CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement"), entered into this 26th day of
August, 1996 (the "Effective Date"), by and between Xxxxx Bank, Honesdale,
Pennsylvania (the "Bank") and Xxxxxxx X. Xxxx (the "Consultant").
WHEREAS, the Consultant has served for many years as the Bank's President,
Chief Executive Officer and as Chairman of its Board of Directors (the "Board of
Directors"), and has developed, as a result of such service, extensive
knowledge, expertise and goodwill regarding the business, industry, and
community in which the Bank operates and competes; and
WHEREAS, effective August 26, 1996, Xxxxxxx Xxxxx will commence employment
as the Bank's President, and the Bank desires to retain the services of Xx.
Xxxx, in a consulting capacity (beyond the services provided by a director or
Chairman of the Board of the Bank), in order to assist Xx. Xxxxx on a daily
basis during his first six months with the Bank, and thereby to protect the
continuity of the Bank's operations in the business, industry and community
during this transition period.
WHEREAS, the parties desire by this writing to set forth the engagement of
the Consultant by the Bank, upon the terms and conditions set forth below.
NOW, THEREFORE, it is AGREED as follows:
1. Duties. The Bank hereby agrees to retain the services of the Consultant
for the period set forth in Section 3 below in a consulting capacity. The
Consultant's responsibilities shall consist generally of assisting the Bank's
new President in managing the Bank as well as rendering such other executive,
administrative and management services for the Bank and its Board of Directors
as is requested from time to time by the Board of Directors, including rendering
advice, consultation, and analysis to the Bank with respect to solicitation of
deposits, branch operations, financial matters, real estate and commercial
lending transactions, business development, internal administration, securities
and investment transactions, the effect of legislative and regulatory
developments on the business and affairs of the Bank, and related activities,
all on an as needed basis, and he also shall be responsible for such other
additional consulting duties and special consulting assignments as from time to
time may be mutually agreed upon by the Bank's Board of Directors and the
Consultant.
The Consultant agrees that he will devote a sufficient amount of his
working time to faithfully, fully and satisfactorily perform all the consulting
services to the Bank required to him hereunder, and that he will perform such
services to the best of his ability.
2. Compensation. The Bank agrees to pay the Consultant for his services
hereunder a quarterly fee equal to $20,000. From the date the Consultant earns
his fee until it is paid to him (or his estate), the Bank shall accrue interest
thereon on a quarterly basis at a rate equal to the highest return paid on the
Bank's one-year certificates of deposit as of the January 1st preceding the date
on which such interest is credited. Such fee and accrued interest shall be paid
to Consultant as soon as practicable after his attainment of age seventy-two
(72), or immediately to his estate upon his death prior to such date.
3. Term. The term of the Consultant's engagement under this Agreement
shall be he period commencing on the Effective Date and ending at the end of six
(6) months from the Effective Date. In addition, the Bank and Consultant may
agree to extend this Agreement for additional periods beyond its then effective
expiration date at an agreed upon compensation.
4. Loyalty; Noncompetition. During the term of the Consultant's engagement
under this Agreement, the Consultant shall not engage in any business or
activity contrary to the business affairs or interests of the Bank and shall not
serve any other depository institution as an officer, director or consultant.
Nothing contained in this Section 4 shall be deemed to prevent or limit the
right of the Consultant to invest in the capital stock or other securities of
any business dissimilar from that of the Bank, or, solely as a passive investor,
in any business.
5. Independent Contractor Status. The Bank and the Consultant agree that
for purposes of this Agreement and all other purposes (including but not limited
to Federal and State income tax withholding), the Consultant is an independent
contractor, and not an employee of the Bank, and shall be liable for all income
and employment taxes on his compensation. The Bank has no right to control or
direct the details, manner or means by which the Consultant performs services
under this Agreement, and, except as specifically set forth herein, the
Consultant is not entitled to any benefits that the Bank provides for its
employees. However, this Agreement shall not impair, reduce or limit in any
respect whatsoever (a) the retirement, pension and related benefits from the
Bank which the Consultant is entitled to receive as a retired officer of the
Bank; (b) the Consultant's rights, obligations, duties or compensation as a
director of the Bank; or (c) the Consultant's rights of indemnification as a
director of the Bank and/or as an agent of the Bank hereunder in accordance with
applicable law, regulation, or the Bank's charter or bylaws, it being explicitly
understood that the Consultant shall be entitled to such indemnification.
6. Termination of the Agreement. Unless sooner terminated in accordance
with this Section, or extended by agreement of the parties, this Agreement shall
terminate upon expiration of the term determined under Section 3 hereof.
(a) This Agreement shall automatically terminate upon the
Consultant's death, in which event his estate shall be entitled to receive the
compensation due the Consultant through the last day of the calendar month in
which his death occurred.
(b) For Just Cause, the Board of Directors may, by written notice to
the Consultant, immediately terminate this Agreement at any time. If terminated
for Just Cause, the Consultant shall be entitled to receive compensation to the
date of his termination on a pro rata basis. The Consultant shall have no right
to receive compensation or other benefits for any period after being terminated
for Just Cause. Termination for "Just Cause" shall include termination because
the Consultant's personal dishonesty, incompetence, willful misconduct,
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breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses), or material breach of any
provision of this Agreement.
(c) For a reason other than Just Cause, the Board of Directors may
at any time, by written notice to the Consultant, immediately terminate his
performance of future services under this Agreement, in which event the
Consultant shall be entitled to receive the compensation and benefits otherwise
payable under this Agreement until the expiration date hereof.
(d) The Consultant may voluntarily terminate this Agreement, upon a
least 60 days prior to written notice to the Board of Directors, in which case
he shall receive only his compensation up to the date on which the Agreement
terminates on a pro rata basis.
7. Regulatory Requirements. The provisions of this Agreement shall be
subject to any regulation or order issued by a governmental agency having
jurisdiction over the Bank.
8. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon any corporate or other successor of the Bank which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets of the Bank. Since the Bank is
contracting for the unique and personal expertise of the Consultant, the
Consultant shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank.
9. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by both parties, except as herein
otherwise specifically provided.
10. Applicable Law. This Agreement shall be governed in all respects,
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the Commonwealth of Pennsylvania.
11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
12. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as approved to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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