CONSULTING AGREEMENT
CONSULTING
AGREEMENT
This
Agreement (“Agreement”) is entered into as of the 22nd day of August, 2006, by
and between Lotus Bancorp, Inc. (“Company”), a corporation organized under the
laws of the State of Michigan, and Xxxxxxx Xxxxx, an adult individual residing
in the State of Michigan (“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 formation or acquisition of
a
proposed new bank charter (“Bank”), upon the terms and conditions hereinafter
set forth.
2. Term.
The
term
of this Agreement shall be effective as of the day after the Company receives
its Charter from the State of Michigan and approval of its application for
FDIC
insurance, and shall terminate on the earlier of (i) March 31, 2007; (ii) the
date on which the Bank opens for business; (iii) the date on which the Company
advises the Consultant that it has abandoned its effort to obtain a charter
for
the Bank; (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: (a)
the Consultant’s failure to use reasonable good faith efforts to perform the
services requested by the Company under this Agreement (which failure is not
cured within ten (10) days following written notice to the Consultant); (b)
the
Consultant’s willful misconduct or gross negligence in the performance of his
services hereunder; (c) 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
regulatory approval; or (d) receipt by the Company of any notification from
the
Federal Deposit Insurance Corporation (“FDIC”) or the Michigan Office
of
Financial and Insurance Services
(“State”) indicating that the Consultant would not be an acceptable candidate to
be Chief Financial Officer or Chief Operating 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 eight thousand seven hundred fifty
dollars ($8,750.00) per month (prorated for any partial month), which shall
be
paid in arrears in two installments of four thousand three hundred seventy
five
dollars ($4,375.00) each on the 15th
and
30th
day of
each calendar month.
(b) Medical
Benefits.
The
Company shall reimburse the Consultant, not less frequently than monthly, upon
presentment of appropriate documentation, the amount paid by the Consultant
to
continue, without interruption, family medical benefits coverages under COBRA,
up to $1,000.00 per month. In addition, in the event that the Consultant’s COBRA
continuation health insurance expires, the Company shall reimburse the
Consultant, not less frequently than monthly, upon presentment of appropriate
documentation, the amount paid by the Consultant to continue, without
interruption, family medical benefits of similar nature to those continued
under
COBRA coverage, up to $1,000.00 per month. In each case, family medical benefits
shall extend to the spouse of the Consultant, dependent children under the
age
of nineteen who live at home and dependent children under the age of twenty-two
who are full-time students at an accredited college or university.
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(c) Deductions.
All such
compensation shall be payable without deduction for federal income, social
security, or state income taxes or any other amounts.
4. Duties.
The
Consultant shall render services conscientiously and shall devote his full
time,
attention, efforts and abilities to the organizational activities of the Company
and 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
Company will supply the Consultant with office, computer, and such other
supplies and materials as the Company deems reasonably necessary for Consultant
to comply with his duties under this Paragraph 4.
5. Expenses.
The
Consultant shall be reimbursed by the Company for all reasonable business
expenses paid by the Consultant during the performance of his services
hereunder; provided however, that any such reimbursement in excess of $250
in
any month shall require the prior written approval of the Company’s board of
directors or its designee. 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 its designee 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 have no obligation to carry
worker’s compensation insurance or any health or accident insurance to cover
Consultant. The Company shall have no obligation to pay any contributions to
social security, unemployment insurance, federal or state withholding taxes,
nor
to provide any other contributions or benefits which might be expected in an
employer-employee relationship.
7. Covenant
Not to Compete.
The
Consultant hereby acknowledges and recognizes the highly competitive nature
of
the Bank’s business and accordingly agrees that, during and for the period
commencing with the date hereof and ending on the later of (i) March 31, 2007
or
(ii) the termination by the Company of this Agreement for any reason other
than
“for cause,” 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,
(b) assist
others in engaging in any of the business activities prohibited to the
Consultant under clause (a) above, or
(c) induce
employees or consultants of the Company or any proposed employees of the Bank
to
engage in any activities hereby prohibited to the Consultant or to terminate
their employment (prospective or otherwise).
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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 to which the
Company and the Bank have an interest, access to and knowledge of which assets
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 and Bank 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. Return
of Property.
Consultant acknowledges that all memoranda, notes, records, reports, manuals,
books, papers, letters, client and customer lists, contracts, software programs,
information and records, drafts of instructions, guides and manuals, and other
documentation (whether in draft or final form), and other sales or financial
information and aids relating to the Company’s or Bank’s business, and any and
all other documents containing confidential information furnished to Consultant
by any representative of the Company or otherwise acquired or developed by
Consultant in connection with his duties under this Agreement (collectively,
“Recipient Materials”) shall at all times be the property of the Company or the
Bank, as applicable. Within three calendar days of the termination of this
Agreement, Consultant shall return to the Company or Bank, as applicable, any
Recipient Materials which are in his possession, custody or
control.
10. Remedies.
In the
event that Consultant violates any of the provisions set forth in Paragraphs
7,
8,
or
9
of this
Agreement, Consultant acknowledges that the Company and Bank would suffer
immediate and irreparable harm and would not have an adequate remedy at law
for
money damages in the event that any of the covenants were not performed in
accordance with their terms or otherwise were materially breached. Accordingly,
Consultant agrees that, without the necessity of proving actual damages or
posting bond or other security, the Company or Bank shall be entitled to
temporary or permanent injunction or injunctions to prevent breaches of such
performance and to specific enforcement of such covenants in addition to any
other remedy to which the Company or Bank may be entitled, at law or in equity.
In such a situation, the parties agree that the Company or Bank may pursue
any
remedy available, including declaratory relief, concurrently or consecutively
in
any order as to any breach, violation, or threatened breach or violation of
Paragraphs 7,
8,
or
9
of this
Agreement, and the pursuit of any particular remedy or remedies shall not be
deemed an election of remedies or waiver of the right to pursue any other
remedy.
11. Assignment.
Consultant’s
obligations under this Agreement are personal in nature and may not be assigned
by Consultant, this Agreement being entered into in reliance upon and in
consideration of the personal skill and qualifications of Consultant. Any
attempted assignment or transfer by Consultant of his obligations hereunder
shall be void.
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12. Modification.
This
Agreement may be modified by the parties hereto only by a written supplemental
agreement executed by both parties.
13. Notice.
All
notices and other communications required or permitted to be given or delivered
hereunder or by reason of the provisions of this Agreement shall be in writing
and shall be deemed to have been properly given if (a) delivered personally,
(b)
delivered by a recognized overnight courier service, (c) sent by United States
mail, or (d) sent by facsimile transmission followed by a confirmation copy
delivered by recognized overnight courier service the next day. Such notices,
requests, consents and other communications shall be sent to the respective
parties as follows (or at such other address for a party as shall be specified
by like notice to the other party):
If
to
Company:
X.X.
Xxx
000000
Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention:
President & CEO
If
to
Consultant:
Xxxxxxx
Xxxxx
000
Xxxxxxxxx
Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000
Any
notice or other communication given pursuant to this Agreement shall be
effective (i) in the case of personal delivery, telex or facsimile transmission,
when received; (ii) in the case of mail, upon the earlier of actual receipt
or
five (5) business days after deposit with the United States Postal Service,
first class certified or registered mail, postage prepaid, return receipt
requested; and (iii) in the case of a recognized overnight courier service,
one
(1) business day after delivery to the courier service together with all
appropriate fees or charges and instructions for overnight
delivery.
14. 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.
15. Entire
Agreement.
The
parties acknowledge and agree that this Agreement constitutes the complete
and
entire agreement between the parties; that each executed this Agreement based
upon the express terms and provisions set forth herein; that, in accepting
this
consulting arrangement, Consultant has not relied on any representations, oral
or written, which are not set forth in this Agreement; that no previous
agreement, either oral or written, shall have any effect on the terms or
provisions of this Agreement; and that all previous agreements, either oral
or
written, are expressly superseded and revoked by this Agreement.
16. Successors,
Binding Agreement.
Subject
to the restrictions on assignment contained herein, this Agreement shall inure
to the benefit, and be enforceable by, the parties and their respective
successors and assigns.
17. Regulatory
Condition.
This
Agreement shall be enforceable, except to the extent otherwise prohibited by
regulatory agencies with jurisdiction over the Company and the
Bank.
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18. Validity.
If any
term or other provision of this Agreement is held to be illegal, invalid or
unenforceable by any rule of law or public policy, (A) such term or provision
shall be fully severable and this Agreement shall be construed and enforced
as
if such illegal, invalid or unenforceable provision were not a part hereof;
(B)
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by such illegal, invalid or unenforceable provision
or
by its severance from this Agreement; and (C) there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be legal, valid
and enforceable.
If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only as broad as is enforceable.
19. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Michigan, without regard to the laws that might otherwise govern under
applicable principles of conflicts of laws.
20. Headings.
The
headings contained in this Agreement are for convenience of reference only
and
shall not affect in any way the meaning or interpretation of this
Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first set forth above.
| CONSULTANT | ||
| /s/ Xxxxxxx Xxxxx | ||
| Xxxxxxx Xxxxx | ||
| LOTUS BANCORP, INC. | ||
| By: /s/ Xxxxxx Xxxxx | ||
|
Xxxxxx
Xxxxx
Its:
President
& CEO
|
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