EXHIBIT 10.3
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (this "Agreement") is made as of August 16th,
2004 (the "Effective Date") by and between Hometown Community Bancshares, Inc.,
a Georgia corporation (the "Company"), and Xxx X. Xxxxxx (the "Consultant").
BACKGROUND
The Company is in the process of organizing a new community bank to be
known as Hometown Community Bank (the "Bank") in the Braselton, Georgia area.
The Consultant is Vice Chairman of the Board of Directors of the Company and
an organizer of the Bank. The Consultant has previously served as a Chief
Executive Officer of other community banks, and the Company desires to engage
the Consultant to provide consulting services regarding the organization and
operation of the Bank in accordance with the terms and conditions of this
Agreement, and the Consultant is willing to do so. The Company may assign this
Agreement to the Bank once it has been organized.
Each of the Company and the Consultant agree that the terms, conditions,
and provisions of this Agreement are fair and reasonable and are necessary to
protect the legitimate business interests of each other.
Therefore, in consideration of the mutual promises and covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency
of which are mutually acknowledged, the Company and the Consultant agree as
follows:
1. Consulting Services. Subject to the terms and conditions set forth
-------------------
in this Agreement, the Company hereby agrees to engage the Consultant as an
independent business consultant. The Consultant shall consult with the Chief
Executive Officer and the Board of Directors with respect to the executive
management of a de novo bank and the organization and operation of the Bank
and such other duties as may otherwise be assigned to the Consultant by the
Board of Directors from time to time for the Term (as defined in Section 2)
("Duties"). In such position, the Consultant shall perform such consulting
service for the Bank diligently and to the reasonable satisfaction of the
Company's Chief Executive Officer and Board of Directors, subject to the
requirement that the Consultant shall be required to be on site at the Bank's
offices one day per week and that the Consultant shall be available for
telephone consultations during other business hours.
2. Term And Termination. The term of the Consultant's engagement under
--------------------
this Agreement (the "Term") will commence on the Effective Date and continue
until the second anniversary of the Effective Date. The Company may end the
Term earlier under the following circumstances:
(a) in the event of the Consultant's death;
(b) if the Consultant is totally disabled so that he has been unable
to perform his duties and responsibilities hereunder for a period of
60 consecutive days;
(c) if the Company's Board of Directors terminates this Agreement
with "cause" (as defined below); or
(d) if the Consultant materially breaches the terms of this
Agreement and such breach remains uncured after reasonable written
notice of and opportunity to cure such breach;
(e) by mutual written agreement between the Executive and the
Company.
If the Company terminates this Agreement pursuant to this Section 2 prior
to the stated end of the Term, the Consultant (or his representative in the
event of his death) will be entitled to receive payment of all compensation
described herein, except that amounts due under Section 3 will only be due
through the date of termination. The provisions of Sections 5 and 6 hereof
will survive any termination in accordance with their terms. As used in this
Agreement, termination with "cause" means any termination evidenced by a finding
adopted in good faith by the Board of Directors of the Company that the
Consultant (i) willfully and continually failed to substantially perform his
duties under this Agreement (other than a failure resulting from the
Consultant's incapacity due to physical or mental illness) and such failure
continues after written notice to the Consultant providing a reasonable
description of the basis for the determination that the Consultant has failed
to perform his duties, (ii) has been indicted for or has entered into a plea
bargain with respect to a criminal offense other than misdemeanors not
disclosable under the federal securities laws, (iii) has breached this Agreement
in any material respect and such breach is not susceptible to remedy or cure or,
if susceptible to remedy or cure, is not cured or remedied reasonably promptly
after written notice to the Consultant providing a reasonable description of
the breach, (iv) engaged in conduct to the material detriment of the Company
that is dishonest, fraudulent, unlawful or grossly negligent or which is not in
compliance with the Company's Code of Conduct or similar applicable set of
standards of conduct and business practices set forth in writing and provided
to the Consultant prior to such conduct, (v) has been found by any regulatory
authority or similar authority in any jurisdiction in which the Company is
conducting business or intends to submit a proposal or conduct business
unsuitable or unfit to continue to perform his obligations to the Company under
this Agreement, and is the subject of a written notice received by the Company
from such authority of such a finding or (vi) has failed to file appropriate
applications with, provide requested information to, or otherwise fails to
cooperate with, any such authority.
3. Compensation. During the Term, as compensation for the performance
------------
of the Consultant's services under this Agreement, the Company will pay the
Consultant $5,000 per month. The Company shall grant the Consultant options
to purchase 5,000 shares of the Company's common stock. The options shall vest
in two equal annual installments beginning on the first anniversary of the
Effective Date, and shall have a term of 10 years. The options shall have an
exercise price equal to the price at which the Company sells shares of its
common stock in its initial public offering. The options shall immediately vest
in full upon a Change in Control.
-2-
4. Reimbursement Of Expenses.
-------------------------
(a) The Company will reimburse the Consultant for his reasonable
travel expenses if he is directed to travel to any location other
than the Bank's offices as part of his duties. In addition, the
Company will reimburse the Consultant for the cost of obtaining high-
speed broadband internet access at his home, up to a maximum of $50
per month.
5. Restrictive Covenants. In addition to any other covenants, contracts,
---------------------
or agreements to which the Consultant may be subject, during the Term and for a
period of 6 months from the end thereof, (the "Restricted Period"), the
Consultant will not without the written consent of the Chairman of the Board of
Directors of the Company, directly or indirectly, either as an individual or as
a consultant, partner, officer, director or over 5% shareholder of any Person
(as defined below):
(a) conduct or assist others in conducting any business that is in
competition with the business of the Bank (the "Bank's Business") in
the Bank's Market Area (as defined below);
(b) recruit, hire, assist others in recruiting or hiring, discuss
employment with, or refer to others for employment (collectively
referred to as "Recruiting Activity") any individual who is, or within
the 6-month period immediately preceding the date of any such
Recruiting Activity was, at any time, an employee of or consultant to
the Bank; or
(c) solicit or induce, attempt to induce or assist any other Person
in inducing or attempting to induce, directly or indirectly, any
customer of the Bank in the Market Area with respect to any business
competitive with the Bank's Business.
Consultant agrees and warrants that the scope of this covenant contained
in this Section 5 is reasonable as to time, area, and persons covered and is
necessary to protect the legitimate business interest of the Company. It is
further agreed that such covenant will be regarded as divisible and will be
operative as to time, area, and persons to the extent that it may be so
operative, and if any part of it is declared invalid, unenforceable, or void
as to time, area, or persons covered, the validity and enforceability of the
remainder will not be affected.
The term "Person" as used in this Agreement means an individual,
corporation, association, partnership, trust, or unincorporated organization,
or any governmental or regulatory body or other entity. The term "Market Area"
as used in this Agreement means an area within a 20-mile radius of the Bank's
offices, it being agreed that the Bank will conduct its Business in an area
that encompasses such 20-mile radius area.
6. Confidentiality. The Consultant acknowledges that the trade secrets,
---------------
plans, strategies, and technology and processes of the Company and the Bank,
as they may exist from time to time, and information concerning the products,
services, production, reconditioning, development, technology, and all technical
information, procurement and sales activities and procedures, customer,
supplier, or distributor lists, promotion and pricing techniques, and credit and
financial data concerning customers, suppliers, and distributors of the Company
-3-
are valuable, special, and unique assets of the Company and the Bank,
respectively (collectively, the "Confidential Information"). In light of the
competitive nature of the industry in which the business of the Company and the
Bank, is conducted, the Consultant agrees to keep all of the Confidential
Information confidential and not to, except as specifically authorized in
writing by the Company or the Bank, as applicable, or as may be necessary or
appropriate to further the best interests of the Company or the Bank, as
applicable, (i) disclose any Confidential Information to any Person, other than
the Company or the Bank, as applicable, or (ii) make use of any Confidential
Information for his own purposes or for the benefit of any other Person other
than the Company or the Bank, as applicable.
The Consultant acknowledges and agrees that all manuals, drawings,
blueprints, letters, notes, notebooks, reports, books, procedures, forms,
documents, records, or paper or copies thereof pertaining to the operations or
business of the Company or the Bank made or received by the Consultant or made
known to him in any way in connection with his employment and any other
Confidential Information are and will be the exclusive property of the Company
or the Bank, as applicable. The Consultant acknowledges that all such papers
and records will at all times be subject to the control of the Company or the
Bank, as applicable, and the Consultant agrees to surrender the same upon
request of the Company or the Bank, as applicable, and will surrender such no
later than any termination of his duties hereunder.
7. Injunctive Relief. Each party acknowledges that a remedy at law for
-----------------
any breach or attempted breach of this Agreement will be inadequate, agrees
that each party will be entitled to specific performance and injunctive and
other equitable relief in case of any breach or attempted breach, and agrees
not to use as a defense that any party has an adequate remedy at law. This
Agreement shall be enforceable in a court of equity, or other tribunal with
jurisdiction, by a decree of specific performance, and appropriate injunctive
relief may be applied for and granted in connection herewith. Such remedy shall
not be exclusive and shall be in addition to any other remedies now or hereafter
existing at law or in equity, by statute or otherwise. No delay or omission in
exercising any right or remedy set forth in this Agreement shall operate as a
waiver thereof or of any other right or remedy and no single or partial exercise
thereof shall preclude any other or further exercise thereof or the exercise of
any other right or remedy.
8. Notices. Any notice or other communication required or permitted
-------
under this Agreement shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission, or sent by certified,
registered, or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed, or sent by facsimile
transmission or, if mailed 5 days after the date of deposit in the United States
mails, to the intended recipient in the case of the Company or the Bank, at its
principal executive office, and in the case of the Consultant, at any address
reflected in the shareholder, customer or employee records of the Company or
the Bank. Either party may by notice given in accordance with this Section 8
to the other party designate another address or person for receipt of notices
under this Agreement. All notices will be deemed to be effective upon delivery
to any agent for personal delivery or upon mailing.
9. Miscellaneous. This Agreement constitutes the entire agreement among
-------------
the parties with respect to the subject matter of this Agreement, and there
are no prior written or prior or contemporaneous oral understandings or
agreements relative to this Agreement that are not fully expressed in this
-4-
Agreement. This Agreement may be amended, superseded, cancelled, renewed, or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay or omission on the part of either party in exercising
any right, power, or privilege under this Agreement shall operate as a waiver
thereof. Nor shall any waiver on the part of either party of any such right,
power, or privilege, nor any single or partial exercise of any such right,
power, or privilege, preclude any further exercise thereof or the exercise
of any other such right, power, or privilege. No waivers of or exceptions
to any term, condition, or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition, or provision. All remedies provided for
in this Agreement will be cumulative and in addition to and not in lieu of any
other remedies available to either party at law, in equity, or otherwise.
This Agreement shall be governed by and construed in accordance with the
substantive laws of the state of Georgia. The Company may assign this Agreement
to the Bank or otherwise in connection with a transfer of substantially all of
the assets of the Company, whether by merger or other means. This Agreement
may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument.
The parties hereto expressly agree that it is not the intention of any of
them to violate any public policy, statutory or common law rules, regulations,
or decisions of any governmental or regulatory body. If any provision of this
Agreement is judicially or administratively interpreted or construed as being
in violation of any such provision, such sections, sentences, words, clauses,
or combinations thereof shall be inoperative and the remainder of this Agreement
shall remain binding upon the parties hereto.
IN WITNESS WHEREOF, the parties to this Agreement have executed and
delivered this Agreement on the date first above written.
HOMETOWN COMMUNITY BANCSHARES, INC. CONSULTANT:
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxx X. Xxxxxx
------------------------- ---------------------------
Name: Xxxxxx X. Xxxxxx Xxx X. Xxxxxx
Title: Secretary
-5-
