Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, made as of the 1st day of January 2005, among LEESPORT FINANCIAL
CORP. (“Company”), a Pennsylvania business corporation having a place of
business at 1240 Broadcasting Road, Wyomissing, Pennsylvania, LEESPORT BANK
(“Bank”), a national banking association having a place of business at 1240
Broadcasting Road, Wyomissing, Pennsylvania, and RAYMOND H. MELCHER, JR.
(“Executive”), an adult individual.

 

WITNESSETH:

 

WHEREAS, Bank is the wholly owned banking subsidiary of Company;

 

WHEREAS, Company, Bank and Executive have been parties to an employment
agreement dated June 15, 1998, as amended January 22, 2002, which is due to
expire December 31, 2005;

 

WHEREAS, Company and Bank desire to continue to employ Executive in the capacity
of President and Chief Executive Officer of each of Company and Bank on the
terms and conditions set forth herein;

 

WHEREAS, Executive desires to accept employment with Company and Bank on the
terms and conditions set forth herein.

 

AGREEMENT:

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:

 

1.  EMPLOYMENT.  COMPANY AND BANK EACH HEREBY EMPLOY EXECUTIVE, AND EXECUTIVE
HEREBY ACCEPTS EMPLOYMENT WITH COMPANY AND BANK, ON THE TERMS AND CONDITIONS SET
FORTH IN THIS AGREEMENT.  BY ENTERING INTO THIS AGREEMENT THE PARTIES AGREE THAT
EXECUTIVE’S CURRENT EMPLOYMENT AGREEMENT IS NULL AND VOID AS OF THE DATE FIRST
ABOVE SET FORTH, BEING SUPERCEDED IN ALL RESPECTS BY THIS AGREEMENT.

 

2.  DUTIES OF EMPLOYEE.  EXECUTIVE SHALL PERFORM AND DISCHARGE WELL AND
FAITHFULLY SUCH DUTIES AS AN EXECUTIVE OFFICER OF COMPANY AND OF BANK AS MAY BE
ASSIGNED TO EXECUTIVE FROM TIME TO TIME BY THE RESPECTIVE BOARDS OF DIRECTORS OF
COMPANY AND OF BANK.  EXECUTIVE SHALL BE EMPLOYED AS PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF COMPANY AND OF BANK, AND SHALL HOLD SUCH OTHER TITLES AS
MAY BE GIVEN TO HIM FROM TIME TO TIME BY THE RESPECTIVE BOARDS OF DIRECTORS OF
COMPANY AND OF BANK.  EXECUTIVE SHALL DEVOTE HIS FULL TIME, ATTENTION AND
ENERGIES TO THE BUSINESS OF COMPANY AND OF BANK DURING THE EMPLOYMENT PERIOD (AS
DEFINED IN SECTION 3 OF THIS AGREEMENT); PROVIDED, HOWEVER, THAT THIS SECTION 2
SHALL NOT BE CONSTRUED AS PREVENTING EXECUTIVE FROM (A) INVESTING EXECUTIVE’S
PERSONAL ASSETS IN ENTERPRISES THAT DO NOT COMPETE WITH COMPANY OR BANK OR
(B) BEING INVOLVED IN ANY OTHER ACTIVITY WITH THE PRIOR APPROVAL OF THE BOARD OF
DIRECTORS OF COMPANY AND BANK.

 

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3.  TERM OF AGREEMENT.

 

(A)  THIS AGREEMENT SHALL BE FOR A THREE (3) YEAR PERIOD (THE “EMPLOYMENT
PERIOD”) COMMENCING ON JANUARY 1, 2005 AND ENDING ON DECEMBER 31, 2007;
PROVIDED, HOWEVER, THAT THE EMPLOYMENT PERIOD SHALL BE AUTOMATICALLY EXTENDED ON
JANUARY 1, 2008 AND ON DECEMBER 31 OF EACH SUBSEQUENT YEAR (THE “ANNUAL RENEWAL
DATE”) FOR A PERIOD ENDING ONE (1) YEAR FROM EACH ANNUAL RENEWAL DATE UNLESS
EITHER PARTY SHALL GIVE WRITTEN NOTICE OF NONRENEWAL TO THE OTHER PARTY AT LEAST
THIRTY (30) DAYS PRIOR TO AN ANNUAL RENEWAL DATE, IN WHICH EVENT THIS AGREEMENT
SHALL TERMINATE AT THE END OF THE THEN EXISTING EMPLOYMENT PERIOD.

 

(B)  NOTWITHSTANDING THE PROVISIONS OF SECTION 3(A) OF THIS AGREEMENT, THIS
AGREEMENT SHALL TERMINATE AUTOMATICALLY FOR CAUSE (AS DEFINED HEREIN) UPON
WRITTEN NOTICE FROM THE BOARD OF DIRECTORS OF EACH OF COMPANY AND BANK TO
EXECUTIVE.  AS USED IN THIS AGREEMENT, “CAUSE” SHALL MEAN ANY OF THE FOLLOWING:

 

(I)  EXECUTIVE’S CONVICTION OF OR PLEA OF GUILTY OR NOLO CONTENDERE TO A FELONY,
A CRIME OF FALSEHOOD, OR A CRIME INVOLVING MORAL TURPITUDE, OR THE ACTUAL
INCARCERATION OF EXECUTIVE FOR A PERIOD OF FORTY-FIVE (45) CONSECUTIVE DAYS OR
MORE;

 

(II)  EXECUTIVE’S FAILURE TO FOLLOW THE GOOD FAITH LAWFUL INSTRUCTIONS OF THE
BOARD OF DIRECTORS OF COMPANY OR BANK WITH RESPECT TO ITS OPERATIONS, FOLLOWING
WRITTEN NOTICE OF SUCH INSTRUCTIONS;

 

(III)  EXECUTIVE’S WILLFUL FAILURE TO SUBSTANTIALLY PERFORM EXECUTIVE’S DUTIES
TO COMPANY OR BANK, OTHER THAN A FAILURE RESULTING FROM EXECUTIVE’S INCAPACITY
BECAUSE OF PHYSICAL OR MENTAL ILLNESS; OR

 

(IV)  EXECUTIVE’S WILLFUL FAILURE TO ENFORCE, OR WILLFUL VIOLATION OF, THE
WRITTEN POLICIES AND PROCEDURES OF COMPANY OR BANK.

 

If this Agreement is terminated for Cause, Executive’s rights under this
Agreement shall cease as of the effective date of such termination, provided,
however, that Executive shall be entitled to payment of any regular salary
accrued, but not yet paid, through the date of his termination for Cause. 
Executive will not be entitled to any portion of any bonus that might otherwise
have been payable to him.

 

(C)  NOTWITHSTANDING THE PROVISIONS OF SECTION 3(A) OF THIS AGREEMENT, THIS
AGREEMENT SHALL TERMINATE AUTOMATICALLY UPON EXECUTIVE’S VOLUNTARY TERMINATION
OF EMPLOYMENT (OTHER THAN AFTER A CHANGE IN CONTROL AS DEFINED IN SECTION 5(B)
OF THIS AGREEMENT), RETIREMENT AT EXECUTIVE’S ELECTION, OR EXECUTIVE’S DEATH,
AND EXECUTIVE’S RIGHTS UNDER THIS AGREEMENT SHALL CEASE AS OF THE DATE OF SUCH
VOLUNTARY TERMINATION, RETIREMENT AT EXECUTIVE’S ELECTION, OR DEATH. EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED HEREIN, IF THIS AGREEMENT IS TERMINATED FOR ANY
SUCH REASON, EXECUTIVE’S RIGHTS UNDER THIS AGREEMENT SHALL CEASE AS OF THE
EFFECTIVE DATE OF SUCH TERMINATION, PROVIDED, HOWEVER, THAT EXECUTIVE SHALL BE
ENTITLED TO PAYMENT OF ANY REGULAR SALARY ACCRUED, BUT NOT YET PAID, THROUGH THE
DATE OF HIS TERMINATION.  EXECUTIVE WILL NOT BE ENTITLED TO ANY PORTION OF ANY
BONUS THAT MIGHT OTHERWISE HAVE BEEN PAYABLE TO HIM.

 

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(D)  NOTWITHSTANDING THE PROVISIONS OF SECTION 3(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, IF EXECUTIVE BECOMES DISABLED AFTER A
CHANGE IN CONTROL, AS DEFINED IN SECTION 5(B) OF THIS AGREEMENT, EXECUTIVE SHALL
NEVERTHELESS BE ABSOLUTELY ENTITLED TO RECEIVE ALL OF THE COMPENSATION AND
BENEFITS PROVIDED FOR IN, AND FOR THE TERM SET FORTH IN, SECTION 6 OF THIS
AGREEMENT.  FOR PURPOSES OF THIS AGREEMENT, DISABILITY SHALL MEAN EXECUTIVE’S
INCAPACITATION BY ACCIDENT, SICKNESS, OR OTHERWISE WHICH RENDERS EXECUTIVE
MENTALLY OR PHYSICALLY INCAPABLE OF PERFORMING THE SERVICES REQUIRED OF
EXECUTIVE FOR THREE HUNDRED SIXTY (360) CONSECUTIVE DAYS.

 

(E)  EXECUTIVE AGREES THAT, IN THE EVENT HIS EMPLOYMENT UNDER THIS AGREEMENT IS
TERMINATED, EXECUTIVE SHALL CONCURRENTLY RESIGN AS A DIRECTOR OF COMPANY OR
BANK, OR ANY AFFILIATE OF COMPANY OR BANK, IF HE IS THEN SERVING AS A DIRECTOR
OF ANY OF SUCH ENTITIES.

 

4.  EMPLOYMENT PERIOD COMPENSATION.

 

(A)  SALARY.  FOR SERVICES PERFORMED BY EXECUTIVE UNDER THIS AGREEMENT, COMPANY
AND BANK SHALL PAY EXECUTIVE A SALARY, IN THE AGGREGATE, DURING THE EMPLOYMENT
PERIOD, AT THE RATE OF $270,000 PER YEAR, PAYABLE AT THE SAME TIMES AS SALARIES
ARE PAYABLE TO OTHER EXECUTIVE EMPLOYEES OF COMPANY OR OF BANK.  COMPANY AND/OR
BANK MAY, FROM TIME TO TIME, INCREASE EXECUTIVE’S SALARY, AND ANY AND ALL SUCH
INCREASES SHALL BE DEEMED TO CONSTITUTE AMENDMENTS TO THIS SECTION 4(A) TO
REFLECT THE INCREASED AMOUNTS, EFFECTIVE AS OF THE DATE ESTABLISHED FOR SUCH
INCREASES BY THE BOARD OF DIRECTORS OF COMPANY OR OF BANK OR ANY COMMITTEE OF
SUCH BOARDS IN THE RESOLUTIONS AUTHORIZING SUCH INCREASES.

 

(B)  BONUS.  FOR SERVICES PERFORMED BY EXECUTIVE UNDER THIS AGREEMENT, COMPANY
AND BANK SHALL PAY EXECUTIVE A BONUS, IN THE AGGREGATE, DURING THE EMPLOYMENT
PERIOD, IN SUCH AMOUNTS AND AT SUCH TIMES, ANNUALLY, AS IS PROVIDED IN SUCH
EXECUTIVE INCENTIVE PLAN FOR EXECUTIVE AS SHALL BE APPROVED BY THE BOARD OF
DIRECTORS OF COMPANY AND IN EFFECT FROM TIME TO TIME.  IN ADDITION, COMPANY
AND/OR BANK MAY, FROM TIME TO TIME, PAY SUCH OTHER BONUS OR BONUSES TO EXECUTIVE
AS COMPANY AND/OR BANK, IN THEIR SOLE DISCRETION, DEEM APPROPRIATE.  THE PAYMENT
OF ANY SUCH BONUSES SHALL NOT REDUCE OR OTHERWISE AFFECT ANY OTHER OBLIGATION OF
COMPANY AND/OR BANK TO EXECUTIVE PROVIDED FOR IN THIS AGREEMENT.

 

(C)  VACATION.  DURING THE TERM OF THIS AGREEMENT, EXECUTIVE SHALL BE ENTITLED
TO PAID ANNUAL VACATION IN ACCORDANCE WITH THE POLICIES AS ESTABLISHED FROM TIME
TO TIME BY THE BOARDS OF DIRECTORS OF COMPANY AND BANK PLUS SUCH OTHER PERSONAL
OR BONUS DAYS AS MAY BE SET FORTH IN THE POLICIES OF COMPANY AND BANK. 
EXECUTIVE SHALL NOT BE ENTITLED TO RECEIVE ANY ADDITIONAL COMPENSATION FROM
COMPANY AND BANK FOR FAILURE TO TAKE A VACATION, NOR SHALL EXECUTIVE BE ABLE TO
ACCUMULATE UNUSED VACATION TIME FROM ONE YEAR TO THE NEXT, EXCEPT TO THE EXTENT
AUTHORIZED BY THE BOARDS OF DIRECTORS OF COMPANY AND BANK.

 

(D)  AUTOMOBILE.  DURING THE TERM OF THIS AGREEMENT, COMPANY AND BANK SHALL
PROVIDE EXECUTIVE WITH EXCLUSIVE USE OF AN AUTOMOBILE.  COMPANY AND BANK SHALL
BE RESPONSIBLE AND SHALL PAY FOR ALL COSTS OF INSURANCE COVERAGE, REPAIRS,
MAINTENANCE AND OTHER OPERATING AND INCIDENTAL EXPENSES, INCLUDING LICENSE, FUEL
AND OIL.  COMPANY AND BANK SHALL PROVIDE EXECUTIVE WITH A REPLACEMENT AUTOMOBILE
AT APPROXIMATELY THE TIME EXECUTIVE’S

 

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AUTOMOBILE REACHES THREE (3) YEARS OF AGE OR 50,000 MILES, WHICHEVER IS FIRST,
AND APPROXIMATELY EVERY THREE (3) YEARS OR 50,000 MILES THEREAFTER, UPON THE
SAME TERMS AND CONDITIONS.

 

(E)  EMPLOYEE BENEFIT PLANS.  DURING THE TERM OF THIS AGREEMENT, EXECUTIVE SHALL
BE ENTITLED TO PARTICIPATE IN AND RECEIVE THE BENEFITS OF ANY PENSION OR OTHER
RETIREMENT BENEFIT PLAN, PROFIT SHARING, STOCK OPTION, EMPLOYEE STOCK OWNERSHIP,
OR OTHER PLANS, BENEFITS AND PRIVILEGES GIVEN TO EMPLOYEES AND EXECUTIVES OF
COMPANY AND BANK, TO THE EXTENT COMMENSURATE WITH HIS THEN EXISTING DUTIES AND
RESPONSIBILITIES, AS FIXED BY THE BOARDS OF DIRECTORS OF COMPANY AND BANK,
INCLUDING WITHOUT LIMITATION ENROLLMENT IN BANK’S SUPPLEMENTAL EXECUTIVE
RETIREMENT PROGRAM (SERP).  COMPANY AND BANK SHALL NOT MAKE ANY CHANGES IN SUCH
PLANS, BENEFITS OR PRIVILEGES WHICH WOULD ADVERSELY AFFECT EXECUTIVE’S RIGHTS OR
BENEFITS THEREUNDER, UNLESS SUCH CHANGE OCCURS PURSUANT TO A PROGRAM APPLICABLE
TO ALL EXECUTIVE OFFICERS OF COMPANY AND 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 COMPANY AND 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 4(A) HEREOF.

 

5.  TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.

 

(A)  IF A CHANGE IN CONTROL (AS DEFINED IN SECTION 5(B) OF THIS AGREEMENT) SHALL
OCCUR AND IF THEREAFTER AT ANY TIME THERE SHALL BE ANY VOLUNTARY OR INVOLUNTARY
TERMINATION OF EXECUTIVE’S EMPLOYMENT (OTHER THAN FOR THE REASONS SET FORTH IN
SECTION 3(B) OR 3(D) OF THIS AGREEMENT), THEN THE PROVISIONS OF SECTION 6 OF
THIS AGREEMENT SHALL APPLY.

 

(B)  AS USED IN THIS AGREEMENT, “CHANGE IN CONTROL” SHALL MEAN THE OCCURRENCE OF
ANY OF THE FOLLOWING:

 

(I)  (A)  A MERGER, CONSOLIDATION, OR DIVISION INVOLVING COMPANY, (B) A SALE,
EXCHANGE, TRANSFER, OR OTHER DISPOSITION OF SUBSTANTIALLY ALL OF THE ASSETS OF
COMPANY, OR (C) A PURCHASE BY COMPANY OF SUBSTANTIALLY ALL OF THE ASSETS OF
ANOTHER ENTITY, UNLESS (X) SUCH MERGER, CONSOLIDATION, DIVISION, SALE, EXCHANGE,
TRANSFER, PURCHASE OR DISPOSITION IS APPROVED IN ADVANCE BY EIGHTY PERCENT (80%)
OR MORE OF THE MEMBERS OF THE BOARD OF DIRECTORS OF COMPANY WHO ARE NOT
INTERESTED IN THE TRANSACTION AND (Y) A MAJORITY OF THE MEMBERS OF THE BOARD OF
DIRECTORS OF THE LEGAL ENTITY RESULTING FROM OR EXISTING AFTER ANY SUCH
TRANSACTION AND OF THE BOARD OF DIRECTORS OF SUCH ENTITY’S PARENT CORPORATION,
IF ANY, ARE FORMER MEMBERS OF THE BOARD OF DIRECTORS OF COMPANY; OR

 

(II)  ANY OTHER CHANGE IN CONTROL OF COMPANY SIMILAR IN EFFECT TO ANY OF THE
FOREGOING.

 

6.  RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.

 

(A)  IN THE EVENT THAT THERE IS A CHANGE IN CONTROL AND THE EXECUTIVE’S
EMPLOYMENT TERMINATES VOLUNTARILY OR INVOLUNTARILY OTHER THAN FOR THE REASONS
SET FORTH IN SECTION 3(B) OR 3(D) OF THIS AGREEMENT, EXECUTIVE SHALL BE
ABSOLUTELY ENTITLED TO RECEIVE THE COMPENSATION AND BENEFITS SET FORTH BELOW:

 

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(I)  COMPANY AND BANK SHALL PAY (OR CAUSE TO BE PAID), IN THE AGGREGATE, TO
EXECUTIVE IN CASH, WITHIN THIRTY (30) DAYS FOLLOWING TERMINATION, AN AMOUNT
EQUAL TO THREE (3.0) MULTIPLIED BY THE SUM OF (I) THE HIGHEST ANNUALIZED BASE
SALARY PAID OR PAYABLE TO EXECUTIVE AT ANY TIME DURING THE THREE (3) YEARS
PRECEDING SUCH TERMINATION (INCLUDING THE YEAR IN WHICH TERMINATION OCCURS) AND
(II) THE HIGHEST ANNUAL BONUS PAID OR PAYABLE WITH RESPECT TO ANY OF THE THREE
(3) YEARS (INCLUDING THE YEAR IN WHICH TERMINATION OCCURS) PRECEDING SUCH
TERMINATION; AND

 

(II)  FOR A PERIOD OF THREE (3) YEARS FOLLOWING TERMINATION, THE EXECUTIVE SHALL
BE ENTITLED TO CONTINUE PARTICIPATION IN COMPANY’S HEALTH AND OTHER WELFARE
BENEFIT PLANS; PROVIDED, HOWEVER, THAT, IF THE EXECUTIVE IS NOT PERMITTED TO
PARTICIPATE IN ANY OF SUCH PLANS IN ACCORDANCE WITH THE ADMINISTRATIVE
PROVISIONS OF THOSE PLANS AND APPLICABLE FEDERAL AND STATE LAW, COMPANY AND BANK
SHALL PAY (OR CAUSE TO BE PAID) TO THE EXECUTIVE IN CASH AN AMOUNT EQUAL TO THE
AFTER-TAX COST TO EXECUTIVE TO OBTAIN SUBSTANTIALLY SIMILAR BENEFITS.

 

(B)  EXECUTIVE SHALL NOT BE REQUIRED TO MITIGATE THE AMOUNT OF ANY PAYMENT
PROVIDED FOR IN THIS SECTION 6 BY SEEKING OTHER EMPLOYMENT OR OTHERWISE.  THE
AMOUNT OF PAYMENT OR THE BENEFIT PROVIDED FOR IN THIS SECTION 6 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.

 

(C)  THE AMOUNTS PAYABLE PURSUANT TO THIS SECTION 6 SHALL CONSTITUTE EXECUTIVE’S
SOLE AND EXCLUSIVE REMEDY IN THE EVENT OF INVOLUNTARY TERMINATION OF EXECUTIVE’S
EMPLOYMENT BY COMPANY AND/OR BANK FOLLOWING A CHANGE IN CONTROL.

 

7.  RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT ABSENT CHANGE IN CONTROL.

 

(A)  IN THE EVENT THAT EXECUTIVE’S EMPLOYMENT IS INVOLUNTARILY TERMINATED BY
COMPANY AND/OR BANK WITHOUT CAUSE AND NO CHANGE IN CONTROL SHALL HAVE OCCURRED
AT THE DATE OF SUCH TERMINATION, COMPANY AND BANK SHALL PAY (OR CAUSE TO BE
PAID), IN THE AGGREGATE, TO EXECUTIVE IN CASH, WITHIN THIRTY (30) DAYS FOLLOWING
TERMINATION, AN AMOUNT EQUAL TO (I) EXECUTIVE’S MONTHLY BASE SALARY IN EFFECT ON
THE DATE OF TERMINATION MULTIPLIED BY THE NUMBER OF MONTHS REMAINING IN THE
EMPLOYMENT PERIOD (BUT NO LESS THAN EIGHTEEN (18) MONTHS IN ANY CASE) PLUS (II)
A PORTION OF THE PROJECTED BONUS OTHERWISE PAYABLE TO EXECUTIVE FOR THE YEAR IN
WHICH SUCH TERMINATION OCCURS PRO-RATED FOR THE PERIOD OF TIME EXECUTIVE IS
EMPLOYED DURING SUCH YEAR.

 

(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.  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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(C)  THE AMOUNTS PAYABLE PURSUANT TO THIS SECTION 7 SHALL CONSTITUTE EXECUTIVE’S
SOLE AND EXCLUSIVE REMEDY IN THE EVENT OF INVOLUNTARY TERMINATION OF EXECUTIVE’S
EMPLOYMENT BY COMPANY AND/OR BANK IN THE ABSENCE OF A CHANGE IN CONTROL.

 

8.  POTENTIAL ADDITIONAL TERMINATION BENEFIT.  IN THE EVENT THAT THE AMOUNTS AND
BENEFITS PAYABLE UNDER SECTIONS 6 OR 7 THIS AGREEMENT, WHEN ADDED TO OTHER
AMOUNTS AND BENEFITS WHICH MAY BECOME PAYABLE TO THE EXECUTIVE BY COMPANY OR
BANK, ARE SUCH THAT EXECUTIVE BECOMES SUBJECT TO THE EXCISE TAX PROVISIONS OF
SECTION 4999 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
COMPANY SHALL PAY EXECUTIVE SUCH ADDITIONAL AMOUNT OR AMOUNTS AS WILL RESULT IN
THE EXECUTIVE’S RETENTION (AFTER THE PAYMENT OF ALL FEDERAL, STATE AND LOCAL
EXCISE, EMPLOYMENT, AND INCOME TAXES ON SUCH PAYMENTS AND THE VALUE OF SUCH
BENEFITS) OF A NET AMOUNT EQUAL TO THE NET AMOUNT THE EXECUTIVE WOULD HAVE
RETAINED HAD THE INITIALLY CALCULATED PAYMENTS AND BENEFITS BEEN SUBJECT ONLY TO
INCOME AND EMPLOYMENT TAXATION.  FOR PURPOSES OF THE PRECEDING SENTENCE, THE
EXECUTIVE SHALL BE DEEMED TO BE SUBJECT TO THE HIGHEST MARGINAL FEDERAL, STATE,
LOCAL AND (IF RELEVANT) FOREIGN TAX RATES.  ALL CALCULATIONS REQUIRED TO BE MADE
UNDER THIS SUBSECTION SHALL BE MADE BY COMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS,
SUBJECT TO THE RIGHT OF THE EXECUTIVE’S REPRESENTATIVES TO REVIEW THE SAME.  ALL
SUCH AMOUNTS REQUIRED TO BE PAID SHALL BE PAID AT THE TIME ANY WITHHOLDING MAY
BE REQUIRED UNDER APPLICABLE LAW, AND ANY ADDITIONAL AMOUNTS TO WHICH THE
EXECUTIVE MAY BE ENTITLED SHALL BE PAID OR REIMBURSED NO LATER THAN FIFTEEN (15)
DAYS FOLLOWING CONFIRMATION OF SUCH AMOUNT BY COMPANY’S INDEPENDENT
ACCOUNTANTS.  IN THE EVENT THAT ANY AMOUNTS PAID HEREUNDER BY COMPANY ARE
SUBSEQUENTLY DETERMINED TO BE IN EXCESS OF THE AMOUNTS OWED BECAUSE ESTIMATES
WERE REQUIRED OR OTHERWISE, THE EXECUTIVE WILL REIMBURSE COMPANY TO CORRECT THE
ERROR UPON WRITTEN NOTICE FROM COMPANY, TOGETHER WITH WRITTEN CONFIRMATION OF
THE SAME BY COMPANY’S INDEPENDENT ACCOUNTANTS, AS APPROPRIATE, AND TO PAY
INTEREST THEREON AT THE APPLICABLE FEDERAL RATE (AS DETERMINED UNDER CODE
SECTION 1274 FOR THE PERIOD OF TIME SUCH ERRONEOUS AMOUNT REMAINED OUTSTANDING
AND UNREIMBURSED).  IN THE EVENT THAT ANY AMOUNTS PAID HEREUNDER BY COMPANY ARE
SUBSEQUENTLY DETERMINED TO BE LESS THAN THE AMOUNTS OWED (OR PAID LATER THAN
WHEN DUE) FOR ANY REASON, COMPANY WILL PAY TO THE EXECUTIVE THE DEFICIENT
AMOUNT, TOGETHER WITH (I) INTEREST AT THE GREATER OF THE ABOVE-REFERENCED RATE
OR THE INTEREST HE IS REQUIRED TO PAY TAXING AUTHORITIES PLUS (II) ANY PENALTIES
ASSESSED AGAINST THE EXECUTIVE BY SUCH AUTHORITIES.  PRIOR TO ITS PAYMENT TO THE
EXECUTIVE, COMPANY SHALL BE ENTITLED TO REQUEST THE DELIVERY OF PROOF (BY
CALCULATIONS MADE BY THE EXECUTIVE’S ACCOUNTANT OR, IN THE CASE OF TAX
ASSESSMENTS, THE EXECUTIVE’S DELIVERY OF COPIES OF SUCH ASSESSMENTS) OF THE
UNDERPAID AMOUNTS AND ANY INTEREST OR PENALTIES ASSESSED BY TAXING AUTHORITIES. 
THE PARTIES RECOGNIZE THAT THE ACTUAL IMPLEMENTATION OF THE PROVISIONS OF THIS
SUBSECTION ARE COMPLEX AND AGREE TO DEAL WITH EACH OTHER IN GOOD FAITH TO
RESOLVE ANY QUESTIONS OR DISAGREEMENTS ARISING HEREUNDER.

 

9.  COVENANT NOT TO COMPETE AND NON-SOLICTATION.

 

(A)  EXECUTIVE HEREBY ACKNOWLEDGES AND RECOGNIZES THE HIGHLY COMPETITIVE NATURE
OF THE BUSINESS OF COMPANY AND BANK AND ACCORDINGLY AGREES THAT, DURING AND FOR
THE APPLICABLE PERIOD SET FORTH IN SECTION 9(C) HEREOF, EXECUTIVE SHALL NOT:

 

(I)  BE ENGAGED, DIRECTLY OR INDIRECTLY, EITHER FOR HIS OWN ACCOUNT OR AS AGENT,
CONSULTANT, EMPLOYEE, PARTNER, OFFICER, DIRECTOR, PROPRIETOR, INVESTOR (EXCEPT
AS AN INVESTOR OWNING LESS THAN 5% OF THE STOCK OF A PUBLICLY OWNED COMPANY) OR
OTHERWISE

 

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OF ANY PERSON, FIRM, CORPORATION, OR ENTERPRISE ENGAGED, IN (1) THE BANKING
(INCLUDING BANK HOLDING COMPANY) OR FINANCIAL SERVICES INDUSTRY, OR (2) ANY
OTHER ACTIVITY IN WHICH COMPANY OR ANY OF ITS SUBSIDIARIES IS ENGAGED AT THE
DATE OF TERMINATION OF THE EXECUTIVE’S EMPLOYMENT, IN ANY COUNTY IN WHICH, AT
THAT DATE, A BRANCH, OFFICE OR OTHER FACILITY OF COMPANY OR ANY OF ITS
SUBSIDIARIES IS LOCATED OR IN WHICH IS LOCATED ANY SUCH FACILITY AS TO WHICH
COMPANY OR ANY OF ITS SUBSIDIARIES IS PARTY TO A BINDING COMMITMENT, LETTER OF
INTENT, MEMORANDUM OF UNDERSTANDING OR SOME OTHER DOCUMENT THAT EVIDENCES ITS
ACQUISITION OF SUCH FACILITY, OR IN ANY COUNTY CONTIGUOUS TO SUCH A COUNTY,
INCLUDING CONTIGUOUS COUNTIES LOCATED OUTSIDE OF THE COMMONWEALTH OF
PENNSYLVANIA (THE “NON-COMPETITION AREA”);

 

(II)  PROVIDE FINANCIAL OR OTHER ASSISTANCE TO ANY PERSON, FIRM, CORPORATION, OR
ENTERPRISE ENGAGED IN (1) THE BANKING (INCLUDING BANK HOLDING COMPANY) OR
FINANCIAL SERVICES INDUSTRY, OR (2) ANY OTHER ACTIVITY IN WHICH COMPANY OR ANY
OF ITS SUBSIDIARIES IS ENGAGED AT THE DATE OF TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT, IN THE NON-COMPETITION AREA; PROVIDED, HOWEVER, THAT EXECUTIVE SHALL
NOT BE PREVENTED FROM OPERATING, WORKING FOR OR OTHERWISE BEING AFFILIATED WITH
A PERSON, FIRM, CORPORATION, OR ENTERPRISE THAT PROVIDES CONSULTING SERVICES TO
THE BANKING OR FINANCIAL SERVICES INDUSTRY, SO LONG AS EXECUTIVE DOES NOT
HIMSELF, DIRECTLY OR INDIRECTLY, PROVIDE CONSULTING SERVICES TO AN ENTITY IN
SUCH INDUSTRY WITHIN THE NON-COMPETITION AREA;

 

(III)  DIRECTLY OR INDIRECTLY SOLICIT THE SALE OF OR SELL ANY FINANCIAL SERVICE
OR PRODUCT OFFERED BY COMPANY OR BANK TO ANY CURRENT CUSTOMER OR CLIENT OF
COMPANY OR BANK OR ANY CUSTOMER OR CLIENT WHO DID BUSINESS WITH COMPANY OR BANK
AT ANY TIME WITHIN THE TWELVE (12)-MONTH PERIOD PRECEDING THE EFFECTIVE DATE OF
TERMINATION; OR

 

(IV)  DIRECTLY OR INDIRECTLY SOLICIT OR HIRE ANY EMPLOYEE OF COMPANY OR BANK OR
INDUCE ANY SUCH EMPLOYEE TO TERMINATE THEIR EMPLOYMENT RELATIONSHIP WITH COMPANY
OR BANK.

 

(B)  IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT, ALTHOUGH EXECUTIVE AND COMPANY
CONSIDER THE RESTRICTIONS CONTAINED IN SECTION 9(A) HEREOF REASONABLE FOR THE
PURPOSE OF PRESERVING FOR COMPANY AND ITS 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.

 

(C)  THE PROVISIONS OF THIS SECTION 9 SHALL BE APPLICABLE COMMENCING ON THE DATE
OF THIS AGREEMENT AND ENDING ON ONE OF THE FOLLOWING DATES, AS APPLICABLE:

 

(I)  IF EXECUTIVE’S EMPLOYMENT TERMINATES IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 3 (OTHER THAN SECTION 3(B) RELATING TO TERMINATION FOR CAUSE) OR UPON
COMPANY AND BANK GIVING NOTICE OF NON-RENEWAL OF THIS AGREEMENT AND COMPANY OR
BANK CONTINUING TO PAY EXECUTIVE’S SALARY AND PROVIDE HIM WITH MEDICAL BENEFITS
FOR A

 

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PERIOD OF EIGHTEEN (18) MONTHS, EIGHTEEN (18) MONTHS AFTER THE EFFECTIVE DATE OF
TERMINATION OF TERMINATION OF EMPLOYMENT;

 

(II)  IF EXECUTIVE’S EMPLOYMENT TERMINATES IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 3(B) (RELATING TO TERMINATION FOR CAUSE), EXECUTIVE’S EMPLOYMENT IS
INVOLUNTARILY TERMINATED IN ACCORDANCE WITH SECTION 7 PRIOR TO A CHANGE IN
CONTROL AND THE EXECUTIVE ACTUALLY RECEIVES THE PAYMENTS DESCRIBED IN SECTION 7,
EXECUTIVE VOLUNTARILY TERMINATES HIS EMPLOYMENT OTHER THAN AFTER A CHANGE IN
CONTROL AS DEFINED IN SECTION 5(B) HEREOF, OR UPON EXECUTIVE GIVING NOTICE OF
NON-RENEWAL OF THIS AGREEMENT, EIGHTEEN (18) MONTHS AFTER THE EFFECTIVE DATE OF
TERMINATION OF EMPLOYMENT; OR

 

(III)  IF EXECUTIVE VOLUNTARILY TERMINATES HIS EMPLOYMENT AFTER A CHANGE IN
CONTROL AS DEFINED BY SECTION 5(B) HEREOF OR EXECUTIVE’S EMPLOYMENT IS
INVOLUNTARILY TERMINATED AFTER A CHANGE IN CONTROL, THE EFFECTIVE DATE OF
TERMINATION OF EMPLOYMENT.

 

10.  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 OFFICES OF COMPANY AND
BANK, IN THE CASE OF NOTICES TO COMPANY AND BANK.

 

11.  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 BOARDS OF DIRECTORS OF COMPANY AND 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.

 

12.  ASSIGNMENT.  THIS AGREEMENT SHALL NOT BE ASSIGNABLE BY ANY PARTY, EXCEPT BY
COMPANY AND BANK TO ANY SUCCESSOR IN INTEREST TO THEIR RESPECTIVE BUSINESSES.

 

13.  ENTIRE AGREEMENT.  THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT OF THE
PARTIES RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.

 

14.  SUCCESSORS; BINDING AGREEMENT.

 

(A)  COMPANY AND 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 COMPANY AND BANK TO EXPRESSLY ASSUME AND AGREE
TO PERFORM THIS AGREEMENT IN THE SAME MANNER AND TO THE SAME EXTENT THAT COMPANY
AND BANK WOULD BE REQUIRED TO PERFORM IT IF NO SUCH SUCCESSION HAD TAKEN PLACE. 
FAILURE BY COMPANY AND 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 6 OF THIS AGREEMENT SHALL APPLY.  AS USED IN THIS
AGREEMENT, “COMPANY” AND “BANK” SHALL MEAN COMPANY 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)  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 FOLLOWING
TERMINATION OF EXECUTIVE’S EMPLOYMENT, 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.

 

15.  ARBITRATION.  COMPANY, 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 ARE TO BE SUBMITTED FOR RESOLUTION,
IN READING, 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”).  COMPANY AND BANK OR EXECUTIVE MAY INITIATE AN ARBITRATION PROCEEDING
AT ANY TIME BY GIVING NOTICE TO THE OTHER IN ACCORDANCE WITH THE RULES.  COMPANY
AND 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, COMPANY,
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.

 

16.  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.

 

17.  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.

 

18.  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.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

LEESPORT FINANCIAL CORP.

 

 

 

 

By:

/s/ Karen A. Rightmire

 

 

 

 

Attest:

/s/ Jenette L. Eck

 

 

 

“Company”

 

 

 

 

 

LEESPORT BANK

 

 

 

By

/s/ Karen A. Rightmire

 

 

 

 

Attest:

/s/ Jenette L. Eck

 

 

 

“Bank”

 

 

 

Witness:

 

 

 

/s/ Stephen A. Murray

 

/s/ Raymond H. Melcher, Jr.

(SEAL)

 

 

 

Raymond H. Melcher, Jr.

 

 

“Executive”

 

 

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