annual increases, stock, stock rights and bonuses as may from time to time be awarded by the Board of Directors.
CNB will also provide MR. BOWER with a family membership at the Clearfield-Curwensville Country Club. In addition MR. BOWER will also be provided an automobile, automobile insurance, fuel and maintenance for said vehicle.
5. OTHER BENEFITS: MR. BOWER shall participate in CNBs retirement plan, health insurance plan, life insurance plan and receive such other benefits as CNB from time to time may provide to its employees.
MR. BOWER shall also be entitled to 24 days paid vacation plus such sick leave as he may reasonable and actually require, both of which are, consistent with the past practice of senior executives at CNB and upon condition that, in the opinion of the Board of Directors the amount and timing of his vacation does not unreasonably interfere with or detract from the fulfillment of his duties under this agreement.
MR. BOWER shall be entitled to breavement and such other employee benefits as now or hereafter granted by CNBs personnel policies.
6. CONFIDENTIAL INFORMATION: MR. BOWER acknowledges and agrees that as an inducement to CNB to employ him and enter this written contract with him, that he shall not disclose, directly or indirectly, intentionally or unintentionally, during the term of this contract or at any time after its termination, any of CNBs proprietary information, account information, customer lists, customer information, policies, pricing, strategy, codes, strategic plan, plans for expansion or business development or other information of a confidential nature (hereinafter referred to as Confidential Information), whatsoever regarding CNB without first obtaining the prior, written consent from CNBs Chairperson of the Board that such disclosure is authorized. Communications with CNBs employees, customers and business relations are excepted from the foregoing prohibition during the term of this Agreement to the extent that such communications are consistent with MR. BOWERs duties.
Confidential Information shall include all information recorded, memorialized or communicated in any form whether written, printed, verbal, video, photographic, electronic, magnetic, digital or otherwise. This shall also include such confidential information as MR. BOWER may have memorized or remembered notwithstanding Pennsylvania or other law to the contrary.
Upon termination of this contract for any reason, MR. BOWER promises that he shall promptly return to CNB or its designated representative any Confidential Information, automobile, insurance cards, owners cards, keys, credit cards, or other CNB property, in his possession.
MR. BOWER further promises that he will not take, keep, or record copies, duplications or reproductions of the Confidential Information or other property subject to this Agreement after termination of this Agreement.
7. COVENANT NOT TO COMPETE: As additional consideration to CNB for entering this Agreement, and for granting the severance benefits described in paragraph 8 below which are a new benefit, MR. BOWER covenants that he shall not compete against CNB, its parent, affiliates or subsidiaries, either directly or indirectly, by taking employment, gratuitously assisting or serving as an independent contractor, consultant, partner, director or officer with a competitor of CNB, or starting his own business which would compete directly or indirectly with CNB, or have a material interest in any business, corporation, partnership, LLC, savings and loan, bank, financial institution, brokerage, or other venture which competes directly or indirectly with CNB while he is employed by CNB and until the earlier of the following: (i) the expiration of a period of three (3) years following the date on which MR. BOWER is last employed by CNB or (ii) the date of a change in control of CNB, as defined in Section 8. For the purpose of defining and enforcing this covenant, CNBs competitors will be identified at the time it seeks enforcement of this covenant. This determination shall be based on CNBs market area and CNBs plans for expansion or acquisition into other market areas at the time enforcement of this covenant is sought.
The Parties also agree that indirect competition shall include the instances stated above but involving MR. BOWERs spouse or children.
The Parties further agree that MR. BOWERs covenant not to compete shall apply in the event of his regular retirement or voluntary termination of his employment hereunder. MR. BOWER agrees in this regard that the security provided by this Agreement is adequate consideration for his covenant not to compete.
MR. BOWER agres that the relevant public policy and legal aspects of covenants not to compete have been discussed with him and that every effort has been made to limit the restrictions placed upon MR. BOWER to those that are reasonable and necessary to protect CNBs legitimate interests. MR. BOWER acknowledges that, based upon his education, experience, and training, the non-compete and non-solicitation provisions of this Section 7 will not prevent Mr. BOWER from earning a livelihood and supporting MR. BOWER and his family during the relevant time period.
The existence of a claim, charge, or cause of action by MR. BOWER against CNB or any of its affiliates shall not constitute a defense to the enforcement by CNB of the foregoing restrictive covenants, but such claim, charge, or cause of action shall be litigated separately.
If any restriction set forth in this Section 7 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of actitives or in too broad a geographic area, the court is hereby expressly authorized to modify this Agreement or to interpret this Agreement to extend only over the maximum period of time, range of actitives, or geographic areas as to which it may be enforceable.
8. SEVERANCE PAY: If MR. BOWERs employment is terminated without cause, whether or not a change in control of CNB has occurred, MR. BOWER shall be entitled to severance benefits equal to 2.99 times his base salary for the year in which his employment ends plus 2.99 times the average of MR. BOWERs incentive pay bonuses for the three (3) years preceding the year in which his employment is terminated hereunder. This severance pay shall be tendered to MR. BOWER in cash in lump sum following the end of his employment with CNB. Mr. BOWER shall also be entitled to this severance pay if he voluntarily terminates his employment with CNB after a change in control for any of the following reasons after providing CNB notice within ninety (90) days of the occurrence of the event and a thirty (30) day opportunity to cure:
For the purposes of this Agreement, a change in control shall include but not be limited to the following:
Notwithstanding anything in this Agreement to the contrary, it will be a condition to MR. BOWERs right to receive any severance benefits under this Section 8 that he execute and deliver to CNB no later than fifty-three (53) days following the date of termination and not revoke a release of claims in favor of CNB in the form as may be reasonably prescribed by CNB. Severance payments and benefits will commence following the expiration of the sixty (60) day period following termination of employment, provided that MR. BOWER has executed and delivered and not revoked the release no later than fifty-three (53) days following the date of termination and such release is effective upon the sixtieth (60th) day following termination of employment.
A form of the release which MR. BOWER will be required to sign in order to receive the foregoing benefits is attached hereto incorporated in this Agreement as Exhibit A, and MR. BOWER hereby expressly approves it.
9. TERMINATION: This Agreement may be terminated on the occurrence of any of the following events and if terminated under this paragraph, MR. BOWER shall not be entitled to severance benefits under Paragraph 8:
10. NOTICES: All notices or communications required by or bearing upon this Agreement or between the Parties shall be in writing and sent by First Class Mail to the Parties as follows unless otherwise specified above:
11. NON-ASSIGNMENT: The Parties acknowledge the unique nature of services to be provided by MR. BOWER under this Agreement, the high degree of responsibility borne by him and the personal nature of his relationship to CNBS Board of Directors and customers. Therefore, the Parties agree that MR. BOWER may not assign this Agreement.
12. ARBITRATION: The Parties agree that all disputes or questions arising under this Agreement or because of their employment relationship shall be submitted to arbitration by three (3) arbitrators. Each Party shall select one (1) arbitrator, and then those two (2) arbitrators shall select a third (3) arbitrator. The arbitrators decision need not be unanimous. Arbitration shall be conducted at a private location in Clearfield County convenient to the parties. The arbitrators must reach and give notice of their decision within five (5) days after completion of an arbitration. The Pennsylvania Uniform Arbitration Act, 42 Pa.C.S.A. §57301 et sec. shall govern arbitrations hereunder. CNB shall compensate the arbitrators and stenographer if used. CNB shall also pay for the arbitration room. Each party shall pay their attorney fees and other costs.
13. LIMITATION ON PAYMENTS: In the event that the severance and other benefits provided for in this Agreement or otherwise payable to MR. BOWER (i) constitute parachute payments within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the Code) and (ii) but for this Section 13, would be subject to the excise tax imposed by Section 4999 of the Code, than MR. BOWERs severance benefits shall be either:
MR. BOWER shall only be entitled to delivery of the Full Amount if, on an after-tax basis after taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, payment of the Full Amount would result in MR. BOWER receiving an amount equal to or greater than 110% of the Reduced Amount. If MR. BOWER is entitled to receive the Reduced Amount, the payments and/or benefits to be provided under this Agreement shall be reduced, but not below zero, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments. Unless CNB and MR. BOWER otherwise agree in writing, any determination required under this Section 13 shall be made in writing by CNBs independent public accountants, whose determination shall be conclusive and binding upon CNB and MR. BOWER for all purposes. For purposes of making the calculations required by this Section 13, the accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. CNB and MR. BOWER shall furnish such information and documents as the accountants may reasonably request in order to make a determination under this Section. CNB shall bear all costs the accountants may reasonably incur in connection with any calculations contemplated by this Section 13.
14. COMPLIANCE WITH SECTION 409A OF THE CODE: MR. BOWER and CNB acknowledge that each of the payments and benefits promised to MR. BOWER under this Agreement must either comply with the requirements of Section 409A of the Code (Section 409A), and the regulations thereunder or qualify for an exception from compliance. To that end, MR. BOWER and CNB agree that the payment described in section 8 is intended to be excepted from compliance with Section 409A as a short-term deferral pursuant to Treasury Regulation Section 1.409A-1(b)(4).
In the case of a payment that is not excepted from compliance with Section 409A, and that is not otherwise designated to be paid immediately upon a permissible payment event within the meaning of Treasury Regulation Section 1.409A-3(a), the payment shall not be made prior to, and shall, if necessary, be deferred to and paid on the later of the date sixty (60) days after MR. BOWERs earliest separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)) and, if MR. BOWER is a specified employee (within the meaning of Treasury Regulation Section 1.409A-l(i)) on the date of his separation from service, the first day of the seventh month following MR. BOWERs separation from service. Furthermore, this Agreement shall be construed and administered in such manner as shall be necessary to effect compliance with Section 409A.
15. INJUNCTIVE RELIEF: MR. BOWER acknowledges and accepts that his compliance with his Agreements in Sections 6, 7 and/or 8 is an integral part of the consideration to be received by CNB and is necessary to protect the equity value, business and goodwill and other proprietary interests of CNB. MR. BOWER acknowledges that a breach of his Agreements in Sections 6, 7 and/or 8 will result in irreparable and continuing damage to CNB and the business of CNB for which the remedies at law will be inadequate, and agrees that, in the event of any breach of the aforesaid Agreements, CNB and its successors and assigns shall be entitled to seek injunctive relief and to any such other and further relief as may be proper.
16. ENFORCEABILITY: If any provision of this Agreement shall be found by a court with proper jurisdiction to be invalid or unenforceable, in whole or in part, then such provision shall be deemed to be modified, narrowed, or restricted only to the limited extent and in the manner necessary to render the same valid and enforceable, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law as if such provision had been originally incorporated herein as so modified, narrowed, or restricted.
17. GENERAL PROVISIONS:
IN WITNESS WHEREOF, the parties have executed this Agreement on the date written above for the purposes herein contained.