CONSULTING AGREEMENT
This
Agreement (this “Agreement”) is entered into as of the 29th
day of
August 2005 by and between De Novo Holdings, Inc., a corporation organized
under
the laws of the State of Michigan (the “Company”), and Xxxxxx X. Xxxxx, an adult
individual residing in the State of Michigan (the “Consultant”).
The
parties hereto agree as follows:
1. Engagement.
The
Company hereby engages the Consultant and the Consultant hereby agrees to
render, at the request of the Company, independent advisory and consulting
services for the Company in connection with the organization of the Company
and
its proposed banking subsidiary (the “Bank”), upon the terms and conditions
hereinafter set forth.
2. Term.
The
term
of this Agreement shall begin as of the date of this Agreement and shall
terminate on the earlier of (i) August 30, 2006 (ii) the date on which the
Bank
receives (and satisfies all conditions to opening for business under) its
authorization to commence its banking business (the “Certificate of Authority”)
from the Office of the Comptroller of the Currency or the State of Michigan
and
approval of Insurance of Accounts from the Federal Deposit Insurance
Corporation; (iii) the date on which the Company advises the Consultant that
it
has abandoned its effort to obtain the Certificate of Authority; (iv) the date
on which the Consultant receives written notice from the Company that it is
terminating this Agreement “for cause” as hereafter defined; or (v) the death or
disability of the Consultant (as used herein, the disability of the Consultant
shall be deemed to have occurred when he has been unable to perform his services
under this Agreement for a period of forty-five (45) consecutive days or the
Consultant has made any claim under any disability insurance policy. As used
herein, “for cause” shall be defined as follows: (i) the Consultant’s failure to
use diligent and good faith efforts to perform the services requested by the
Company under this Agreement (which failure is not cured within five (5) days
following written notice to the Consultant); (ii) the Consultant’s willful
misconduct or gross negligence in the performance of his services hereunder;
(iii) the Consultant’s conviction of a crime or involvement in any conduct which
could, in the judgment of the Company, adversely impact on the reputation of
the
Company or the Bank or the prospects of the Bank receiving its Certificate
of
Authority; (iv) receipt by the Company of any notification from the Office
of
the Comptroller of the Currency or the Federal Deposit Insurance Corporation
indicating that the Consultant would not be an acceptable candidate to be Chief
Executive Officer or President or Executive Vice President or Chief Financial
Officer or Chief Lending Officer of the Bank.
3. Compensation.
During
the term of this Agreement, as compensation for all services rendered by the
Consultant under this Agreement, the Company shall pay the Consultant the
following amounts:
(a) Consulting
Fee.
. The
Company shall pay the Consultant the sum of $7,500.00 per month (prorated for
any partial month), which shall be paid in arrears in two installments of
$3750.00 dollars each on the 15th
and
30th
day of
each calendar month. The Co-Managers of the Company will not need to seek
further approvals from the Company’s Board of Directors to pay these scheduled
amounts from Paragraph 3(a) to the Consultant.
(b) Deductions.
All such
compensation shall be payable without deduction for federal income, social
security, or state income taxes or any other amounts.
(c) Deferred
Compensation.
Unless
this Agreement has been terminated or the term has ended pursuant to Paragraph
2
hereof, the Company shall cause the Bank, subject to and upon its opening for
business to the public, to pay, in one lump sum, not later than thirty (30)
days
following its opening for business, an amount equal to Three Thousand Dollars
($3,000.00) times the number of months of the term of this Agreement
representing the accumulated difference of fees paid under this Agreement and
the annualized amount of compensation, prorated for the term of this Agreement.
The Co-Managers of the Company or the appropriate officers of the Bank will
not
need to seek further approvals from the Company’s or the Bank’s Board of
Directors to pay these scheduled amounts from Paragraph 3(c) to the
Consultant.
(d) Termination
Payment. If,
for
any reason, other than a termination by the Company for Cause, the Company
terminates this Agreement during its term and without the Employment Agreement
referenced in Paragraph 10 of this Agreement becoming effective, Consultant
will
be entitled to receive a lump sum payment, payable on the date of termination,
of not less than the greater of (i) one-half of the fees which would have been
payable for the remaining term of this Agreement from the date of termination
or
(ii) Twenty Five Thousand Dollars ($25,000.00).
4. Duties.
The
Consultant shall render services conscientiously and shall devote his full
time,
attention, efforts and abilities to the establishment of the Bank, including
without limitation obtaining regulatory approvals, site development activities,
personnel matters and capital raising activities, at such times during the
term
hereof and in such manner as reasonably requested by the Company, and performed
at such places and at such times as are reasonably convenient to the Company
and
the Consultant. The Consultant shall observe all policies and directives
promulgated from time to time by the Company’s Board of Directors. The
Consultant may originate mortgages under his mortgage brokerage license up
to
the point that the bank can originate its own mortgages. Until that time, the
Consultant may originate such mortgages for his own benefit during non-business
hours and place the business of the Company before any such
activity.
5. Expenses.
The
Consultant shall be reimbursed by the Company for all reasonable business
expenses and which were incurred by the Consultant during the performance of
his
services hereunder; provided, any such reimbursement in excess of $250 in any
month shall require the prior written approval of the Company’s Board of
Directors or a committee thereof; provided however that any expenses set forth
in the organizational budget shall be deemed to be approved unless the Company’s
Board of Directors makes an express determination to the contrary prior to
the
time at which the expense is incurred. The Company’s obligation to reimburse the
Consultant pursuant to this paragraph shall be subject to the presentation
to
the Company’s Board of Directors or a committee thereof by the Consultant of an
itemized account of such expenditures, together with supporting vouchers, in
accordance with any policies of the Company in effect from time to
time.
6. Independent
Contractor.
It is
expressly agreed that Consultant is acting as an independent contractor in
performing services hereunder. The Company shall carry no worker’s compensation
insurance or any health or accident insurance to cover Consultant. The Company
shall not pay any contributions to Social Security, unemployment insurance,
federal or state withholding taxes, nor provide any other contributions or
benefits, which might be expected in an employer-employer
relationship.
7. Covenant
Not to Compete.
The
Consultant hereby acknowledges and recognizes the highly competitive nature
of
the Company’s business and accordingly agrees that, during and for the period
commencing with the date hereof and ending on the later of (i) August 30, 2006
or (ii) the termination, whether by the Company or the Consultant, of this
Agreement, the Consultant will not, except as provided in Paragraph 4 hereof,
directly or indirectly:
(a) Engage
in
any business activity related to the business of banking or financial services,
or the formation of any entity for the purpose of engaging in such a business
(other than on behalf of the Company to the extent that the Consultant is then
in the employ of or consulting for the Company), whether such engagement is
as
an officer, director, proprietor, employee, partner, member, investor (other
than as a passive investor in less than one percent (1%) of the outstanding
capital stock of a publicly traded corporation), consultant, advisor, agent
or
other participant in another business,
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(b) Assist
others in engaging in any of the business activities prohibited to the
Consultant under clause (a) above, or
(c) Induce
employees of the Company to engage in any activities hereby prohibited to the
Consultant or to terminate their employment.
The
term
of this restriction shall be extended for a period of time equal to any period
of time during which the Consultant violates or fails to observe the provisions
of this paragraph.
8. No
Disclosure of Confidential Information.
The
Consultant acknowledges that the Company’s trade secrets and private processes,
as they may exist from time to time, and confidential information concerning
the
formation and development of the Bank, the Bank’s planned products, technical
information regarding the Bank, and data concerning potential customers of
and
investors in the Bank are valuable, special, and unique assets of the Company,
access to and knowledge of which are essential to the performance of the
Consultant’s duties under this Agreement. In light of the highly competitive
nature of the industry in which the business of the Company is conducted, the
Consultant further agrees that all knowledge and information described in the
preceding sentence not in the public domain and heretofore or in the future
obtained by the Consultant as a result of his engagement by the Company shall
be
considered confidential information. In recognition of this fact, the Consultant
agrees that the Consultant will not, during or after the term of this Agreement,
disclose any of such secrets, processes, or information to any person or other
entity for any reason or purpose whatsoever, except as necessary in the
performance of the Consultant’s duties as a consultant to the Company and then
only upon a written confidentiality agreement in such form and content as
requested by the Company from time to time, nor shall Consultant make use of
any
of such secrets, processes or information for Consultant’s own purposes or for
the benefit of any person or other entity (except the Company and its
subsidiaries, if any) under any circumstances during or after the term of this
Agreement.
9. Remedies.
The
Consultant acknowledges and agrees that the Company’s remedy at law for a breach
or threatened breach of any of the provisions of Paragraphs 7 and 8 of this
Agreement would be inadequate. In recognition thereof, if the Consultant
breaches or threatens to breach any provision of Paragraphs 7 and 8 of this
Agreement, the Company shall be entitled to equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available in addition
to any of its remedies at law. Nothing herein shall prohibit the Company from
pursuing any other right or remedy available to it for such breach or threatened
breach.
10. Employment
Agreement.
The
Consultant agrees to enter into, and the Company agrees to cause the Bank to
enter into, an Employment Agreement having a term of not less than five years
with the Consultant in form satisfactory to the Consultant and the Bank in
their
reasonable discretion, subject to the approval of such form by the Bank’s
primary regulators and modifications to such form as may be required by the
regulators, which Employment Agreement shall be effective as of the date on
which the Office of the Comptroller of the Currency or the State of Michigan
issues the Certificate of Authority to the Bank and the Federal Deposit
Insurance Corporation issues approval for Insurance of Accounts.
11. Assignment.
This
Agreement is a personal one, being entered into in reliance upon and in
consideration of the personal skill and qualifications of Consultant. Consultant
shall therefore not voluntarily or by operation of law assign or otherwise
transfer the obligations incurred on its part pursuant to the terms of this
Agreement without the prior written consent of Company. Any attempted assignment
or transfer by Consultant of its obligations without such consent shall be
wholly void.
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12. Modification
of Agreement:
This
Agreement may be modified by the parties hereto only by a written supplemental
agreement executed by both parties.
13. Notice.
Any
notice required or permitted to be given hereunder shall be sufficient if in
writing, and if sent by any nationally recognized courier service providing
for
receipt of delivery, registered or certified mail, postage prepaid, or by fax
followed by such mail, addressed as follows:
If
to
Company:
De
Novo Holdings, Inc.
00000
Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx
Xxxxxxx, XX 00000
Attention:
Xxxxxxxx X. Xxxxx
Chairman,
Personnel Committee
If
to
Consultant:
Xxxxxx
X.
Xxxxx
0000
Xxxxxxxxxx Xxxx
Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Or
to
such other address as the parties hereto may specify, in writing, from time
to
time.
14. Mediation
and Arbitration.
The
parties agree to mediate, in good faith, any claim arising hereunder and to
refrain from pursuing arbitration hereunder until the parties have met with
a
mediator. The parties agree to select and mediate any claim or controversy
within sixty (60) days of the date the claim or controversy accrues or
first arises. The mediator shall be selected by the Company with the
Consultant’s consent, which may not be unreasonably withheld. The mediator shall
be licensed to practice law in the State of Michigan and be experienced in
the
arbitration of labor and employment disputes.
The
parties acknowledge and agree that any claim or controversy arising out of
or
relating to this Agreement, or the breach of this Agreement, or any other
dispute arising out of or relating to the consulting relationship, shall be
settled by final and binding arbitration in the City of Detroit, State of
Michigan, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date the claim or controversy arises.
The parties further acknowledge and agree that either party must request
arbitration of any claim or controversy within one hundred twenty (120)
days of the date the claim or controversy accrues or first arises by giving
written notice of the party’s request for arbitration by certified U.S. mail or
personal delivery. Notice shall be effective upon delivery or mailing. Failure
to give notice of any claim or controversy within one hundred twenty (120)
days shall constitute a waiver of the claim or controversy.
All
claims or controversies subject to arbitration shall be submitted to arbitration
within one hundred eighty (180) days from the date the written notice of a
request for arbitration is effective. All claims or controversies shall be
resolved by a panel of three (3) arbitrators who are licensed to practice
law in the State of Michigan and who are experienced in the arbitration of
labor
and employment disputes. These arbitrators shall be selected in accordance
with
the Commercial Arbitration Rules of the American Arbitration Association in
effect at the time the claim or controversy arises. Either party may request
that the arbitration proceeding be stenographically or otherwise recorded by
a
Certified Shorthand Reporter. The arbitrators shall issue a written decision
with respect to all claims or controversies within thirty (30) days from
the date the claims or controversies are submitted to arbitration. The parties
shall be entitled to be represented by legal counsel at any arbitration
proceeding. The parties acknowledge and agree that each party will bear fifty
percent (50%) of the cost of the arbitration proceeding. The parties shall
be responsible for paying their own attorneys’ fees and other costs, if
any.
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The
parties acknowledge and agree that the arbitration provisions set forth herein
may be specifically enforced by either party, and submission to arbitration
proceedings compelled, by any court of competent jurisdiction. The parties
further acknowledge and agree that the decision of the arbitrators may be
specifically enforced by either party in any court of competent
jurisdiction.
15. Waiver
of Breach.
The
waiver by either party of any breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
16. Entire
Agreement.
This
Agreement contains the entire agreement of the parties relating to the subject
matter of this Agreement, and supersedes any prior written or oral arrangements
with respect to the Consultant’s engagement by the Company.
17. Successors,
Binding Agreement.
Subject
to the restrictions on assignment contained herein, this Agreement shall inure
to the benefit (including all rights to receive compensation earned hereunder
prior to death or disability) of and be enforceable by the Consultant’s personal
or legal representatives, executors, administrators, heirs, distributees,
devisees, and legatees.
18. 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.
19. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Michigan.
20. Headings.
The
headings of the 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
this Agreement as of the date first set forth above.
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| CONSULTANT | ||
| |
|
|
| /s/ Xxxxxx Xxxxx | ||
|
Xxxxxx X. Xxxxx |
||
| De Novo Holdings, Inc. | ||
| |
|
|
| By: | Xxxxxxxx Xxxxx | |
|
Xxxxxxxx X. Xxxxx, Chairman Personnel Committee |
||
| |
|
|
| By: | Xxxxxxxxx Xxxxxxxxx | |
|
Xxxxxxxxx
Xxxxxxxxx, Co-Manager
|
||
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