EXHIBIT 10.1
LETTER AGREEMENTS WITH FICAP STRATEGIC PARTNERS, LLC
June 8, 1999
The Board of Directors
Belmont Bancorp
Belmont National Bank
Gentlemen:
This letter confirms our understanding that Belmont Bancorp ("Bancorp") and
its wholly owned banking subsidiary, Belmont National Bank ("Bank") (Bancorp and
Bank are referred to collectively as the "Company") have engaged FiCap Strategic
Partners, LLC ("FiCap") on an exclusive basis to provide management services to
the Company as more fully described below, reporting to and under the
supervision of the Board of Directors of the Company, or a committee thereof
which may hereafter be formed (if so formed, the "Committee"). Without limiting
the generality of the foregoing, FiCap shall on behalf of the Company retain
Doepken Keevican & Xxxxx Professional Corporation ("DKW") to serve as special
counsel for the Company, with the fees and expenses of DKW to be paid by the
Company.
An Action Plan (the "Action Plan") that sets forth the areas in which FiCap
and DKW will assist the Company and action steps to be taken for that purpose
has been provided by FiCap to the Company as part of FiCap's Proposal for
Professional Services, dated June 7, 1999 (the "Proposal"). The Action Plan is
incorporated here by reference. Without limiting the scope of services to be
provided, the Board of Directors has identified the following areas in which the
Company has an immediate need for assistance:
(A) Interim senior management of the Company.
(B) Development of a process for the recruitment of new continuing senior
management of the Company, including without limitation negotiation of
appropriate employment agreements and stock option agreements.
(C) Advice and assistance in connection with any enforcement action that
may result from the current examination of the Company by the
Comptroller of the Currency or from other legal investigations or
proceedings respecting the Company.
(D) Review of existing loan and investment policies and recommendation of
changes where necessary or appropriate. Review of the Company's
investment portfolio. Analysis of the Company's asset and liability
risk models and development of an appropriate asset and liability
committee process.
1.
(E) Development of a business valuation model to support the Board of
Directors' strategic planning on behalf of the Company.
(F) Advice concerning the Company's internal audit function currently
provided by a third party under contract and assistance should the
Company decide to consider making any changes to that relationship.
FiCap shall provide management services to the Company in these areas and
shall perform the tasks set forth in the Action Plan toward the end of
accomplishing the Goals defined in the Action Plan. FiCap shall retain DKW to
provide legal services for the benefit of the Company in support of FiCap's and
the Company's achievement of the Goals defined in the Action Plan. All such
management and legal services shall be provided by FiCap, DKW and their
personnel identified in the Proposal and such other personnel of FiCap and DKW,
including consultants retained or employed for that purpose by FiCap or DKW with
the consent of the Company, which consent shall not be unreasonably withheld.
The performance of such services by such personnel shall be subject to the terms
of this engagement letter and that certain Confidentiality Agreement, dated as
of June 1, 1999 between FiCap and the Company (the "Confidentiality Agreement").
The Company shall make available to FiCap all information concerning the
business, assets, operations and financial condition of the Company that FiCap
reasonably requests in connection with the services to be performed for the
Company hereunder, and shall provide FiCap with reasonable access to the
Company's officers, directors, employees, independent accountants and other
advisors and agents as FiCap shall deem appropriate. The Company represents
that, to the best of its knowledge, all information furnished by it or on its
behalf to FiCap, whether or not covered under the Confidentiality Agreement,
will be accurate and complete in all material respects. The Company acknowledges
that FiCap will share the information so provided with DKW.
The Company shall also make available to FiCap secure office space,
business equipment (computers, telephones and the like), secretarial and
clerical support, and such other and further assistance as shall be reasonably
required by FiCap for the performance of the services called for in this
engagement letter.
1. FiCap's compensation for management services rendered under this
engagement will include the following:
(A) Fees at the rate of $250 per hour for each FiCap principal or senior
consultant providing services to the Company.
(B) Options to acquire 50,000 shares of common stock of Bancorp. The
options will be priced at the average price for shares of Company
stock over the trading days falling during June and July 1999. The
options will be exercisable at any time on or before the second
anniversary of the date of this letter agreement.
2.
(C) If any officer or principal of FiCap is requested or required to
prepare for (which preparation shall not include the performance of
the services for which fees are paid under paragraph (A)) or
participate in one or more depositions or similar discovery
proceedings or to testify at a hearing, trial or similar proceeding
(any such preparation, participation or testimony is hereafter defined
as "Testimony") in connection with the matters contemplated by this
engagement, whether or not FiCap's engagement hereunder has been
terminated or completed, the Company shall pay FiCap, a Per Diem Fee
of $2,000 per day for any day (or any significant portion thereof)
that at least one officer or principal of FiCap is required to provide
Testimony, provided that FiCap shall use reasonable efforts to avoid
charging the Company based upon multiple partial days of work. Per
Diem Fees, if any, payable to FiCap pursuant to this clause (C) shall
be in addition to the fees otherwise provided for in this paragraph 2
and any payment obligations of the Company to the indemnified persons
referred to in the separate indemnification agreement referred to in
paragraph 4 hereof. Payments to FiCap pursuant to this clause (C)
shall be made promptly upon submission by FiCap of statements
therefor.
(D) In addition to any fees payable by the Company to FiCap hereunder, the
Company shall reimburse FiCap on a monthly basis for its travel
expense and other reasonable out-of-pocket expenses (including all
costs and disbursements of FiCap personnel, and of other consultants
and advisors retained by FiCap with the Company's consent, including
without limitation temporary housing in the Company's local market
area and automobile transportation within a radius of 100 miles)
incurred in connection with, or arising out of FiCap's activities
under or contemplated by, this engagement. The Company shall also
reimburse FiCap, at such times as FiCap shall request, for any sales,
use or similar taxes (including additions to such taxes, if any, but
excluding income taxes) arising in connection with any matter referred
to or contemplated by this engagement. Such reimbursements shall be
made promptly upon submission by FiCap of statements therefor.
(E) The fees payable under clause (A) and the expenses payable under
clause (D) shall be due and payable upon receipt of an invoice
describing in reasonable detail the services rendered. An end of the
matter retainer in the amount of $75,000 shall be paid by the Company
to FiCap upon execution of this engagement letter. The end of the
matter retainer may be commingled by FiCap with other funds of FiCap
and shall be applied to the final invoices rendered by FiCap to the
Company in connection with this engagement. Any amount remaining after
such application shall be returned to Company by FiCap.
The Company will also pay DKW for legal services rendered on the Company's
behalf by DKW personnel based upon DKW's hourly rates, billed at the amounts in
effect at the
3.
time that the services are rendered. At present, these rates are $210-$265 per
hour for members; $110-$210 per hour for associates and $90-$110 per hour for
paralegals. DKW's hourly rates are periodically adjusted; in preparing
statements for legal services, DKW will use its hourly rates as in effect when
such services were rendered.
The Company will also pay DKW in accordance with the provisions of clauses
(C) and (D) for Testimony and out of pocket expenses as described in those
clauses. DKW's statements for legal services shall be due and payable upon
receipt of an invoice describing in reasonable detail the services rendered.
If any statement or invoice is not paid within fifteen days after receipt,
FiCap or DKW, as the case may be, may, upon fifteen days prior notice to the
Company, terminate, or suspend until payment is made, the provision of services
under this engagement. DKW shall also have the right to terminate its legal
representation upon reasonable notice, if in the exercise of DKW's reasonable
discretion, DKW believes a continuation of representation would be unethical. A
copy of DKW's Internet and external e-mail policy is also attached.
2. The Company recognizes and confirms that, in advising the Company and in
completing its engagement hereunder, FiCap and DKW will be using and relying on
publicly available information and on data, material, and other information
furnished to FiCap by the Company and other parties, including without
limitation confidential information furnished pursuant to the Confidentiality
Agreement.
3. The Company and FiCap have entered into a separate letter agreement,
dated the date hereof and attached hereto, providing for indemnification by the
Company of FiCap and certain related persons. Such indemnification agreement is
an integral part of this agreement and the terms thereof are incorporated by
reference herein. As stated therein, such indemnification agreement shall
survive any termination or completion of FiCap's engagement hereunder.
4. FiCap has been retained under this agreement as an independent
contractor with duties owed solely to Company acting by and through the Board of
Directors of the Company and the Committee. The advice (oral or written)
rendered by FiCap pursuant to this agreement is intended solely for the benefit
and use of the Board of Directors of the Company and the Committee in
considering the matters to which this agreement relates, and the Company agrees
that such advice may not be relied upon by any other person, used for any other
purpose or reproduced, disseminated, quoted or referred to at any time, in any
manner or for any purpose, nor shall any public references to FiCap be made by
the Company, without the prior written consent of FiCap.
5. The term of this engagement shall be one year from the date of execution
of this engagement letter; provided, however, that this agreement and FiCap's
engagement hereunder may be terminated at any time after December 8, 1999, by
either the Company or FiCap, with or without cause, upon 30 days prior written
notice thereof to the other party; provided, further, however, that (a) any
termination or completion of FiCap's engagement hereunder shall not affect the
Company's continuing obligation to indemnify FiCap and certain related persons
as provided in the separate letter agreement referred to above, and (b) any
termination of FiCap's engagement
4.
hereunder shall not affect the Company's obligation to reimburse the expenses
accruing prior to such termination to the extent provided for in paragraph 2(D)
herein and to pay the fees provided for in paragraph 2(C) hereof and in the
corresponding provisions of paragraph 2 applicable to DKW.
6. The Company agrees that FiCap shall have the right to place
advertisements in financial and other newspapers and journals at its own expense
describing its services to the Company hereunder, provided that FiCap will
submit a copy of any such advertisement to the Company for its approval prior to
placement, which approval shall not be unreasonably withheld or delayed.
7. The Company acknowledges that neither FiCap nor DKW has made any
guarantees with regard to the ultimate outcome of the matters that are the
subject of this engagement, including how long it will take to achieve an
ultimate outcome, or the total amount of management and attorney's fees, costs,
charges and expenses that will be incurred. The parties acknowledge that no
change can be made in this agreement unless and until it is in writing and is
signed by the parties.
8. FiCap has disclosed that it currently has no other contracts where it is
providing interim senior management for a financial institution. Before
committing to any management contract where it is obligated to provide senior
management services (whether on an interim or permanent basis) to any bank or
financial organization within a 100-mile radius of St. Xxxxxxxxxxx, Ohio, FiCap
will consult with Company to determine whether the new engagement would cause
loyalty concerns for the Company and what actions would be appropriate
(including but not limited to refusing or delaying the new management contract)
to resolve those concerns. For a period of twenty-four (24) months following the
termination of the engagement hereunder, FiCap shall not represent or advise any
entity in connection with a proposal to acquire or merge with the Company,
unless FiCap has first received the written approval of the Company for such
representation or advice.
9. This agreement shall be deemed made in Ohio. This agreement and all
controversies arising from or relating to performance under this agreement shall
be governed by and construed in accordance with the laws of the State of Ohio.
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF
THIS AGREEMENT OR CONDUCT IN CONNECTION WITH THIS ENGAGEMENT IS HEREBY WAIVED.
10. This agreement may be executed in counterparts, each of which together
shall be considered a single document. This agreement shall be binding upon and
inure to the benefit of FiCap, the Company and DKW (insofar as made applicable
to it by FiCap's retention of DKW on the Company's behalf and by the terms
hereof) and their respective successors and assigns. This agreement is not
intended to confer any rights upon any shareholder, owner, or employee of the
Company, or any other person not a party hereto other than the indemnified
persons referenced in the indemnification agreement referred to above.
We are pleased to accept this engagement and look forward to working with
the Company, the Board of Directors and the Committee. Please confirm that the
foregoing is in
5.
accordance with your understanding by signing and returning to us the enclosed
duplicate of this letter, which shall thereupon constitute a binding agreement
between FiCap and the Company.
Very truly yours,
FICAP STRATEGIC PARTNERS, LLC
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Authorized Representative
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Authorized Representative
ACCEPTED AND AGREED TO:
BELMONT BANCORP
By: /s/ X. Xxxx Xxxx XX
-------------------------------
W. Xxxx Xxxx XX
Chairman of the Board
BELMONT NATIONAL BANK
By: /s/ X. Xxxx Xxxx XX
-------------------------------
W. Xxxx Xxxx XX
Chairman of the Board
CONSENTED AND AGREED TO:
DOEPKEN KEEVICAN & XXXXX
PROFESSIONAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
6.
Wire transfer instructions for payment of end of the matter advance retainer in
the amount of $75,000 due to FiCap Strategic Partners, LLC under the terms of
that certain engagement letter dated June 8, 1999.
Wire Transfer to:
7.
Belmont Bancorp
000 Xxxx Xx., Xxxxxxxxxx, XX 00000
June 8, 1999
FiCap Strategic Partners, LLC
58th Floor, USX Tower
Pittsburgh, PA 15219
Gentlemen:
In connection with your engagement to provide management services pursuant
to a separate agreement between you and us, we hereby agree to indemnify and
hold harmless FiCap Strategic Partners, LLC, Doepken Keevican & Xxxxx
Professional Corporation (DKW; which is being retained as special counsel to us
pursuant to that separate agreement) and Financial Institutions Management
Associates Corporation ("FIMAC"), your and their respective directors, officers,
agents, employees and controlling persons, and each of your and their respective
successors and assigns (collectively, the "indemnified persons"), to the full
extent lawful, from and against all losses, claims, damages, liabilities and
expenses incurred by them which (A) are related to or arise out of (i) actions
or alleged actions taken or omitted to be taken (including any untrue statements
made or any statements omitted to be made) by us or (ii) actions or alleged
actions taken or omitted to be taken by an indemnified person with our consent
or in conformity with our actions or omissions or (B) are otherwise related to
or arise out of FiCap's activities on our behalf under FiCap's engagement,
provided that any indemnified person seeking indemnification under this clause
(B) acted in good faith or in a manner he or she reasonably believed to be in
the best interest of Belmont Bancorp or Belmont National Bank, as the case may
be. We also agree that no indemnified person shall have any liability to us for
or in connection with such engagement; provided, however, such person acted in
good faith or in a manner he or she reasonably believed to be in the best
interest of Belmont Bancorp or Belmont National Bank, as the case may be; and
provided further, however, that in no event shall the indemnified persons'
aggregate liability to us exceed the fees FiCap actually receives from us
pursuant to the engagement referred to above.
Promptly after receipt by an indemnified person of notice of any complaint
or the commencement of any action or proceeding with respect to which
indemnification is being sought hereunder, such person will notify us in writing
of such complaint or of the commencement of such action or proceeding, but
failure so to notify us will relieve us from any liability which we may have
hereunder only if, and to the extent that such failure results in the forfeiture
by us of substantial rights and defenses, and will not in any event relieve us
from any other obligation or liability that we may have to any indemnified
person otherwise than under this letter agreement. If we so elect or are
requested by such indemnified person, we will assume the defense of such action
or proceeding, including the employment of counsel reasonably satisfactory to
FiCap, DKW or FIMAC, as the case may be, and the payment of the fees and
disbursements of such counsel. In any action or proceeding the defense of which
we assume, the indemnified person will have the right to participate in such
litigation and to retain its own counsel at such indemnified person's own
expense. We further agree
1.
that we will not, without the prior written consent of FiCap, DKW or FIMAC, as
the case may be, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not FiCap,
DKW, FIMAC or any other indemnified person is an actual or potential party to
such claim, action, suit or proceeding) unless such settlement, compromise or
consent includes an unconditional release of FiCap, DKW, FIMAC and each other
indemnified person hereunder from all liability arising out of such claim,
action, suit or proceeding.
We further agree that we will promptly reimburse FiCap and any other
indemnified person hereunder for all expenses (including fees and disbursements
of counsel) as they are incurred by FiCap or such other indemnified person in
connection with investigating, preparing or defending, any pending or threatened
action, claim, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder, whether or not in connection with pending
or threatened litigation in which FiCap or any other indemnified person is a
party.
Our indemnity, contribution and other obligations under this letter
agreement shall be in addition to any rights that FiCap or any other indemnified
person may have at common law or otherwise. This letter agreement shall inure to
the benefit of the parties hereto and the indemnified parties, and shall be
binding on our successors and assigns.
We hereby consent to personal jurisdiction, service and venue in any court
in which any claim which is subject to, or which may give rise to a claim for
indemnification or contribution under, this letter agreement is brought against
FiCap or any other indemnified person.
This letter agreement shall be deemed made in Ohio. This letter agreement
and all controversies arising from or relating to performance under this letter
agreement shall be governed by and construed in accordance with the laws of the
State of Ohio, without giving effect to such state's rules concerning conflicts
of laws. ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING
OUT OF THIS LETTER AGREEMENT OR ANY ENGAGEMENT OF FICAP IS HEREBY WAIVED.
It is understood that, in connection with FiCap's above-mentioned
engagement, FiCap may also be engaged to act in one or more additional
capacities, and that the terms of the original engagement or any such additional
engagement may be embodied in one or more separate written agreements. The
provisions of this letter agreement shall apply to the original engagement,
related activities prior to the date of the original engagement, any such
additional engagement and any modification of the original engagement or such
additional engagement and shall remain in full force and effect following the
completion or termination of FiCap's engagement(s).
Very truly yours,
BELMONT BANCORP
By: /s/ X. XXXX XXXX, XX
----------------------------
X. XXXX XXXX, XX
Title: Chairman of the Board
2.
BELMONT NATIONAL BANK
By: /s/ X. Xxxx Xxxx, XX
-----------------------------
X. XXXX XXXX, XX
Title: Chairman of the Board
Accepted and agreed to:
FICAP STRATEGIC PARTNERS, LLC
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Authorized Representative
3.
