FORM OF CONSULTING AGREEMENT
EXHIBIT
10.1
FORM
OF
THIS
CONSULTING AGREEMENT is entered into this _______ day of _______________, 200_,
by and between COMMUNITY BANKS, INC., a Pennsylvania corporation (the
“Company”), and XXXXX X. XXXXXX, an individual residing in York County,
Pennsylvania (“Xxxxxx”).
BACKGROUND:
X. Xxxxxx
has most recently served as the chief executive officer of East Prospect State
Bank (“East Prospect”).
B. On
_____________, 200_ East Prospect merged with and into CommunityBanks, the
banking subsidiary of the Company (the “Merger”), pursuant to an Agreement and
Plan of Merger by and among the Company, CommunityBanks and East Prospect dated
September 12, 2006 (“Merger Agreement”).
C. At
the
request of the Company, Xxxxxx has advised the Company that he is willing to
serve in the capacity of an independent contractor consultant in order to
facilitate the smooth transition and assimilation of the operations and customer
relationships of East Prospect with those of CommunityBanks.
D. The
parties wish to set forth the terms and conditions of Xxxxxx’x consulting
arrangement with the Company. Initially capitalized terms used, but not defined,
in this Agreement shall have the same meanings as in the Merger
Agreement.
NOW,
THEREFORE, in consideration of the premises, and intending to be legally bound
hereby, the parties agree as follows:
1.
Retention
of Xxxxxx and Duties.
Commencing on the Effective Date of the Merger and continuing through the second
anniversary of the Effective Date (“Consulting Period”), the Company shall
retain Xxxxxx to serve it in the capacity of a consultant and an independent
contractor. During the Consulting Period, Xxxxxx shall be responsible to use
his
best efforts to develop new customer business for the Company and its
subsidiaries, retain the existing business relationships of East Prospect,
promote the corporate image of the Company in the market heretofore served
by
East Prospect and engage in such additional duties as may reasonably be
requested by the Board of Directors of the Company (the “Board”). Xxxxxx shall
report, and otherwise be answerable, to the Chairman of the Board (the
“Chairman”); provided, however, that neither the Chairman, nor the Board as a
whole, shall be entitled to direct Xxxxxx as to the means and methods he must
use to carry out his duties under this section.
2.
Term.
The
term of this Agreement shall commence the moment immediately following the
Merger and continue for a period of two years thereafter, unless earlier
terminated pursuant to Section 6.
3.
Time
Requirements of Consulting.
During
the Consulting Period, Xxxxxx agrees to devote such time to his consulting
duties hereunder as may reasonably be required to discharge the same; provided,
however, that in no event shall he be required, on average, to render consulting
services
in
excess
of 15 hours per week. During the Consulting Period, Xxxxxx (or any individual
or
business controlled by or affiliated with him) may render services to other
business entities as he desires, provided the rendering of such services does
not materially interfere with the discharge of his consulting duties hereunder
and does not otherwise violate the provisions of Sections 7 and 8. With due
regard to the duties assigned to him and the reasonable timeframes given to
him
to perform such duties, Xxxxxx shall be free to take such time off for vacation
or otherwise as he desires; provided, however, that as a matter of courtesy,
he
agrees to give 20 days prior notice to the Chairman of any material period
of
time that he plans on being unavailable to render services hereunder.
4.
Compensation
and Related Matters.
During
the term hereof, the Company agrees to pay Xxxxxx compensation at an annualized
rate of $100,000, at such times as the Company pays its exempt employees their
salaries.
5.
Expenses.
During
the term hereof, the Company shall promptly reimburse Xxxxxx for all
out-of-pocket expenses, including automobile mileage expenses, reasonably
incurred by him in connection with the discharge of his duties hereunder. Such
obligation of expense reimbursement shall not exist until Xxxxxx shall have
submitted such detailed information regarding such expenses as the Company
requires of its employees and consultants generally.
6.
Early
Termination of Agreement.
Notwithstanding anything herein to the contrary, the following provisions shall
govern the termination of this Agreement prior to the otherwise scheduled
expiration of its term set forth in Section 2.
(a)
Death.
This
Agreement shall terminate immediately upon the death of Xxxxxx. In such event,
the Company shall forthwith pay or continue to pay, as provided in Section
13(b)
and at the time otherwise due (i) a pro rata portion of his compensation earned
through the date of death under Section 4 and (ii) expenses incurred by him
but
not yet reimbursed pursuant to Section 5.
(b)
Disability.
This
Agreement shall terminate upon the good faith determination by the Board, after
consultation with a physician mutually satisfactory to the parties or their
representatives, that Xxxxxx has incurred a “permanent and total disability,” as
such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986,
as amended (the “Code”). In such event, the Company shall forthwith pay or
continue to pay to him (or his surviving spouse or estate, as provided in
Section 13(b), if appropriate) at the time otherwise due (i) a pro rata portion
of his compensation earned through the date of termination under Section 4
and
(ii) expenses incurred by him but not yet reimbursed pursuant to Section 5.
(c)
Cause.
The
Board may terminate this Agreement for Cause. For purposes of this section,
the
term “Cause” shall mean (i) the willful refusal by Xxxxxx to discharge duties
reasonably assigned to him pursuant to the provisions of this Agreement after
written notice to Xxxxxx and the failure of Xxxxxx to resume the discharge
of
such duties within 30 days after such notice, (ii) the material breach of any
of
the provisions of Sections 7 or 8 or (iii) the incarceration of Xxxxxx for
a
period of at least 45 days. In such event, the Company shall forthwith pay
to
him solely (iv) a pro rata portion of his compensation earned through the date
of termination under Section 4 and (v) expenses incurred by him but not yet
reimbursed pursuant to Section 5.
(d)
Without
Cause.
In the
event the Board terminates this Agreement without Cause prior to its scheduled
expiration date, the Company shall forthwith pay to Xxxxxx, in one lump sum
(and
without discount), an amount equal to (i) all amounts that would otherwise
have
been paid under
Section
4
had the Agreement not been so terminated and (ii) expenses incurred by him
but
not yet reimbursed pursuant to Section 5.
(e)
Voluntary
Termination by Xxxxxx Without Company Breach.
In the
event Xxxxxx voluntarily terminates the relationship created by this Agreement,
other than by reason of a material breach of the same by the Company, the
Company shall forthwith pay him (i) a pro rata portion of his compensation
earned through the date of termination under Section 4 and (ii) expenses
incurred by him but not yet reimbursed pursuant to Section 5. Notwithstanding
the foregoing, Xxxxxx shall remain bound by the provisions of Sections 7 and
8.
(f)
Voluntary
Termination by Xxxxxx Following Company Breach.
In the
event Xxxxxx voluntarily terminates the relationship created by this Agreement
by reason of a material breach of this Agreement by the Company, the Company
shall forthwith pay, in one lump sum (and without discount), an amount equal
to
(i) all amounts that would otherwise have been paid under Section 4 had he
not
so terminated and (ii) expenses incurred by him but not yet reimbursed pursuant
to Section 5. Notwithstanding the foregoing, Xxxxxx shall remain bound by the
provisions of Sections 7 and 8.
7.
Covenants.
(a)
Covenants.
Xxxxxx
hereby acknowledges and recognizes the highly competitive nature of the business
of the Company and its affiliated companies and accordingly agrees that, during
the term of this Agreement (as specified in Section 2) and for a period of
one
year thereafter, he 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 of any person, firm, corporation, or enterprise engaged, in any line
of business in which the Company or any of its affiliated companies are engaged
during the term of this Agreement through the date of his termination hereunder
(the “Protected Businesses”), in any state in which the Company or any of its
affiliated companies is licensed to do, or otherwise legally engages in,
business (the “Non-Competition Area”);
(ii)
provide financial or other assistance to any person, firm, corporation, or
enterprise engaged in a Protected Business in the Non-Competition Area;
(iii)
solicit current or former customers of the Company or any of its affiliated
companies in the Non- Competition Area; or
(iv)
solicit for hire or otherwise hire current or former employees of the Company
or
any of its affiliated companies.
(b)
Judicial
Cut-Back.
It is
expressly understood and agreed that, although Xxxxxx and the Company consider
the restrictions contained in Section 7(a) reasonable for the purpose of
preserving for the Company and its affiliated companies their good will and
other proprietary rights, if a final determination is made by a court or
arbitrator having jurisdiction that the time or territory or any other
restriction contained in Section 7(a) is an unreasonable or otherwise
unenforceable restriction against Xxxxxx, the provisions of Section 7(a) 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 or arbitrator may
determine or indicate to be reasonable.
8.
Unauthorized
Disclosure.
During
the term of this Agreement, or at any later time, Xxxxxx shall not, without
the
written consent of the Board or a person authorized thereby, knowingly disclose
to any person, other than an employee of the Company or a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by Xxxxxx of his duties hereunder, any material confidential
information obtained by him while rendering services to or on behalf of the
Company with respect to any of the Company’s or any of its affiliated companies’
services, products, improvements, formulas, designs or styles, processes,
customers, methods of business or any business practices the disclosure of
which
could be or will be damaging to the Company or any of its affiliated companies;
provided, however, that confidential information shall not include any
information known generally to the public (other than as a result of
unauthorized disclosure by Xxxxxx or any person with the assistance, consent
or
direction of Xxxxxx) or any information of a type not otherwise considered
confidential by persons engaged in the same business or a business similar
to
that conducted by the Company or its affiliated companies, or any information
that must be disclosed as required by law.
9.
Notices.
Any
notice required or permitted to be given under this Agreement shall, to be
effective hereunder, be given to the Company, in the case of notices given
by
Xxxxxx, and be given by the Company, in the case of notices given to Xxxxxx.
Any
such notice shall 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 of Xxxxxx, in the case of notices to Xxxxxx, and to
the
principal executive office of Company, in the case of notices to Company.
10.
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 Xxxxxx
and an executive officer of the Company specifically designated by the Board
for
such purpose. No waiver by any 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.
11.
Assignment.
This
Agreement shall not be assignable by any party hereto, except by the Company
to
any successor in interest to its business.
12.
Entire
Agreement.
This
Agreement contains the entire agreement of the parties relating to the subject
matters of this Agreement, and it supersedes all prior written or unwritten
understandings between the parties (or between East Prospect and Xxxxxx) with
respect to such subject matters.
13.
Successors,
Binding Agreement.
(a)
The
Company 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 the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform if no such succession had taken place. Failure by the
Company to obtain such assumption and agreement prior to the effectiveness
of
any such succession shall constitute a material breach of this Agreement. As
used in this Agreement, the “Company” shall mean the Company as hereinbefore
defined and any successor to the business and/or assets of the Company as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b)
This
Agreement shall inure to the benefit of and be enforceable by Xxxxxx’x personal
or legal representatives, executors, administrators, heirs, distributees,
devisees, and legatees, as appropriate. If Xxxxxx should die while any amount
or
benefit would be payable to him under this
Agreement
if he had continued to live, all such amounts and benefits, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to
his surviving spouse, if any, and, if there is no surviving spouse, to his
estate.
14.
Legal
Expenses.
The
Company shall pay to Xxxxxx (or his surviving spouse or estate) all reasonable
legal fees and expenses when incurred by Xxxxxx (or his surviving spouse or
estate) in seeking to obtain or enforce any right or benefit provided by this
Agreement; provided he (or his spouse or estate) prevails with respect to any
material issue in dispute.
15.
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.
16.
Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
internal laws (but not the law of conflict of laws) of the Commonwealth of
Pennsylvania.
17.
Headings.
The
headings of the sections, subsections and paragraphs 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.
IN
WITNESS WHEREOF, the parties hereto have executed, or cause to be executed,
this
Agreement as of the day and year first above written.
COMMUNITY
BANKS, INC.
By:
Xxxxx
X. Xxxxxxxxxxxx, Chairman, President and CEO
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WITNESS:
________________________________
Name:
Title:
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________________________________
Xxxxx
X. Xxxxxx
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WITNESS:
_________________________________
Name:
Title:
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