Document:

Exhibit 10.43

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

THIS FIRST
AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of July 1,
2003, by and between Expeditors International of Washington, Inc., a Washington
corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

WHEREAS,
Borrower is currently indebted to Bank pursuant to the terms and conditions of
that certain Credit Agreement between Borrower and Bank dated as of July 1,
2002, as amended from time to time (“Credit Agreement”).

 

WHEREAS, Bank
and Borrower have agreed to certain changes in the terms and conditions set
forth in the Credit Agreement and have agreed to amend the Credit Agreement to
reflect said changes.

 

NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree that the Credit Agreement shall
be amended as follows:

 

1.  Section 1.1. (a) is hereby amended by
deleting “July 1, 2003” as the last day on which Bank will make advances under
the Line of Credit, and by substituting for said date “July 1, 2004,” with such
change to be effective upon the execution and delivery to Bank of a promissory
note substantially in the form of Exhibit A attached hereto (which promissory
note shall replace and be deemed the Line of Credit Note defined in and made
pursuant to the Credit Agreement) and all other contracts, instruments and
documents required by Bank to evidence such change.

 

2.  Section 4.9. (b) is hereby deleted in its
entirety, and the following substituted therefor:

 

“(b)         Tangible Net Worth not at any time less
than $400,000,000.00, with “Tangible Net Worth” defined as the aggregate of
total stockholders’ equity plus subordinated debt less any intangible assets.”

 

3.  Except as specifically provided herein, all
terms and conditions of the Credit Agreement remain in full force and effect,
without waiver or modification.  All
terms defined in the Credit Agreement shall have the same meaning when used in
this Amendment.  This Amendment and the
Credit Agreement shall be read together, as one document.

 

4.  Borrower hereby remakes all representations
and warranties contained in the Credit Agreement and reaffirms all covenants
set forth therein.  Borrower further
certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.

 

1

 

ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed as of the
day and year first written above.

 

	
  Expeditors International of

  Washington, Inc.

  	
   

  	
  WELLS FARGO BANK,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
       /s/
  R. Jordan Gates

  	
   

  	
   

  	
  By:

  	
       /s/
  Russell Carson

  	
   

  
	
   

  	
  Jordan
  Gates, Executive Vice

  	
   

  	
   

  	
  Russell
  Carson, Relationship Manager

  
	
   

  	
  President/CFO

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
       /s/
  Charles Lynch

  	
   

  	
   

  	
   

  
	
   

  	
  Charles
  Lynch, Vice President/

  	
   

  	
   

  
	
   

  	
  Corporate
  Controller

  	
   

  	
   

  

 

2

 

REVOLVING LINE OF CREDIT NOTE

 

	
  $50,000,000.00

  	
  Seattle, Washington

  
	
   

  	
  July 1, 2003

  

 

FOR VALUE
RECEIVED, the undersigned Expeditors International of Washington, Inc.
(“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Bank”) at its office at Seattle RCBO, 999 Third Avenue 11th
Floor, Seattle, Washington 98104, or at such other place as the holder hereof
may designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of Fifty Million Dollars
($50,000,000.00), or so much thereof as may be advanced and be outstanding,
with interest thereon, to be computed on each advance from the date of its
disbursement as set forth herein.

 

DEFINITIONS:

 

As used
herein, the following terms shall have the meanings set forth after each, and
any other term defined in this Note shall have the meaning set forth at the
place defined:

 

(a)           “Business Day” means any day except a
Saturday, Sunday or any other day on which commercial banks in Washington are
authorized or required by law to close.

 

(b)           “Fixed Rate Term” means a period
commencing on a Business Day and continuing for 1, 2, 3 or 6 months, as
designated by Borrower, during which all or a portion of the outstanding
principal balance of this Note bears interest determined in relation to LIBOR;
provided however, that no Fixed Rate Term may be selected for a principal
amount less than One Million Dollars ($1,000,000.00); and provided further,
that no Fixed Rate Term shall extend beyond the scheduled maturity date
hereof.  If any Fixed Rate Term would
end on a day, which is not a Business Day, then such Fixed Rate Term shall be
extended to the next succeeding Business Day.

 

(c)           “LIBOR” means the rate per annum
(rounded upward, if necessary, to the nearest whole 1/8 of 1%) and determined
pursuant to the following formula:

 

	
  LIBOR=  

  	
  Base LIBOR

  
	
   

  	
  100% - LIBOR Reserve Percentage

  

 

(i)            “Base LIBOR” means the rate per
annum for United States dollar deposits quoted by Bank as the Inter-Bank Market
Offered Rate, with the understanding that such rate is quoted by Bank for the
purpose of calculating effective rates of interest for loans making reference
thereto, on the first day of a Fixed Rate Term for delivery of funds on said
date for a period of time approximately equal to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term applies. 
Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including,
but not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.

 

(ii)           “LIBOR Reserve Percentage” means the
reserve percentage prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for “Eurocurrency

 

1

 

Liabilities” (as defined in
Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for
expected changes in such reserve percentage during the applicable Fixed Rate
Term.

 

(d)           “Prime Rate” means at any time the
rate of interest most recently announced within Bank at its principal office as
its Prime Rate, with the understanding that the Prime Rate is one of Bank’s
base rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof after its announcement in such internal publication or
publications as Bank may designate.

 

INTEREST:

 

(a)           Interest.  The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 360-day year, actual days
elapsed) either (i) at a fluctuating rate per annum equal to the Prime Rate in
effect from time to time, or (ii) at a fixed rate per annum determined by Bank
to be three-quarters percent (.75%) above LIBOR in effect on the first day of
the applicable Fixed Rate Term.  When
interest is determined in relation to the Prime Rate, each change in the rate
of interest hereunder shall become effective on the date each Prime Rate change
is announced within Bank.  With respect
to each LIBOR selection hereunder, Bank is hereby authorized to note the date,
principal amount, interest rate and Fixed Rate Term applicable thereto and any
payments made thereon on Bank’s books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

 

(b)           Selection of Interest Rate Options.  At any time any portion of this Note bears
interest determined in relation to LIBOR, it may be continued by Borrower at
the end of the Fixed Rate Term applicable thereto so that all or a portion
thereof bears interest determined in relation to the Prime Rate or to LIBOR for
a new Fixed Rate Term designated by Borrower. 
At any time any portion of this Note bears interest determined in
relation to the Prime Rate, Borrower may convert all or a portion thereof so
that it bears interest determined in relation to LIBOR for a Fixed Rate Term
designated by Borrower.   At such time
as Borrower requests an advance hereunder or wishes to select a LIBOR option
for all or a portion of the outstanding principal balance hereof, and at the
end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i)
the interest rate option selected by Borrower; (ii) the principal amount
subject thereto; and (iii) for each LIBOR selection, the length of the
applicable Fixed Rate Term.  Any such
notice may be given by telephone (or such other electronic method as Bank may
permit) so long as, with respect to each LIBOR selection, (A) if requested by
Bank, Borrower provides to Bank written confirmation thereof not later than
three (3) Business Days after such notice is given, and (B) such notice is
given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or
at a later time during any Business Day if Bank, at it’s sole option but
without obligation to do so, accepts Borrower’s notice and quotes a fixed rate
to Borrower.  If Borrower does not
immediately accept a fixed rate when quoted by Bank, the quoted rate shall
expire and any subsequent LIBOR request from Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate.  If no specific designation of interest is
made at the time any advance is requested hereunder or at the end of any Fixed
Rate Term, Borrower shall be deemed to have made a Prime Rate interest
selection for such advance or the principal amount to which such Fixed Rate
Term applied.

 

(c)           Taxes and Regulatory Costs.  Borrower shall pay to Bank immediately upon
demand, in addition to any other amounts due or to become due hereunder, any
and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any

 

2

 

manner to LIBOR, and (ii)
future, supplemental, emergency or other changes in the LIBOR Reserve
Percentage, assessment rates imposed by the Federal Deposit Insurance
Corporation, or similar requirements or costs imposed by any domestic or
foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central
bank or other governmental authority and related in any manner to LIBOR to the
extent they are not included in the calculation of LIBOR. In determining which
of the foregoing are attributable to any LIBOR option available to Borrower
hereunder, any reasonable allocation made by Bank among its operations shall be
conclusive and binding upon Borrower.

 

(d)           Payment of Interest.  Interest accrued on this Note shall be
payable on the first day of each month, commencing August 1, 2003.

 

(e)           Default Interest.  From and after the maturity date of this
Note, or such earlier date as all principal owing hereunder becomes due and
payable by acceleration or otherwise, the outstanding principal balance of this
Note shall bear interest until paid in full at an increased rate per annum
(computed on the basis of a 360-day year, actual days elapsed) equal to four
percent (4%) above the rate of interest from time to time applicable to this
Note.

 

BORROWING AND REPAYMENT:

 

(a)           Borrowing and Repayment.  Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made
hereon by or for any Borrower, which balance may be endorsed hereon from time
to time by the holder. The outstanding principal balance of this Note shall be
due and payable in full on July 1, 2004.

 

(b)           Advances.  Advances hereunder, to the total amount of
the principal sum stated above, may be made by the holder at the written
request of Jordan Gates and Charles Lynch, acting together, who are authorized
to request advances and direct the disposition of any advances to any deposit
account of the Borrower until written notice of the revocation of such
authority is received by the holder at the office designated above, which
advances, when so deposited, shall be conclusively presumed to have been made
to or for the benefit of Borrower regardless of the fact that persons other
than those authorized to request advances may have authority to draw against
such account.

 

(c)           Application of Payments.  Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest determined
in relation to the Prime Rate, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to LIBOR, with
such payments applied to the oldest Fixed Rate Term first.

 

3

 

 

PREPAYMENT:

 

(a)           Prime Rate.  Borrower may prepay principal on any portion
of this Note which bears interest determined in relation to the Prime Rate at
any time, in any amount and without penalty.

 

(b)           LIBOR.  Borrower may prepay principal on any portion
of this Note which bears interest determined in relation to LIBOR at any time
and in the minimum amount of One Hundred Thousand Dollars ($100,000.00);
provided however, that if the outstanding principal balance of such portion of this
Note is less than said amount, the minimum prepayment amount shall be the
entire outstanding principal balance thereof. In consideration of Bank
providing this prepayment option to Borrower, or if any such portion of this
Note shall become due and payable at any time prior to the last day of the
Fixed Rate Term applicable thereto by acceleration or otherwise, Borrower shall
pay to Bank immediately upon demand a fee which is the sum of the discounted
monthly differences for each month from the month of prepayment through the
month in which such Fixed Rate Term matures, calculated as follows for each
such month:

 

(i)                                     Determine
the amount of interest which would have accrued each month on the amount
prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term applicable thereto.

 

(ii)                                  Subtract
from the amount determined in (i) above the amount of interest which would have
accrued for the same month on the amount prepaid for the remaining term of such
Fixed Rate Term at LIBOR in effect on the date of prepayment for new loans made
for such term and in a principal amount equal to the amount prepaid.

 

(iii)                               If
the result obtained in (ii) for any month is greater than zero, discount that
difference by LIBOR used in (ii) above.

 

Each Borrower acknowledges that
prepayment of such amount may result in Bank incurring additional costs,
expenses and/or liabilities, and that it is difficult to ascertain the full
extent of such costs, expenses and/or liabilities. Each Borrower, therefore,
agrees to pay the above-described prepayment fee and agrees that said amount
represents a reasonable estimate of the prepayment costs, expenses and/or
liabilities of Bank. If Borrower fails to pay any prepayment fee when due, the
amount of such prepayment fee shall thereafter bear interest until paid at a
rate per annum two percent (2.00%) above the Prime Rate in effect from time to
time (computed on the basis of a 360-day year, actual days elapsed). Each
change in the rate of interest on any such past due prepayment fee shall become
effective on the date each Prime Rate change is announced within Bank.

 

EVENTS OF DEFAULT:

 

This Note is
made pursuant to and is subject to the terms and conditions of that certain
Credit Agreement between Borrower and Bank dated as of July 1, 2002, as amended
from time to time (the “Credit Agreement”). Any default in the payment or
performance of any obligation under this Note, or any defined event of default
under the Credit Agreement, shall constitute an “Event of Default” under this
Note.

 

4

 

MISCELLANEOUS:

 

(a)           Remedies.  Upon the occurrence of any Event of Default,
the holder of this Note, at the holder’s option, may declare all sums of
principal and interest outstanding hereunder to be immediately due and payable
without presentment, demand, notice of nonperformance, notice of protest,
protest or notice of dishonor, all of which are expressly waived by each
Borrower, and the obligation, if any, of the holder to extend any further
credit hereunder shall immediately cease and terminate. Subject to the last
sentence of this paragraph (which provides that the prevailing party in an
action to enforce this Note is entitled to recover certain fees and costs in
connection therewith), each Borrower shall pay to the holder immediately upon
demand the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees),
expended or incurred by the holder in connection with the enforcement of the
holder’s rights and/or the collection of any amounts which become due to the
holder under this Note, and the prosecution or defense of any action in any way
related to this Note, including without limitation, any action for declaratory
relief, whether incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing incurred in
connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity. Notwithstanding
anything herein to the contrary, the prevailing party in any action to enforce
this Note shall be entitled to recover its reasonable outside attorneys’ fees
and costs incurred in connection with such action from the non-prevailing party
in such action.

 

(b)           Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of Washington.

 

ORAL
AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

 

IN WITNESS
WHEREOF, the undersigned has executed this Note as of the date first written
above.

 

 

Expeditors International of
Washington, Inc.

 

	
  By:

  	
       /s/
  R. Jordan Gates

  	
   

  
	
   

  	
  Jordan
  Gates, Executive Vice President/CFO

  
	
   

  	
   

  
	
  By:

  	
       /s/
  Charles Lynch

  	
   

  
	
   

  	
  Charles
  Lynch, Vice President/Corporate Controller

  

 

5Exhibit
10.1

 

CHANGE
IN CONTROL AGREEMENT

 

THIS AGREEMENT
(“Agreement”) made as of the
             day
of
                    ,
2003, by and among Peoples First, Inc., a Pennsylvania
business corporation (“Peoples First”), The Peoples Bank of Oxford, a Pennsylvania
banking institution (the “Bank”), and
                                                                                                                 ,
an individual (the “Employee”).

 

W
I T N E S S E T H:

 

WHEREAS, the
Employee will initially be serving as
                         
                                                                                                                                        
        
                                                                                                                           ;
and

 

WHEREAS, Peoples
First and the Bank consider the continued services of the Employee to be in the
best interest of Peoples First, the Bank, their affiliated companies and the
shareholders of Peoples First; and

 

WHEREAS, Peoples
First and the Bank desire to induce the Employee to remain in the employ of
his/her then employer (whether it be Peoples First or any company affiliated
with Peoples First (the “Employer”)) on an impartial and objective basis in the
event of a proposed transaction pursuant to which a Change in Control (as
defined in Section 2(c)) will occur, if completed.

 

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

 

1.                    Term of Agreement and Related Matters.

 

(a)  In
General.   Except as otherwise
provided herein, the term of this Agreement will be for a period commencing on
the date of this Agreement and ending on December 31, 2007; provided,
however, that this Agreement will automatically be renewed on January 1,
2008 and on January 1 of each subsequent year (each an “Annual Renewal
Date”) for a period of one (1) additional year from the applicable Annual
Renewal Date unless either the Executive or his/her employer gives written
notice of nonrenewal of this Agreement to the other at least sixty (60) days
prior to an Annual Renewal Date (in which case this Agreement will expire on
the Annual Renewal Date immediately following such notice).

 

(b)  Termination
for Cause.   Notwithstanding the
provisions of Section 1(a), this Agreement will terminate automatically
upon Termination for Cause of the Employee’s employment by his/her
Employer.  As used in this Agreement,
the term “Termination for Cause” means:

 

 

(i)  prior to the public announcement of a
transaction involving an actual or potential Change in Control, termination for
any reason; and

 

(ii)  concurrent with or following the public
announcement of a transaction involving an actual or potential Change in
Control, termination following (A) except if attributable to physical or mental
illness or injury, the willful failure of the Employee to perform his/her
duties, but only after written demand, and, if the termination is before the
actual occurrence of a Change in Control, only after a vote of at least
two-thirds of Peoples First’s directors then in office, (B) the commission
of any act of dishonesty against Peoples First or any company affiliated with
Peoples First, or against an employee or customer of Peoples First or any such
affiliate, (C) an intentional material violation by the Employee of any
applicable code of conduct or similar policy applicable to Employees of the
Employee’s Employer, (D) the conviction of the Employee of, or plea of
nolo contendere to, a felony or a crime of moral turpitude, (E) the
removal or prohibition of the Employee from being an institution-affiliated
party by a final order of an appropriate federal banking agency pursuant to
Section 8(e) of the Federal Deposit Insurance Act or any other provision
of applicable law, or (F) the Employee’s refusal to accept a Reasonable
Job Offer (as defined in Section 1(e)).

 

If, following a public announcement described in subsection (i)
above, a proposed transaction is terminated without completion, this Agreement
shall thereafter be construed as though no such announcement had ever been
made; provided, however, that the rights associated with any termination of
employment during the interim period shall be determined by reference to
subsection (ii) above.

 

Notwithstanding the preceding provisions of this subsection, prior to
the public announcement of a transaction involving an actual or potential
Change in Control, a transfer of the Employee to a new Employer which is
Peoples First, the Bank or an affiliate of either shall not be deemed a
Termination for Cause and this Agreement shall continue in force.

 

If the Employee’s employment is terminated for Cause, his/her rights
under this Agreement will cease as of the effective date of such termination.

 

(c)  Voluntary
Termination, Retirement, or Death. 
Notwithstanding the provisions of Section 1(a), this Agreement will
terminate automatically upon the voluntary termination of the Employee’s
employment (other than in accordance with Section 2), his/her retirement
on or after age sixty-five (65) or his/her death.  In any such event, the Employee’s rights under this Agreement
will cease as of the effective date of such termination; provided, however,
that if the Employee dies after a Notice of Termination (as defined in
Section 2(b)) is delivered by him/her in accordance with such section, the
payments described in Section 3 will nonetheless be made to the person or
persons determined pursuant to Section 9(b).

 

2

 

(d)  Disability.  Notwithstanding the provisions of
Section 1(a), this Agreement will terminate automatically upon the
termination of the Employee’s employment by reason of his/her Disability.  In such event, the Employee’s rights under
this Agreement will cease as of the effective date of such termination;
provided, however, that if the Employee becomes disabled after a Notice of
Termination is delivered by him/her in accordance with Section 2(b),
he/she will nonetheless be entitled to receive the payments described in Section 3.
 As used in this Agreement, the term
“Disability” means incapacitation, by accident, sickness or otherwise, such
that the Employee is rendered unable to perform the essential duties required
of him/her by his/her then position with the Employer, notwithstanding
reasonable accommodation, for a period of six (6) consecutive months.

 

(e)  Reasonable
Job Offer Defined.  For purposes of
this Agreement, the term “Reasonable Job Offer” means a good faith offer of
employment made or directly facilitated by Peoples First, the Bank, an
affiliate of either, an entity proposing to acquire the business of Peoples
First or the Bank, or an affiliate of such entity, which offer (i) would
not give the Employee the right to terminate employment for Good Reason under
Section 2(a)(ii), (iii) or (iv), and (ii) does not require an
employment background and skill set materially different than required for
his/her then position.

 

2.                    Termination Following a Change in Control.

 

(a)  Events
Giving Right To Terminate For Good Reason. 
If a public announcement of a transaction involving an actual or
potential Change in Control occurs and, concurrently therewith or during a
period of eighteen (18) months thereafter, an event constituting Good Reason
also occurs with respect to the Employee, he/she may terminate his/her
employment in accordance with the provisions of Section 2(b) and,
thereupon, will become entitled to the payments described in
Section 3.  As used in this
Agreement, the term “Good Reason” means any of the following events:

 

(i)  the involuntary termination of the
Employee’s employment, other than an involuntary termination permitted in
Sections 1(b) and (d);

 

(ii)  a reduction in the Employee’s base
compensation below a level that was in effect immediately prior to the public
announcement;

 

(iii)  the failure to provide the Employee with a
total compensation package (salary, welfare and pension benefits, stock options
and a bonus plan evaluated on the basis of bonus potential) reasonably
comparable to the compensation package provided to the Employee immediately
prior to the public announcement;

 

(iv)  the reassignment of the Employee to a
principal office which is more than thirty-five (35) miles from his/her primary
residence as of the date of the public announcement; and

 

(v)  any material breach of this Agreement by the
Employee’s Employer at the relevant time, coupled with the failure to cure the
same within thirty (30) days after receipt of written notice of such breach
from the Employee.

 

(b)  Notice
of Termination.  Upon the occurrence
of an event of Good Reason subject to Section 2(a), the Employee may,
within ninety (90) days of the occurrence of any such event, resign from
employment by a notice in writing (“Notice of Termination”) delivered to
Peoples First, whereupon he/she will become entitled to the payments and
benefits described in Section 3. 
In the case of a termination described in Clause (i) of
Section 2(a), the Employee shall confirm his/her involuntary termination,
in writing, within ninety (90) days of the date of such termination, and such
confirmation will be deemed a Notice of Termination.

 

3

 

(c)  Change
in Control Defined.  As used in this
Agreement, the term “Change in Control” means any of the following:

 

(i)  any “person” (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the
“Exchange Act”)), other than Peoples First, a subsidiary of Peoples First, or
an employee benefit plan of Peoples First or a subsidiary of Peoples First
(including a related trust), becomes the beneficial owner (as determined
pursuant to Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of Peoples First representing more than 19.9% of (A) the
combined voting power of Peoples First’s then outstanding stock and securities
or (B)  the aggregate number of shares of Peoples First’s then outstanding
common stock;

 

(ii)  the occurrence of a sale of all or
substantially all of the assets of Peoples First or the Bank to an entity which
is not a direct or indirect subsidiary of Peoples First;

 

(iii)  the occurrence of a reorganization, merger,
consolidation or similar transaction involving Peoples First, unless
(A) the shareholders of Peoples First immediately prior to the consummation
of any such transaction initially thereafter own securities representing at
least a majority of the voting power of the surviving or resulting corporation,
and (B) the directors of Peoples First immediately prior to the
consummation of such transaction initially thereafter represent at least a
majority of the directors of the surviving or resulting corporation;

 

(iv)  a plan of liquidation or dissolution, other
than pursuant to bankruptcy or insolvency, is adopted for Peoples First or the
Bank;

 

(v)  during any period of two consecutive years,
individuals who, at the beginning of such period, constituted the Board of
Directors of Peoples First cease to constitute the majority of such Board
(unless the election of each new director was expressly or by implication
approved by a majority of the Board members who were still in office and who
were directors at the beginning of such period); and

 

(vi)  the occurrence of any other event which is
irrevocably designated as a “change in control” for purposes of this Agreement
by resolution adopted by a majority of the then non-employee directors of
Peoples First.

 

Notwithstanding
the foregoing, a Change in Control will not be deemed to have occurred if a
person becomes the beneficial owner, directly or indirectly, of stock and
securities representing more than 19.9% of the combined voting power of Peoples
First’s then outstanding stock and securities or the aggregate number of shares
of Peoples First’s then outstanding common stock solely as a result of an
acquisition by Peoples First of its stock or securities which, by reducing the
number of securities or stock outstanding, increases the proportionate number
of securities or stock beneficially owned by such person; provided, however,
that if a person becomes the beneficial owner of more than 19.9% of the
combined voting power of stock and securities or the aggregate number of shares
of common stock by reason of such acquisition and thereafter becomes the
beneficial owner, directly or indirectly, of any additional voting stock or
securities or common stock (other than by reason of a stock split, stock
dividend or similar transaction), then a Change in Control will thereupon be
deemed to have occurred.

 

(d)  Termination
of Proposed Change in Control Transaction. 
If, following a public announcement described in Subsection (a), a
proposed transaction is terminated without completion, this Agreement shall
thereafter be construed as though no such announcement had ever been made;
provided,

 

4

 

however, that the rights
associated with any termination of employment or the giving of a Notice of
Termination during the interim period shall be determined without regard to
this subsection.

 

3.  Rights in the Event of Certain Terminations Following Change
in Control.  In the event the
Employee validly and timely delivers a Notice of Termination to Peoples First,
he/she will be entitled to receive the following payments and benefits:

 

(a)  Basic
Payments.  The Employee shall
receive a continuation of payments of his/her base salary plus bonus (with the
per pay bonus amount equal to the highest of the last two years’ bonus divided
by the number of pay periods in a calendar year), at the salary amount in
effect on the day immediately preceding the Change in Control (or as the same
may be increased following a Change in Control), for a period of either
(a) eighteen (18) months in the event of a Change in Control
occurring prior to January 1, 2005 or (b) twenty-four (24) months in
the event of a Change in Control occurring on or after January 1,
2005.  Payments under this
Section 3(a) shall be made monthly in equal installments beginning on the
first day of the month immediately following the month in which Employee
delivers the Notice of Termination and continuing on the first day of each
month thereafter.

 

5

 

 

(b)  Health
and Medical Benefits.  For a period
of two (2) years from the date of termination of employment, the Employee shall
be provided, at no charge, with a continuation of health and medical benefits
substantially similar to the most favorable of such benefits provided to
him/her during the two (2) year period immediately preceding such termination.  To the extent such benefits cannot be
provided under a plan because the Employee is no longer an employee of the
Employer, a dollar amount equal to the after-tax cost (estimated in good faith
by Peoples First) of obtaining such benefits, or substantially similar
benefits, shall be paid to him/her periodically, as appropriate.

 

(c)  Excise
Tax Matters.  Notwithstanding
anything in this section or elsewhere in this Agreement to the contrary, in the
event the payments and benefits payable hereunder to or on behalf of the
Employee, when added to all other amounts and benefits payable to or on behalf
of the Employee, would result in the imposition of an excise tax under
Section 4999 of the Internal Revenue Code of 1986, as amended, the amounts
and benefits payable hereunder shall be reduced to such extent as may be
necessary to avoid such imposition.  The
Employee shall have the right, within thirty (30) days of receipt of written
notice from Peoples First, to specify which amounts and benefits shall be reduced
to satisfy the requirements of this subsection.  All calculations required to be made under this subsection will
be made by Peoples First’s independent public accountants, subject to the right
of Employee’s representative to review the same.  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.

 

(d)  Primary
Obligor.  The obligation to make
payments and provide benefits under this section shall primarily be those of
the Employee’s Employer as of the date of his/her termination of
employment.  In the event the Employer
is not Peoples First or the Bank, Peoples First will cause such Employer to make
required payments and provide required benefits.  To the extent Peoples First fails or is unable to do so, it shall
make such payments and provide such benefits.

 

4.                    Legal Expenses.  Peoples First will pay (or cause
to be paid) to the Employee all reasonable legal fees and expenses when incurred
by the Employee in seeking to obtain or enforce any right or benefit provided
by this Agreement, provided he/she acts in good faith with respect to issues
raised.

 

5.                    Notices.  Any notice required or permitted
to be given under this Agreement will, to be effective hereunder, be given to
Peoples First, in the case of notices given by the Employee.  Any such notice will be deemed properly
given if in writing and if mailed by registered or certified mail, postage prepaid
with return receipt requested, to the last known residence address of the
Employee, in the case of notices to the Employee, and to the principal office
of Peoples First, in the case of notices to Peoples First.

 

6

 

6.                    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 the Employee and an Employee
officer of Peoples First designated for such purpose by the Board of Directors
of Peoples First.  No waiver by any
party hereto at any time of any breach by another party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party will be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.

 

7.                    Assignment.  This Agreement is not assignable
by any party hereto, except by Peoples First and the Bank to any successor in
interest to the respective businesses of Peoples First and the Bank.

 

8.                    Entire Agreement.  This Agreement contains the
entire agreement of the parties relating to the subject matter hereof and, in
accordance with the provisions of Section 18, supersedes any prior
agreement of the parties.

 

9.                    Successors; Binding Effect.

 

(a)  Successors.  Peoples First will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of Peoples First
and/or the Bank to expressly assume and agree to perform this Agreement (or
cause it to be performed) in the same manner and to the same extent that
Peoples First, the Bank or any affiliated company of either would be required
to perform it if no such succession had taken place.  Failure by Peoples First to obtain such assumption and agreement
prior to the effectiveness of any such succession shall constitute a material
breach of this Agreement under Section 2(a)(v).  As used in this Agreement, “Peoples First” and the “Bank” means
Peoples First and the Bank as hereinbefore defined and any successor to the
business and/or assets of Peoples First and/or the Bank as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

(b)  Binding
Effect.  This Agreement shall inure
to the benefit of and be enforceable by the Employee’s personal or legal
representatives, executors, administrators, heirs, distributees, devisees, and
legatees.  If the Employee should die
while any amount is payable to the Employee under this Agreement if the
Employee had continued to live, all such amounts, unless otherwise provided
herein, will be paid in accordance with the terms of this Agreement to the
Employee’s surviving spouse or, if there is no such person, to the Employee’s
estate.

 

10.              Continuation of Certain Provisions.  Any
termination of the Employee’s employment under this Agreement or of this
Agreement will not affect the benefit provisions of Section 3 or 4, which
will, if relevant, survive any such termination and remain in full force and
effect in accordance with their respective terms.

 

7

 

11.              Other Rights.  Except as provided in
Sections  3(c) and 18, nothing herein shall be construed as limiting,
restricting or eliminating any rights the Employee may have under any plan,
contract or arrangement to which he/she is a party or in which he/she is a
vested participant; provided, however, that any termination payments required
hereunder will be in lieu of any severance benefits to which he/she may be
entitled under a severance plan or arrangement of Peoples First, the Bank, an
affiliate of either, or an entity which is the successor of any of them or an
affiliate thereof; and provided further, that if the benefits under any such
plan or arrangement may not legally be eliminated, then the payments hereunder
will be correspondingly reduced in such equitable manner as the Board of
Directors of Peoples First may determine.

 

12.              No Mitigation or Offset.  The
Employee shall not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking employment or otherwise; nor shall
any amounts or benefits payable or provided hereunder be reduced in the event
he/she does secure employment.

 

13.              Validity.  The invalidity or
unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which will
remain in full force and effect.

 

14.              Applicable Law.  Except to the extent preempted
by federal law, this Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without regard to its
conflicts of law principles.

 

15.              Number.  Words used herein in the
singular shall be construed as being used in the plural, as the context
requires, and vice  versa.

 

16.              Headings.  The headings of the sections and
subsections 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.

 

17.              References to Entities.  All
references to Peoples First shall be deemed to include references to the Bank,
or any affiliate of either, as appropriate in the relevant context, and vice
versa; provided, however, that this section shall not be construed in a
manner that results in a determination that a transaction constitutes a Change
in Control unless such transaction is literally described in the definition of
such term.

 

18.              Effective Date; Termination of Prior Agreements.  This
Agreement shall become effective immediately upon the execution and delivery of
the same by the parties hereto.  Upon
the execution and delivery of this Agreement, any prior agreement relating to
the subject matter hereof will be deemed automatically terminated and be of no
further force or effect.

 

19.              Withholding For Taxes.  All
amounts and benefits paid or provided hereunder shall be subject to withholding
for taxes as required by law.

 

8

 

20.              Nonsolicitation of Employees and Customers.  During
the period of time that any payments and benefits are to be provided to
Employee under Section 3, he/she shall refrain from directly or indirectly
soliciting for employment or business relationship purposes employees or
customers of Peoples First, the Bank or any affiliate of either or any
successor to either as of the date of his/her termination of employment.  In the event of a breach of this section,
the Employee’s right to payments and benefits under Sections 3 and 4 shall
immediately terminate.  Peoples First or
any successor shall be entitled to recover any payments or benefits made
following the commencement of the prohibited conduct, but before discovery of
the same, and may commence an action in any court of competent jurisdiction for
such additional legal and equitable relief as it may deem necessary or
appropriate to recover damages incurred by reason of such conduct and to
preclude continued violation of this section.

 

IN WITNESS WHEREOF, the parties have executed this
Agreement, or caused it to be executed, as of the date first above written.

 

	
   

  	
  PEOPLES
  FIRST, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
  (SEAL)

  	
  Attest:

  	
   

  	
   

  
	
   

  	
  (Assistant)
  Secretary

  
	
   

  	
   

  
	
   

  	
  (“Peoples First”)

  
	
   

  	
   

  
	
   

  	
  THE
  PEOPLES BANK OF OXFORD

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  
	
  (SEAL)

  	
  Attest:

  	
   

  	
   

  
	
   

  	
  (Assistant)
  Secretary

  
	
   

  	
   

  
	
   

  	
  (“Bank”)

  
	
  Witness:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  
	
   

  	
   

  
	
   

  	
  (“Employee”)

  
								

 

9

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