ENGAGEMENT AGREEMENT
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THIS AGREEMENT, is made as of the 27th day of May 1999, among XXXX XXXXXX
FINANCIAL CORP. ("CORPORATION"), a Pennsylvania business corporation having its
principal place of business at 000 Xxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000; XXXX XXXXXX BANK & TRUST COMPANY ("BANK"), a state chartered bank and
trust company having its principal place of business at 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx 00000, and XXXXXXX X. XXXXXXX ("XXXXXXX"), an
individual residing at 000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000,
sometimes referred to collectively as the "Parties."
WHEREAS, CORPORATION is a registered bank holding company; and
WHEREAS, Clearfield Bank & Trust Company and CSB Bank have entered into an
Agreement of Merger and Plan of Reorganization dated December 31, 1998, (the
"Reorganization Agreement"), and
WHEREAS, pursuant to the Reorganization Agreement, BANK will be a
wholly-owned banking subsidiary of CORPORATION on the effective date as set
forth in Section 11.2 of the Reorganization Agreement; and
WHEREAS, the CORPORATION and the BANK desire that XXXXXXX serve as Chairman
of the Board of Directors of each of the CORPORATION and BANK under the terms
and conditions set forth herein; and
WHEREAS, XXXXXXX agrees to serve the CORPORATION and BANK in the aforesaid
capacity under the terms and conditions set forth in this Engagement Agreement
(the "Agreement");
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and intending to be legally bound hereby, the parties agree as
follows:
TERMS OF AGREEMENT
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1. The CORPORATION and BANK hereby request that XXXXXXX serve and XXXXXXX
hereby agrees to serve as Chairman of the Board of Directors of the
CORPORATION and BANK for a term of two (2) years beginning on the
Effective Date as set forth in Section 11.2 of the Reorganization
Agreement and ending two (2) years later (the "TERM"), subject,
however, to prior termination of this Agreement as set forth below.
SERVICES
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2. XXXXXXX shall perform and discharge well and faithfully such duties as
Chairman of the Board of Directors of the CORPORATION and BANK as may
be assigned to him from time to time by the Board of Directors of the
CORPORATION and BANK.
COMPENSATION
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3. For all the services rendered by XXXXXXX hereunder, the CORPORATION or
BANK shall pay XXXXXXX an annual compensation of TWENTY THOUSAND FIVE
HUNDRED ($20,500.00) DOLLARS, at a rate of ONE THOUSAND SEVEN HUNDRED
EIGHT and 33/100 ($1,708.33) DOLLARS per month.
OTHER BENEFITS
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4. XXXXXXX shall be entitled to benefits of medical and hospitalization
insurance and life insurance made available to other Directors of the
CORPORATION or BANK. In addition, the CORPORATION or BANK shall
provide, or shall reimburse XXXXXXX for, the actual cost to maintain a
membership for XXXXXXX, at the Clearfield-Curwensville Country Club or
at another country club mutually acceptable to XXXXXXX, CORPORATION
and BANK, and CORPORATION or BANK shall either pay for, or shall
reimburse XXXXXXX for, the expenses in order for XXXXXXX to attend the
ABA and PBA Conventions.
ENGAGEMENT IN OTHER EMPLOYMENT
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5. XXXXXXX shall not engage in any business or commercial activities,
duties or pursuits which compete with the business or commercial
activities of the CORPORATION or BANK or any subsidiary thereof, or
any parent corporation or affiliate thereof, nor may XXXXXXX serve as
a director or officer or in any other capacity in a company which
competes with the CORPORATION or BANK for a period of three (3) years
beginning on the Effective Date as set forth in Section 11.2 of the
Reorganization Agreement and ending three (3) years later. In
consideration for this agreement by XXXXXXX not to compete as
hereinafter set forth, CORPORATION and BANK agree to pay to XXXXXXX
the sum of THIRTY-THREE THOUSAND FIVE HUNDRED ($33.500.00) DOLLARS,
per year, to be paid at the rate or TWO THOUSAND SEVEN HUNDRED NINETY-
ONE and 67/100 ($2,791.67) DOLLARS per month.
COVENANT NOT TO COMPETE
-----------------------
6. XXXXXXX hereby acknowledges and recognizes the highly competitive
nature of the business of the CORPORATION and BANK and accordingly
agrees that, during and for the applicable period set forth in Section
6(c) hereof, XXXXXXX shall not:
(a)(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 (1) the banking (including bank
holding company) or financial services industry, or (2) any other
activity in which CORPORATION or BANK or any of their subsidiaries are
engaged during the term of this Agreement, in any county in which, at
any time during the term of this Agreement, a branch, office or other
facility of CORPORATION or BANK or any of their subsidiaries is
located, or in any county contiguous to such a county, including
contiguous counties located outside of the Commonwealth of
Pennsylvania (the "Non-Competition Area"); or
(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 CORPORATION or BANK or any of their subsidiaries are
engaged during the period of this agreement in the Non-Competition
Area; or
(iii) solicit current and former customers of CORPORATION, BANK or any
Corporation subsidiary in the Non-Competition Area; or
(iv) solicit current or former employees of CORPORATION, BANK or any
Corporation subsidiary.
(b) It is expressly understood and agreed that, although XXXXXXX and
CORPORATION and BANK consider the restrictions contained in Section
6(a) hereof reasonable for the purpose of preserving for the
CORPORATION and BANK and their 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 6(a) hereof is an unreasonable or
otherwise unenforceable restriction against XXXXXXX, the provisions of
Section 6(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 6 shall be applicable for a three
(3) year period commencing on the Effective Date as set forth in
Section 11.2 of the Reorganization Agreement.
LIABILITY INSURANCE
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7. The CORPORATION or BANK shall use its best efforts to obtain insurance
coverage for XXXXXXX under an insurance policy covering officers and
directors of the CORPORATION or BANK against lawsuits, arbitrations or
other legal or regulatory proceedings; however, nothing herein shall
be construed
to require the CORPORATION or BANK to obtain such insurance, if the
Board of Directors of the CORPORATION or BANK determine that such
coverage cannot be obtained at a reasonable price.
TERMINATION
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8. (a) XXXXXXX'X services hereunder shall terminate upon his death.
(b) If XXXXXXX becomes disabled because of sickness, physical or
mental disability, or any other reason, the Board of Directors of
the CORPORATION or BANK shall have the option to terminate this
Agreement by giving written notice of termination to XXXXXXX.
If the services of XXXXXXX are terminated under Section 8(b) of this
Agreement, XXXXXXX, having been elected as a member of the Board of
Directors, shall have the option of serving the balance of his term
and compensated as a member of such Board upon the expiration of the
payments required by this Agreement.
(c) The board of Directors of the CORPORATION or BANK may
terminate XXXXXXX'X service hereunder for "Cause." As used in
this Agreement, "Cause" to terminate XXXXXXX'X service hereunder
shall require:
(1) the willful failure by XXXXXXX to substantially perform his duties
hereunder after notice from the Board of Directors of the CORPORATION
or BANK and a failure to cure such violation within thirty (30) days
of said notice;
(2) the willful engaging by XXXXXXX in misconduct injurious to the
CORPORATION or BANK;
(3) the willful violation by XXXXXXX of any provisions of this
Agreement, after notice from the Board of Directors of the CORPORATION
or BANK and a failure to cure such violation within thirty (30) days
of said notice, or if said violation cannot be cured within thirty
(30) days, within a reasonable time thereafter as long as XXXXXXX is
diligently attempting to cure the violation;
(4) the dishonesty or gross negligence of XXXXXXX in the performance
of his duties;
(5) the breach of XXXXXXX'X fiduciary duty involving personal profit;
(6) the violation of any law, rule or regulation governing banks or
bank officers or any final cease and desist order issued by a bank or
insurance regulatory authority any of which materially jeopardizes the
business of the CORPORATION or BANK; or
(7) conduct on the part of XXXXXXX which brings public discredit to
the CORPORATION or BANK.
PAYMENTS UPON TERMINATION
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9. In the event that this Agreement is terminated, other than for Cause
as defined in Section 8(c), XXXXXXX shall be entitled to receive the
compensation pursuant to Section 3 and Section 5 for the remainder of
the term of this agreement as set forth in Section 1 and Section 6. In
the event XXXXXXX is terminated for Cause, as defined in Section 8(c),
the CORPORATION shall pay XXXXXXX his compensation pursuant to Section
3 and Section 5 for the remainder of the term of this Agreement as set
forth in Section 1 and Section 6.
In the event of XXXXXXX'X death, any moneys that may be due him from the
CORPORATION or BANK under this Agreement shall be paid to the person designated
by him in writing for this purpose, or in the absence of any such designation,
to his estate.
DAMAGES FOR BREACH OF CONTRACT
------------------------------
10. In the event of breach of this Agreement by either the CORPORATION or
BANK or XXXXXXX resulting in damages to another party to this
Agreement, that party may recover from the party breaching the
Agreement only those damages as set forth herein. In no event shall
any party be entitled to the recovery of attorney's fees or costs.
NOTICE
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11. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when hand-delivered or mailed
by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to XXXXXXX: Xxxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the CORPORATION: Xxxx Xxxxxx Financial Corporation
Attn: Xxxxx X. Xxxxxxxx, President
X.X. Xxx 00
Xxxxxxxxxxxx, XX 00000
If to the BANK: Xxxx Xxxxxx Bank & Trust Company
Attn: Xxxxx X. Xxxxxxxx, President
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
SUCCESSORS
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12. This Agreement shall inure to the benefit of and be binding upon
XXXXXXX, his personal representatives, heirs or assigns, and to the
CORPORATION or BANK and any successors or assigns of the CORPORATION
or BANK.
SEVERABILITY
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13. If any provisions of this Agreement is declared unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
AMENDMENT
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14. This Agreement may be amended or canceled only by mutual agreement of
the parties in writing.
LAW GOVERNING
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15. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
ENTIRE AGREEMENT
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16. This Agreement supersedes any and all agreements, either oral or in
writing, between the parties to this Agreement with respect to its
subject matter, and no other agreement, statement or promise relating
to the subject matter of this Agreement that is not contained in it
shall be valid or binding.
This Agreement shall supersede and replace the Agreement dated November 25,
1997, between Clearfield Bank & Trust Company and XXXXXXX.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be duly executed in their respective names
and, in the case of the CORPORATION and BANK, by its authorized representatives,
the day and year first above written.
ATTEST: XXXX XXXXXX FINANCIAL CORP.
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
"CORPORATION"
XXXX XXXXXX BANK & TRUST COMPANY
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, President
"BANK"
WITNESS:
/s/ Xxxxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
"XXXXXXX"
