EXHIBIT 10.6
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is effective as of the 12th
day of August, 1996, by and among PROFESSIONAL BANCORP, INC., a Pennsylvania
corporation ("Bancorp"), FIRST PROFESSIONAL' BANK, NATIONAL ASSOCIATION ("Bank")
and NETWORK HEALTH FINANCIAL SERVICES, INC., a California corporation ("NHFS").
RECITALS
WHEREAS, Bancorp and Bank desire to engage the services of NHFS to provide
certain consulting services, and NHFS desires to provide such consulting
service.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, the parties hereby agree as follows:
1. CONSULTING SERVICES. Bancorp and Bank hereby engage NHFS, and NHFS
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hereby accepts the engagement, to provide the following consulting services to
Bancorp and Bank during the term hereof:
(a) NHFS will assess the current personnel, staffing levels and other
staffing issues of Bancorp and Bank, and provide, as soon as practicable,
written recommendations concerning staffing issues to Bancorp's and Bank's
Chairman of the Board. The recommendations shall include advice concerning
staffing reassignments, staff additions, and recommendations of candidates to
fill any vacant positions. Unless requested by Bancorp and Bank, NHFS's
assessment will not include the executive positions of President and Chief
Executive Officer, for which a search firm has already been engaged by Bancorp
and Bank.
(b) NHFS will assess the Bank's current loan processes, procedures and
status, including loan clientele, marketing programs, collection strategy,
allowance for loan losses, credit administrative processes, accountability
systems and current client relationships, and shall provide, as soon as
practicable, initial written recommendations to Bancorp's and Bank's Chairman of
the Board. NHFS shall provide monthly reports thereafter on progress and results
and further recommendations.
(c) NHFS will assess the Bank's current operations, client services,
products and product development and shall provide, as soon as practicable,
written recommendations to Bancorp's and Bank's Chairman of the Board.
(d) As requested by Bancorp or Bank, NHFS shall provide training to
personnel specified by Bancorp and Bank. Also as requested by Bancorp or Bank,
NHFS shall provide interim personnel on an "as needed" basis.
Any final decision with regard to any matter in connection with the
business of Bancorp or the Bank, irrespective of whether the advice of NHFS has
been solicited or received,
shall rest with the Boards of Directors of Bancorp and Bank, or to the extent
authorized by the Boards, with the Chairman of the Board of Bancorp and Bank
pursuant to the authority conferred by resolutions of the Boards. The parties
agree that the value of the recommendations from NHFS will be enhanced by prompt
consideration by Bancorp and Bank; therefore, Bancorp and Bank will
expeditiously take action in response to the advice and recommendations of NHFS.
2. JOINT COMMUNICATIONS. Any written communication in any form, from the
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date hereof, with any person who or entity which is not a party to the
Agreement, and which relates in any way to the Agreement or to the current,
future or planned relationship between, on the one hand Bancorp and/or Bank, and
on the other hand NHFS and/or Xxxxxxx XxXxxxxx, must be approved in writing by
both an authorized representative of Bancorp or Bank and by Xxxxxxx XxXxxxxx or
her designee, prior to distributing or otherwise disseminating such written
communication.
3. COMPENSATION. In consideration of the services to be provided by NHFS
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as set forth in Section 1, Bancorp and Bank shall pay NHFS a monthly consulting
fee equal to (a) the actual costs (as defined below) incurred by NHFS in its
performance of the consulting services for that month, plus an additional
twenty-five percent (25%) of such monthly costs, and (b) the flat, monthly
charges for the services of Xxxxxxx XxXxxxxx and Xxxxx Xxxxx as described below.
NHFS shall provide an invoice by the 10th day of each month, detailing the
services provided and expenses incurred in the preceding month. NHFS shall keep
accurate, contemporaneous time records to substantiate all xxxxxxxx, which shall
be available to Bancorp and/or Bank upon request. Upon execution of this
Agreement, Bancorp and Bank will provide to NHFS a deposit of Fifty Thousand
Dollars ($50,000) to be applied to the last invoice of NHFS for the services
described in this Agreement. Any amount not so applied will be refunded to
Bancorp and Bank within thirty (30) days of the date receipt by NHFS of payment
for such last invoice and any unpaid balance.
"Actual costs" incurred shall include all reasonable out-of-pocket
expenses incurred by NHFS, and the hourly rates set forth below for NHFS
personnel:
NHFS Employee Hourly Rate
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Xx Xxxxxx $80
Xxxxx Xxxxxxxx 60
Xxxx Xxxxxxx 40
Xxxxxx Xxxxxxxx 50
Xxxxxxx Xxxxxxx 25
With respect to the services of Xxxxxxx XxXxxxxx and Xxxxx Xxxxx, NHFS
will charge a flat monthly fee of: (a) Nineteen Thousand Dollars ($19,000) for
Xxxxxxx XxXxxxxx, which sum is based on an allocation of approximately fifty
percent (50%) of her working time to Bancorp and Bank; and (b) Nine Thousand
Dollars ($9,000) for Xxxxx Xxxxx, which sum is based on an allocation of
approximately seventy percent (70%) of her working time to Bancorp and Bank. No
percentage markup of these flat monthly fees for Xxxxxxx XxXxxxxx and Xxxxx
Xxxxx will be charged. Costs for all other NHFS personnel not specifically set
forth herein shall be billed at reasonable rates as mutually agreed to by the
parties.
4. TERMINATION. This Agreement may be terminated at any time (i) by the
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mutual written consent of the parties, or (ii) by one party giving thirty (30)
days' prior written notice of
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termination to the other party. If Bancorp and/or Bank gives thirty days' notice
of termination as provided herein, the notice shall contain a description of the
services Bancorp and/or Bank desires NHFS to perform during the remaining thirty
day period. Bancorp's and Bank's only obligation to NHFS in the event of
termination by Bancorp and/or Bank shall be the payment to NHFS for the services
properly performed prior to the notice of termination and for the specific
services performed by NHFS during the last thirty days, as set forth in the
notice of termination from Bank and/or Bancorp.
5. DISCLOSURE OF INFORMATION.
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(a) Bancorp and Bank will provide to NHFS all relevant business
information, including a reasonable and secure means of access to such
information, that shall be reasonably necessary to perform NHFS's services under
this Agreement. NHFS and its employees and agents acknowledge that the list of
Bancorp's and Bank's clients, Bancorp's and Bank's financial information,
customer information and other business documents and other proprietary
information (the "Confidential Information") are valuable, special, and unique
assets of Bancorp's and Bank's business. NHFS and its employees and agents,
shall not, during the term hereof or thereafter, directly or indirectly disclose
all or any part of the Confidential Information in any manner whatsoever to any
person, firm, corporation, association or other entity or use such Confidential
Information for its/their own purposes or benefit, other than in connection with
the consulting services provided hereunder. NHFS shall be responsible for
ensuring that its employees and agents do not disclose or use for their benefit
(other than in connection with the consulting services provided hereunder) any
Confidential Information. NHFS agrees that any of its employees participating in
the consulting services hereunder shall sign a Confidential Non-Disclosure
Agreement with Bancorp and Bank prior to being provided with any Confidential
Information. In the event of NHFS's or its employees' or agents' breach or
threatened breach of this paragraph, Bancorp and Bank shall be entitled to a
preliminary restraining order and an injunction restraining and enjoining NHFS
or the applicable employee(s) or agent(s) from disclosing or using all or any
part of the Confidential Information and from rendering any services to any
person, firm, corporation, association, or other entity to whom all or any part
of such Confidential Information has been, or is threatened to be, disclosed. In
addition to or in lieu of the above, Bancorp and Bank may pursue all other
remedies available to Bancorp and Bank for such breach or threatened breach,
including the recovery of damages from NHFS and the applicable employee(s) or
agent(s). Upon termination of this Agreement, NHFS shall promptly return all
Confidential Information in its possession, without retaining copies thereof.
(b) Bancorp, Bank and their respective employees and agents
acknowledge that the list of NHFS's clients, NHFS's financial information,
customer information and other business documents and other proprietary
information (the "NHFS Confidential Information") are valuable, special, and
unique assets of NHFS's business. Bancorp, Bank and their respective employees
and agents, shall not, during the term hereof or thereafter, directly or
indirectly disclose all or any part of the NHFS Confidential Information in any
manner whatsoever to any person, firm, corporation, association or other entity
or use such NHFS Confidential Information for its/their own purposes or benefit,
other than in connection with the consulting services provided by NHFS
hereunder. Bancorp and Bank shall be responsible for ensuring that their
employees and agents do not disclose or use for their benefit (other than in
connection with the consulting services provided by NHFS hereunder) any NHFS
Confidential Information. Bancorp and Bank agree that any of their
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respective employees participating in the consulting services hereunder shall
sign a Confidential Non-Disclosure Agreement with NHFS prior to being provided
with any NHFS Confidential Information. In the event of Bancorp's, Bank's or
their respective employees' or agents' breach or threatened breach of this
paragraph, NHFS shall be entitled to a preliminary restraining order and an
injunction restraining and enjoining Bancorp, Bank or the applicable employee(s)
or agent(s) from disclosing or using all or any part of the NHFS Confidential
Information and from rendering any services to any person, firm, corporation,
association, or other entity to whom all or any part of such NHFS Confidential
Information has been, or is threatened to be, disclosed. In addition to or in
lieu of the above, NHFS may pursue all other remedies available to NHFS for such
breach or threatened breach, including the recovery of damages from Bancorp,
Bank and the applicable employee(s) or agent(s). Upon termination of this
Agreement, Bancorp and Bank shall promptly return all NHFS Confidential
Information in their possession, without retaining copies thereof.
(c) If any of NHFS or Bancorp or Bank or any of their respective
employees and agents are requested or are required by applicable law (by
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information or NHFS Confidential Information, as applicable, it will provide
Bancorp and Bank, in the case of Confidential Information, or NHFS, in the case
of NHFS Confidential Information, with immediate notice of such request and
requirement so that the party receiving such notice may consider seeking a
protective order. If in the absence of a protective order or the receipt of a
waiver under this Agreement, NHFS or Bancorp or Bank is, in the written opinion
of independent counsel, compelled to disclose any Confidential Information or
NHFS Confidential Information, as applicable, to any tribunal or any other
person or else be subject to contempt or suffer other material censure or
penalty, it may disclose such information to such tribunal or other party
without liability hereunder.
(d) NHFS represents and warrants that it has, or will have at the time
of disclosure, authority from its clients to provide whatever client information
NHFS provides to Bancorp or Bank in connection with NHFS' performance of the
consulting services hereunder.
(e) There shall be no presumption that an unlawful use of Confidential
Information or NHFS Confidential Information or a breach of this Section has
occurred if a customer of a party becomes a customer of another party to this
Agreement.
6. INDEMNIFICATION.
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(a) NHFS shall indemnify and hold harmless Bancorp, Bank and their
respective directors, officers, employees, shareholders, agents, successors and
assigns against any and all claims, liabilities, damages and losses (including
attorneys' fees and settlement costs) which arise or result from the gross
negligence or willful misconduct of NHFS in the performance of NHFS's duties and
services hereunder. NHFS shall not have any responsibility for day-to-day
operations on behalf of Bancorp or Bank, and is engaged only in an advisory
capacity.
(b) Bancorp and Bank shall indemnify and hold harmless NHFS and its
directors, officers, employees, shareholders, agents, successors and assigns
against any and all claims, liabilities, damages and losses (including
attorneys' fees and settlement costs) which arise or result
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from the performance of NHFS's duties and services hereunder, other than as set
forth in subparagraph 6(a).
(c) If a party believes that any of the persons entitled to
indemnification under this Section 6 has suffered or incurred any claims,
liabilities, damages or losses ("Loss"), such party shall notify the
indemnifying party promptly in writing describing such Loss, the amount thereof,
if known, and the method of computation of such Loss, all with reasonable
particularity; provided that the failure by such party to give notice as
provided herein shall not relieve the indemnifying party of its indemnification
obligation except to the extent that such indemnifying party is materially
damaged as a result of such failure to give notice. Any person entitled to
indemnification hereunder shall use reasonable effort to minimize any Loss for
which indemnification is sought hereunder.
(e) In the event of any claim for indemnification hereunder resulting
from or in connection with any claim or legal proceeding by a third party, the
indemnified person shall give notice thereof to the indemnifying party not later
than twenty (20) days prior to the time any response to the asserted claim is
required, and in any event within fifteen (15) days following the date such
indemnified person has actual knowledge thereof; provided that the failure by
such indemnified person to give notice as provided herein shall not relieve the
indemnifying party of its indemnification obligation except to the extent that
such indemnifying party is materially damaged as a result of such failure to
give notice. In the event of any such claim for indemnification resulting from
or in connection with a claim or legal proceeding by a third party, the
indemnifying party may, at its sole cost and expense, assume the defense
thereof; provided that counsel for the indemnifying party, who shall conduct the
defense of such claim or legal proceeding, shall be reasonably satisfactory to
the indemnified person; and provided further that, if the defendants in any such
action include both indemnified persons and the indemnifying party and the
indemnified persons shall have reasonably concluded that there may be legal
defenses or rights available to them which have not been waived and are in
actual or potential conflict with those available to the indemnifying party, the
indemnified persons shall have the right to select one law firm reasonably
acceptable to the indemnifying party to act as separate counsel on behalf of all
such indemnified persons, at the expense of the indemnifying party. Unless the
indemnified persons are represented by separate counsel pursuant to the second
proviso of the immediately preceding sentence, if an indemnifying party assumes
the defense of any such claim or legal proceeding, such indemnifying party shall
not consent to the entry of any judgment, or enter into any settlement, that (a)
is not subject to indemnification in accordance with the provisions in this
Section 6, (b) provides for injunctive or other nonmonetary relief affecting the
indemnified persons, or (c) does not include as a term thereof the giving by
each claimant or plaintiff to such indemnified persons of an unconditional
release from all liability with respect to such claim or legal proceeding,
without the prior written consent of the indemnified persons (which consent, in
the case of clauses (b) and (c) shall not be unreasonably withheld); and,
provided further, that unless the indemnified persons are represented by
separate counsel pursuant to the second proviso of the immediately preceding
sentence, the indemnified persons may, at their own expense, participate in any
such proceeding with counsel of their choice without any right or control
thereof. So long as the indemnifying party is in good faith defending such claim
or proceeding, the indemnified person shall not compromise or settle such claim
or proceeding without the prior written consent of the indemnifying party, which
consent shall not be unreasonably withheld. If the indemnifying party does not
assume the defense of any such claim or litigation in accordance with the terms
hereof, the indemnified persons may defend against such claim or litigation in
such manner as they may deem appropriate including, without limitation,
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settling such claim or litigation (after giving prior written notice of the same
to the indemnifying party and obtaining the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld) on such
terms as the indemnified persons may deem appropriate, and the indemnifying
party will promptly indemnify the indemnified persons in accordance with the
provisions of this Section 6.
7. INDEPENDENT CONTRACTOR RELATIONSHIP. NHFS is an independent contractor
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retained only for the purposes and to the extent set forth in this Agreement,
and this Agreement shall not, under any circumstances, create an employer-
employee or agency relationship between the parties hereto. NHFS is not
authorized to make, and shall not make, any contracts, representations,
warranties, commitments or other obligations which are or purport to be binding
on Bancorp and/or Bank.
8. ARBITRATION. Any controversy or dispute arising out of or relating to
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this Agreement, its enforcement or interpretation, shall be submitted to
arbitration to be held in Los Angeles County, California, in accordance with the
rules of the American Arbitration Association. In the event any party institutes
arbitration in connection with or concerning the subject matter of this
Agreement, the prevailing party shall be entitled to recover all costs and
expenses incurred by such party in connection therewith, including, but not
limited to, reasonable attorneys' fees, the arbitration fee, and the cost of a
court reporter.
9. ENTIRE AGREEMENT, MODIFICATION AND WAIVER. The provisions hereof
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constitute the entire agreement between the parties with respect to the subject
matter hereof. This Agreement shall supersede all prior agreements and
understandings between the parties and no representations or statements made by
any representative of Bancorp, Bank or NHFS which are not stated herein shall be
binding. There shall be no modification or amendment of this Agreement unless it
is in writing and signed by a duly authorized representative of each party.
Failure of either party to enforce rights under this Agreement will not
constitute a waiver of such rights.
10. SEVERABILITY. A finding by any court of competent jurisdiction that any
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provision of this Agreement or part thereof is invalid or unenforceable will not
affect the validity and enforceability of the remaining provisions of this
Agreement.
11. NOTICES. All notices, requests or other communications required or
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permitted to be given or made under this Agreement shall be deemed given or
served hereunder by any party to another if in writing and delivered personally
or sent by prepaid registered or certified mail, return receipt requested, to
the respective party at the following address, or at such other address as any
party may designate for itself by notice to the other parties given in
accordance with the provisions hereof:
If to Bancorp or Bank: Xxxxx X. Xxxxxxxx, Chairman of the Board
Professional Bancorp, Inc.
000 Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
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With copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxx, Xxxxxxx & Xxxxx Co., L.P.A.
3500 Xxxxx Tower
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
If to NHFS: Xxxxxxx XxXxxxxx
Network Health Financial Services
00000 X. Xxxxxxx Xxxx.,
Xxxxx 000X
Xxx Xxxxxxx, XX 00000
With copy to: Xxxx X. Xxxxxxx
Xxxxxx, Xxxxx & Xxxxxxx, LLP
22nd Floor, 000 X. Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
12. ASSIGNMENT. NHFS may not assign this Agreement or any part thereof.
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13. GOVERNING LAW. This Agreement is deemed to be made under and shall be
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construed according to the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
NETWORK HEALTH FINANCIAL FIRST PROFESSIONAL BANK,
SERVICES, INC. NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. XxXxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Title: President & CEO Title: Chairman
PROFESSIONAL BANCORP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Chairman
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