EXHIBIT 10.3
[Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
SERVICE AGREEMENT
This SERVICE AGREEMENT ("Agreement"), is made and entered into this 19th
day January, 1998, by and between Xxxxxxx Merchants Bank, a Maine corporation,
having a principal place of business in Bangor, Maine (hereinafter "Client"),
and M&M Consulting Limited Liability Company, a Maine limited liability company,
having a principal place of business at 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000
(hereinafter "Company").
Section 1
SCOPE OF SERVICES
1.1 Consulting Services. Company shall provide certain banking related
services specified in Schedule A attached hereto.
1.2 Conduct of Services. All work shall be performed in a professional
manner by employees of Company having a level of skill commensurate with the
requirements of the bank regulatory authorities having jurisdiction over Client.
Company shall require its employees at all times to observe security policies of
Client.
Section 2
METHOD OF PERFORMING SERVICES
2.1 Method of Performing Services. Company shall have the right to
determine the method, details, and means of performing the work to be done for
Client. Client may, however, require Company's personnel at all times to observe
security policies of Client. In addition, Client shall be entitled to exercise
broad general power of supervision and control over the results of work
performed by Company's personnel to ensure satisfactory performance, including
the right to review the work, the right to stop work, the right to make
suggestions or recommendations as to the details of the work, and the right to
propose modifications to the work.
2.2 Scheduling. Company will try to accommodate work schedule requests to
the extent possible. Should any personnel of Company be unable to perform
scheduled services because of illness, resignation, or other causes beyond
Company's reasonable control, Company will attempt to replace such employee
within a reasonable time, but Company shall not be liable for delays resulting
from factors beyond its control.
2.3 Reporting. Client and Company shall develop appropriate administrative
- 1 -
procedures for coordinating with Company's personnel. Client shall periodically
prepare an evaluation of the performance of Company's personnel. Should Client
not be satisfied with the performance of one or more of Company's personnel,
Client may request, on reasonable notice, that Company terminate their
assignment to Client's work.
2.4 Place of Work. Company's personnel will perform their work for Client
primarily at Client's premises except when such projects or tasks may be
performed off site. Client agrees to provide working space and facilities, and
any other services and materials Company or its personnel may reasonable request
in order to perform the work assigned to them.
Section 3
TERM AND TERMINATION
3.1 Term. The term of this Agreement shall commence on the date set forth
above and shall continue through the completion of the services set forth in
Schedule A attached hereto, and thereafter for so long as Client seeks or
obtains services from Company.
3.2 Termination. This Agreement may be terminated by either party upon
written notice, if the other party breaches any obligation provided hereunder
and the breaching party fails to cure such breach within a thirty (30) day
period after written notice of such breach; provided that the cure period for
any failure of Client to pay fees and charges due hereunder shall be fifteen
(15) days from the date of receipt by Client of notice of such failure.
3.3 Remaining Payments. Within thirty (30) days of termination of this
Agreement for any reason, Company shall submit to Client an itemized invoice for
any fees or expenses theretofore accrued under this Agreement. Client, upon
payment of accrued amounts so invoiced, shall thereafter have no further
liability or obligation to Company whatsoever for any further fees or expenses
arising hereunder. Notwithstanding any termination of the terms of this
Agreement, the rights and licenses granted under Section 6 hereof shall continue
in effect in accordance with their terms.
Section 4
FEES, EXPENSES, AND PAYMENT
4.1 Fees. In consideration of the services to be performed by Company,
Client shall pay Company the fees set forth in Schedule B attached hereto.
4.2 Reimbursement of Expenses. In addition to the foregoing, Client shall
pay Company its actual out-of-pocket expenses as reasonably incurred by Company
in furtherance of its performance hereunder. Company agrees to provide Client
with access to such receipts, ledgers, and other records as may be reasonably
appropriate for Client or its accountants to verify the amount and nature of any
such expenses.
- 2 -
4.3 Additional Work. The fees and charges for any follow-on or additional
work not described in Schedule A attached hereto shall be performed at Company's
then-current rates for such work.
4.4 Payment. Client shall pay all fees and expenses owing to the Company
hereunder within fifteen (15) days after Company has submitted to Client an
itemized invoice therefor. A late payment fee equal to the lesser of ***% per
month, or the highest amount allowed by law shall be imposed on amounts overdue
30 or more days. Client hereby agrees to pay all of Company's costs of
collecting overdue amounts, including but not limited to reasonable attorneys
fees.
Section 5
TREATMENT OF PERSONNEL
5.1 Compensation of Company's Personnel. Company shall bear sole
responsibility for payment of compensation to its personnel. Company shall pay
and report, for all personnel assigned to Client's work, federal and state
income tax withholding, social security taxes, and unemployment insurance
applicable to such personnel as employees of Company. Company shall bear sole
responsibility for any health or disability insurance, retirement benefits, or
other welfare or pension benefits, if any, to which such personnel may be
entitled. Company agrees to defend, indemnify, and hold harmless Client,
Client's officers, directors, employees, and agents, and the administrators of
Client's benefit plans from and against any claims, liabilities, or expenses
relating to such compensation, tax, insurance, or benefit matters; provided that
Client shall promptly notify Company of each such claim when and as it comes to
Client's attention, Client shall cooperate with Company in the defense and
resolution of such claim, and Client shall not settle or otherwise dispose of
such claim without Company's prior written consent, such consent not to be
unreasonably withheld.
5.2 Worker's Compensation. Notwithstanding any other workers' compensation
or insurance policies maintained by Client, Company shall procure and maintain
workers' compensation coverage sufficient to meet the statutory requirements of
every state where Company's personnel assigned to Client's work are located.
Section 6
OWNERSHIP RIGHTS
6.1 Ownership. As between Client and Company, except as set forth below in
this Section 6, all right, title, and interest, including copyright interests
and any other intellectual property, in and to any financial information,
programs, systems, data, memoranda, books, papers, letters, formulas, or
materials produced or provided by Company, alone or in combination with Client
and/or its employees, under this Agreement shall be the property of Company.
Client shall have an unlimited license to use such materials exclusively in
- 3 -
* [Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
connection with its own operations, but may not disclose any aspect of such
materials to third parties except for Bank Regulatory Officials.
Section 7
PROPRIETARY AND CONFIDENTIAL INFORMATION
7.1 Trade Secrets; Confidentiality. a. Company acknowledges that in order
to perform the services called for in this Agreement, it shall be necessary for
Client to disclose to Company certain Trade Secrets. Company further
acknowledges that the work will of necessity incorporate such Trade Secrets.
Company agrees that it shall not disclose, transfer, use, copy, or allow access
to any such Trade Secrets to any employees of the Company or to any third
parties, excepting those who have a need to know such Trade Secrets in order to
perform the services hereunder and who have bound themselves to respect and
protect the confidentiality of such Trade Secrets. Unless Company is compelled
to disclose Trade Secrets by judicial or regulatory process, Company shall not
disclose any such Trade Secrets to any third parties, including but not limited
to the member/owner of Company or their affiliates or their directors, officers
or employees. b. Company also acknowledges, and Client understands, that Company
is a company which has as members banks or affiliates of banks which may be
competitors of Client. Company has therefore adopted internal policies and
procedures, including confidentiality agreements with Company's personnel, which
assure that the Trade Secrets of Client are not communicated or otherwise
transmitted or made available by Company or its personnel to (ii) the
member/owners of Company; (ii) corporate parents, affiliates, or subsidiaries of
the member/owners of Company; or (iii) officers, directors, agents or employees
of the member/owners of Company or of the member/owners' corporate parents,
affiliates, or subsidiaries.
7.2 Scope of Restriction. As used herein, the term "Trade Secrets" shall
mean any Client data, financial and other information, or formulas, including
but not limited to any data or information pertaining to a deposit or loan
customer of Client, that is not generally known in the industry or to the
public.
Section 8
WARRANTIES
8.1 Warranties of Company. Company warrants that Company's performance of
the services called for by this Agreement do not and shall not violate any
applicable law, rule, or regulation; or any contracts with third parties.
Section 9
LIMITATION OF LIABILITY
- 4 -
9.1 Consulting Services ... Internal Support. The services rendered by
Company consist of consulting services only, with decision making
responsibilities in all instances retained by Client's management. The services
provided by Company are not intended to take the place of legal, accounting and
other professionals, but rather to provide internal support similar to that
which would be provided by Client's own employees.
9.2 No Consequential Damages, etc. In no event shall Company be liable to
Client for any incidental, indirect, or consequential damages or lost profits of
Client.
9.3 Loss of Data. In no event shall Company be liable for loss of data or
records of Client, it being understood that Client shall be responsible for
ensuring proper and adequate back-up and storage procedures.
9.4 Force Majeure. Company shall not be liable to Client for any failure or
delay caused by events beyond Company's control, including, without limitation,
Client's failure to furnish necessary information; sabotage; failure or delays
in transportation or communication; failure or substitutions of equipment; labor
disputes; accidents; shortages of labor, fuel, raw materials or equipment; or
technical failures.
Section 10
HIRING OF COMPANY'S PERSONNEL
10.1 Additional Value From Hiring. Client acknowledges that Company
provides a valuable service by identifying and assigning personnel for Client's
work. Client further acknowledges that Client would receive substantial
additional value, and Company would be deprived of the benefits of its work
force, if Client were to directly hire Company's personnel after they have been
introduced to Client by Company.
10.2 Orderly Transition. In the event that Client hires any personnel of
Company, Client will allow said employee and Company to work out an orderly
transition, up to forty-five (45) days, if necessary.
Section 11
MISCELLANEOUS
11.1 Governing Law. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of Maine as they apply to a
contract entered into and performed in that State.
11.2 Independent Contractors. The parties are and shall be independent
contractors to one another, and nothing herein shall be deemed to cause this
Agreement to create an agency, partnership, or joint venture between the
parties. Nothing in this Agreement shall be interpreted or construed as creating
or establishing the relationship of employer and
- 5 -
employee between Client and either Company or any employee or agent of Company.
11.3 Notices. All notices required or permitted hereunder shall be given in
writing addressed to the respective parties as set forth herein, unless another
address shall have been designated, and shall be delivered by hand or by
registered or certified mail, postage prepaid.
11.4 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior representations, proposals,
discussions, and communications, whether oral or in writing. This Agreement may
be modified only in writing and shall be enforceable in accordance with its
terms when signed by the party sought to be bound.
11.5 Parties in Interest. This Agreement is enforceable only by Company and
Client. The terms of this Agreement are not a contract or assurance regarding
compensation, continued employment, or benefit of any kind to any personnel
assigned to Client's work, or any beneficiary of any such personnel, and no such
personnel (or any beneficiary thereof) shall be a third-party beneficiary under
or pursuant to the terms of this Agreement.
11.6 Arbitration of Disputes. All disputes between the parties under this
Agreement shall be submitted to binding arbitration in accordance with the rules
of the American Arbitration Association (the "Association"). The procedure for
arbitration shall be in accordance with the Association's then existing rules,
except that if the parties are unable to agree on a single arbitrator within
five days after arbitration is sought, each party shall select one arbitrator,
and the two selected arbitrators shall choose a third arbitrator. If either
party fails to select an arbitrator within ten days after arbitration is sought,
or the two arbitrators fail to select a third arbitrator within 15 days after
arbitration is sought, the Association shall make the selection.
- 6 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives, on the date and year first above
written.
COMPANY:
M&M CONSULTING LIMITED LIABILITY COMPANY
By:
(Signature)
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx
Senior Consultant
CLIENT:
By:
(Signature)
/s/ Xxxxx X. Xxxxx
----------------------------------
Xxxxx X. Xxxxx
President and Chief Executive Officer
SCHEDULES A AND B
SCHEDULE A
o Scope of Services - Per audit plan submitted to Xxxxxxx Merchants Audit
Committee on December 18, 1997.
o Term of Contract - January 1, 1998 through December 31, 1999.
SCHEDULE B
o Cost of services - $*** per hour.
- 7 -
* [Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
[Confidential portions of this agreement have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
SERVICE AGREEMENT
This SERVICE AGREEMENT ("Agreement"), is made and entered into as of this
5th day of December, 1996, by and between Client, Xxxxxxx Merchants Bank, a
commercial bank chartered by the State of Maine, having a principal place of
business at 000 Xxxx Xx., Xxxxxx, XX. (hereinafter "Client"), and M&M Consulting
Limited Liability Company, a Maine limited liability company, having a principal
place of business at 000 Xxxx Xx., Xxxxxx, (hereinafter "Company").
Section 1
SCOPE OF SERVICES
1.1 Consulting Services. Company shall provide certain banking related
services specified in Schedule A attached hereto.
1.2 Conduct of Services. All work shall be performed in a professional
manner by employees of Company having a level of skill commensurate with the
requirements of the bank regulatory authorities having jurisdiction over Client.
Company shall require its employees at all times to observe security policies of
Client.
Section 2
METHOD OF PERFORMING SERVICES
2.1 Method of Performing Services. Company shall have the right to
determine the method, details, and means of performing the work to be done for
Client. Client may, however, require Company's personnel at all times to observe
security policies of Client. In addition, Client shall be entitled to exercise
broad general power of supervision and control over the results of work
performed by Company's personnel to ensure satisfactory performance, including
the right to review the work, the right to stop work, the right to make
suggestions or recommendations as to the details of the work, and the right to
propose modifications to the work.
2.2 Scheduling. Company will try to accommodate work schedule requests to
the extent possible. Should any personnel of Company be unable to perform
scheduled services because of illness, resignation, or other causes beyond
Company's reasonable control, Company will attempt to replace such employee
within a reasonable time, but Company shall not be liable for delays resulting
from factors beyond its control.
2.3 Reporting. Client and Company shall develop appropriate administrative
- 8 -
procedures for coordinating with Company's personnel. Client shall periodically
prepare an evaluation of the performance of Company's personnel. Should Client
not be satisfied with the performance of one or more of Company's personnel,
Client may request, on reasonable notice, that Company terminate their
assignment to Client's work.
2.4 Place of Work. Company's personnel will perform their work for Client
primarily at Client's premises except when such projects or tasks may be
performed off site. Client agrees to provide working space and facilities, and
any other services and materials Company or its personnel may reasonable request
in order to perform the work assigned to them.
Section 3
TERM AND TERMINATION
3.1 Term. The term of this Agreement shall commence on the date set forth
above and shall continue through the completion of the services set forth in
Schedule A attached hereto, and thereafter for so long as Client seeks or
obtains services from Company.
3.2 Termination. This Agreement may be terminated by either party upon
written notice, if the other party breaches any obligation provided hereunder
and the breaching party fails to cure such breach within a thirty (30) day
period after written notice of such breach; provided that the cure period for
any failure of Client to pay fees and charges due hereunder shall be fifteen
(15) days from the date of receipt by Client of notice of such failure.
3.3 Remaining Payments. Within thirty (30) days of termination of this
Agreement for any reason, Company shall submit to Client an itemized invoice for
any fees or expenses theretofore accrued under this Agreement. Client, upon
payment of accrued amounts so invoiced, shall thereafter have no further
liability or obligation to Company whatsoever for any further fees or expenses
arising hereunder. Notwithstanding any termination of the terms of this
Agreement, the rights and licenses granted under Section 6 hereof shall continue
in effect in accordance with their terms.
Section 4
FEES, EXPENSES, AND PAYMENT
4.1 Fees. In consideration of the services to be performed by Company,
Client shall pay Company the fees set forth in Schedule B attached hereto.
4.2 Reimbursement of Expenses. In addition to the foregoing, Client shall
pay Company its actual out-of-pocket expenses as reasonably incurred by Company
in
- 9 -
furtherance of its performance hereunder. Company agrees to provide Client with
access to such receipts, ledgers, and other records as may be reasonably
appropriate for Client or its accountants to verify the amount and nature of any
such expenses.
4.3 Additional Work. The fees and charges for any follow-on or additional
work not described in Schedule A attached hereto shall be performed at Company's
then-current rates for such work.
4.4 Payment. Client shall pay all fees and expenses owing to the Company
hereunder within fifteen (15) days after Company has submitted to Client an
itemized invoice therefor. A late payment fee equal to the lesser of *** per
month, or the highest amount allowed by law shall be imposed on amounts overdue
30 or more days. Client hereby agrees to pay all of Company's costs of
collecting overdue amounts, including but not limited to reasonable attorneys
fees.
Section 5
TREATMENT OF PERSONNEL
5.1 Compensation of Company's Personnel. Company shall bear sole
responsibility for payment of compensation to its personnel. Company shall pay
and report, for all personnel assigned to Client's work, federal and state
income tax withholding, social security taxes, and unemployment insurance
applicable to such personnel as employees of Company. Company shall bear sole
responsibility for any health or disability insurance, retirement benefits, or
other welfare or pension benefits, if any, to which such personnel may be
entitled. Company agrees to defend, indemnify, and hold harmless Client,
Client's officers, directors, employees, and agents, and the administrators of
Client's benefit plans from and against any claims, liabilities, or expenses
relating to such compensation, tax, insurance, or benefit matters; provided that
Client shall promptly notify Company of each such claim when and as it comes to
Client's attention, Client shall cooperate with Company in the defense and
resolution of such claim, and Client shall not settle or otherwise dispose of
such claim without Company's prior written consent, such consent not to be
unreasonably withheld.
5.2 Worker's Compensation. Notwithstanding any other workers' compensation
or insurance policies maintained by Client, Company shall procure and maintain
workers' compensation coverage sufficient to meet the statutory requirements of
every state where Company's personnel assigned to Client's work are located.
Section 6
OWNERSHIP RIGHTS
6.1 Ownership. As between Client and Company, except as set forth below in
- 10 -
* [Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
this Section 6, all right, title, and interest, including copyright interests
and any other intellectual property, in and to any financial information,
programs, systems, data, memoranda, books, papers, letters, formulas, or
materials produced or provided by Company, alone or in combination with Client
and/or its employees, under this Agreement shall be the property of Company.
Client shall have an unlimited license to use such materials exclusively in
connection with its own operations, but may not disclose any aspect of such
materials to third parties except for Bank Regulatory Officials.
Section 7
PROPRIETARY AND CONFIDENTIAL INFORMATION
7.1 Trade Secrets; Confidentiality. a. Company acknowledges that in order
to perform the services called for in this Agreement, it shall be necessary for
Client to disclose to Company certain Trade Secrets. Company further
acknowledges that the work will of necessity incorporate such Trade Secrets.
Company agrees that it shall not disclose, transfer, use, copy, or allow access
to any such Trade Secrets to any employees of the Company or to any third
parties, excepting those who have a need to know such Trade Secrets in order to
perform the services hereunder and who have bound themselves to respect and
protect the confidentiality of such Trade Secrets. Unless Company is compelled
to disclose Trade Secrets by judicial or regulatory process, Company shall not
disclose any such Trade Secrets to any third parties, including but not limited
to the member/owner of Company or their affiliates or their directors, officers
or employees. b. Company also acknowledges, and Client understands, that Company
is a company which has as members banks or affiliates of banks which may be
competitors of Client. Company has therefore adopted internal policies and
procedures, including confidentiality agreements with Company's personnel, which
assure that the Trade Secrets of Client are not communicated or otherwise
transmitted or made available by Company or its personnel to (i) the
member/owners of Company; (ii) corporate parents, affiliates, or subsidiaries of
the member/owners of Company; or (iii) officers, directors, agents or employees
of the member/owners of Company or of the member/owners' corporate parents,
affiliates, or subsidiaries.
7.2 Scope of Restriction. As used herein, the term "Trade Secrets" shall
mean any Client data, financial and other information, or formulas, including
but not limited to any data or information pertaining to a deposit or loan
customer of Client, that is not generally known in the industry or to the
public.
Section 8
WARRANTIES
8.1 Warranties of Company. Company warrants that Company's performance
- 11 -
of the services called for by this Agreement do not and shall not violate any
applicable law, rule, or regulation; or any contracts with third parties.
Section 9
LIMITATION OF LIABILITY
9.1 Consulting Services ... Internal Support. The services rendered by
Company consist of consulting services only, with decision making
responsibilities in all instances retained by Client's management. The services
provided by Company are not intended to take the place of legal, accounting and
other professionals, but rather to provide internal support similar to that
which would be provided by Client's own employees.
9.2 No Consequential Damages, etc. In no event shall Company be liable to
Client for any incidental, indirect, or consequential damages or lost profits of
Client.
9.3 Loss of Data. In no event shall Company be liable for loss of data or
records of Client, it being understood that Client shall be responsible for
ensuring proper and adequate back-up and storage procedures.
9.4 Force Majeure. Company shall not be liable to Client for any failure or
delay caused by events beyond Company's control, including, without limitation,
Client's failure to furnish necessary information; sabotage; failure or delays
in transportation or communication; failure or substitutions of equipment; labor
disputes; accidents; shortages of labor, fuel, raw materials or equipment; or
technical failures.
Section 10
HIRING OF COMPANY'S PERSONNEL
10.1 Additional Value From Hiring. Client acknowledges that Company
provides a valuable service by identifying and assigning personnel for Client's
work. Client further acknowledges that Client would receive substantial
additional value, and Company would be deprived of the benefits of its work
force, if Client were to directly hire Company's personnel after they have been
introduced to Client by Company.
10.2 Orderly Transition. In the event that Client hires any personnel of
Company, Client will allow said employee and Company to work out an orderly
transition, up to forty-five (45) days, if necessary.
Section 11
MISCELLANEOUS
- 12 -
11.1 Governing Law. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of Maine as they apply to a
contract entered into and performed in that State.
11.2 Independent Contractors. The parties are and shall be independent
contractors to one another, and nothing herein shall be deemed to cause this
Agreement to create an agency, partnership, or joint venture between the
parties. Nothing in this Agreement shall be interpreted or construed as creating
or establishing the relationship of employer and employee between Client and
either Company or any employee or agent of Company.
11.3 Notices. All notices required or permitted hereunder shall be given in
writing addressed to the respective parties as set forth herein, unless another
address shall have been designated, and shall be delivered by hand or by
registered or certified mail, postage prepaid.
11.4 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior representations, proposals,
discussions, and communications, whether oral or in writing. This Agreement may
be modified only in writing and shall be enforceable in accordance with its
terms when signed by the party sought to be bound.
- 13 -
11.5 Parties in Interest. This Agreement is enforceable only by Company and
Client. The terms of this Agreement are not a contract or assurance regarding
compensation, continued employment, or benefit of any kind to any personnel
assigned to Client's work, or any beneficiary of any such personnel, and no such
personnel (or any beneficiary thereof) shall be a third-party beneficiary under
or pursuant to the terms of this Agreement.
11.6 Arbitration of Disputes. All disputes between the parties under this
Agreement shall be submitted to binding arbitration in accordance with the rules
of the American Arbitration Association (the "Association"). The procedure for
arbitration shall be in accordance with the Association's then existing rules,
except that if the parties are unable to agree on a single arbitrator within
five days after arbitration is sought, each party shall select one arbitrator,
and the two selected arbitrators shall choose a third arbitrator. If either
party fails to select an arbitrator within ten days after arbitration is sought,
or the two arbitrators fail to select a third arbitrator within 15 days after
arbitration is sought, the Association shall make the selection.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives, on the date and year first above
written.
COMPANY:
M&M CONSULTING LIMITED LIABILITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
(Signature)
Xxxxxxx X. Xxxxxx Senior Consultant
------------------------------------- ---------------------------------
Typed Name Title
CLIENT:
Xxxxxxx Merchants Bank
By: /s/ Xxxxxxx X. Xxxx
----------------------------------
(Signature)
Xxxxxxx X. Lucy Senior Vice President
-------------------------------------- ---------------------------------
Typed Name Title
- 14 -
Appendix A to a Service Agreement between Xxxxxxx Merchants Bank and M&M
Consulting, LLC
Services to be Performed:
Loan Review of the Commercial Loan Portfolio.
Scope of the loans to be reviewed will be subject to an ongoing dialogue with
the Audit Committee/Board of Directors and senior management based upon their
needs and occurrences within the portfolio.
At a minimum, it is expected that 50% of the average outstanding commercial
loans will be reviewed in any given twelve-month period. This will be
accomplished in segments over the period and will be coordinated with bank
management.
It is estimated that this process will not exceed seven weeks of on-site work in
any twelve-month period. Preparatory work before the on-site visits and report
preparation after the visits will be accomplished to the maximum extent possible
outside the bank.
The loan reviews will include, at a minimum, appropriateness of risk ratings,
compliance with bank lending policies and loan covenants, and adherence to
relevant laws and regulations. Appropriate written reports will be prepared
after each segment of the loan review process and will be presented to and
discussed with the Audit Committee.
These services will extend for two years from the date set forth in the body of
this agreement.
- 15 -
Appendix B to a Service Agreement between Xxxxxxx Merchants Bank and M&M
Consulting, LLC
Fees:
Services (whether on-site or off-site) will be billed monthly, as performed, at
$*** per day. The estimated cost over the twelve-month period for seven weeks is
estimated to be $*** plus expenses referred to in Section 4 of this agreement.
- 16 -
* [Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
SERVICE AGREEMENT
This SERVICE AGREEMENT ("Agreement"), is made and entered into as of this
1st day of October, 1996, by and between Client, Xxxxxxx Merchants Bank, a
commercial bank chartered by the State of Maine, having a principal place of
business at 000 Xxxx Xx., Xxxxxx, XX. (hereinafter "Client"), and M&M Consulting
Limited Liability Company, a Maine limited liability company, having a principal
place of business at 000 Xxxx Xx., Xxxxxx, (hereinafter "Company").
Section 1
SCOPE OF SERVICES
1.1 Consulting Services. Company shall provide certain banking related
services specified in Schedule A attached hereto.
1.2 Conduct of Services. All work shall be performed in a professional
manner by employees of Company having a level of skill commensurate with the
requirements of the bank regulatory authorities having jurisdiction over Client.
Company shall require its employees at all times to observe security policies of
Client.
Section 2
METHOD OF PERFORMING SERVICES
2.1 Method of Performing Services. Company shall have the right to
determine the method, details, and means of performing the work to be done for
Client. Client may, however, require Company's personnel at all times to observe
security policies of Client. In addition, Client shall be entitled to exercise
broad general power of supervision and control over the results of work
performed by Company's personnel to ensure satisfactory performance, including
the right to review the work, the right to stop work, the right to make
suggestions or recommendations as to the details of the work, and the right to
propose modifications to the work.
2.2 Scheduling. Company will try to accommodate work schedule requests to
the extent possible. Should any personnel of Company be unable to perform
scheduled services because of illness, resignation, or other causes beyond
Company's reasonable control, Company will attempt to replace such employee
within a reasonable time, but Company shall not be liable for delays resulting
from factors beyond its control.
2.3 Reporting. Client and Company shall develop appropriate administrative
- 17 -
procedures for coordinating with Company's personnel. Client shall periodically
prepare an evaluation of the performance of Company's personnel. Should Client
not be satisfied with the performance of one or more of Company's personnel,
Client may request, on reasonable notice, that Company terminate their
assignment to Client's work.
2.4 Place of Work. Company's personnel will perform their work for Client
primarily at Client's premises except when such projects or tasks may be
performed off site. Client agrees to provide working space and facilities, and
any other services and materials Company or its personnel may reasonable request
in order to perform the work assigned to them.
Section 3
TERM AND TERMINATION
3.1 Term. The term of this Agreement shall commence on the date set forth
above and shall continue through the completion of the services set forth in
Schedule A attached hereto, and thereafter for so long as Client seeks or
obtains services from Company.
3.2 Termination. This Agreement may be terminated by either party upon
written notice, if the other party breaches any obligation provided hereunder
and the breaching party fails to cure such breach within a thirty (30) day
period after written notice of such breach; provided that the cure period for
any failure of Client to pay fees and charges due hereunder shall be fifteen
(15) days from the date of receipt by Client of notice of such failure.
3.3 Remaining Payments. Within thirty (30) days of termination of this
Agreement for any reason, Company shall submit to Client an itemized invoice for
any fees or expenses theretofore accrued under this Agreement. Client, upon
payment of accrued amounts so invoiced, shall thereafter have no further
liability or obligation to Company whatsoever for any further fees or expenses
arising hereunder. Notwithstanding any termination of the terms of this
Agreement, the rights and licenses granted under Section 6 hereof shall continue
in effect in accordance with their terms.
Section 4
FEES, EXPENSES, AND PAYMENT
4.1 Fees. In consideration of the services to be performed by Company,
Client shall pay Company the fees set forth in Schedule B attached hereto.
4.2 Reimbursement of Expenses. In addition to the foregoing, Client shall
pay Company its actual out-of-pocket expenses as reasonably incurred by Company
in
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furtherance of its performance hereunder. Company agrees to provide Client with
access to such receipts, ledgers, and other records as may be reasonably
appropriate for Client or its accountants to verify the amount and nature of any
such expenses.
4.3 Additional Work. The fees and charges for any follow-on or additional
work not described in Schedule A attached hereto shall be performed at Company's
then-current rates for such work.
4.4 Payment. Client shall pay all fees and expenses owing to the Company
hereunder within fifteen (15) days after Company has submitted to Client an
itemized invoice therefor. A late payment fee equal to the lesser of *** per
month, or the highest amount allowed by law shall be imposed on amounts overdue
30 or more days. Client hereby agrees to pay all of Company's costs of
collecting overdue amounts, including but not limited to reasonable attorneys
fees.
Section 5
TREATMENT OF PERSONNEL
5.1 Compensation of Company's Personnel. Company shall bear sole
responsibility for payment of compensation to its personnel. Company shall pay
and report, for all personnel assigned to Client's work, federal and state
income tax withholding, social security taxes, and unemployment insurance
applicable to such personnel as employees of Company. Company shall bear sole
responsibility for any health or disability insurance, retirement benefits, or
other welfare or pension benefits, if any, to which such personnel may be
entitled. Company agrees to defend, indemnify, and hold harmless Client,
Client's officers, directors, employees, and agents, and the administrators of
Client's benefit plans from and against any claims, liabilities, or expenses
relating to such compensation, tax, insurance, or benefit matters; provided that
Client shall promptly notify Company of each such claim when and as it comes to
Client's attention, Client shall cooperate with Company in the defense and
resolution of such claim, and Client shall not settle or otherwise dispose of
such claim without Company's prior written consent, such consent not to be
unreasonably withheld.
5.2 Worker's Compensation. Notwithstanding any other workers' compensation
or insurance policies maintained by Client, Company shall procure and maintain
workers' compensation coverage sufficient to meet the statutory requirements of
every state where Company's personnel assigned to Client's work are located.
Section 6
OWNERSHIP RIGHTS
6.1 Ownership. As between Client and Company, except as set forth below in
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* [Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
this Section 6, all right, title, and interest, including copyright interests
and any other intellectual property, in and to any financial information,
programs, systems, data, memoranda, books, papers, letters, formulas, or
materials produced or provided by Company, alone or in combination with Client
and/or its employees, under this Agreement shall be the property of Company.
Client shall have an unlimited license to use such materials exclusively in
connection with its own operations, but may not disclose any aspect of such
materials to third parties except for Bank Regulatory Officials.
Section 7
PROPRIETARY AND CONFIDENTIAL INFORMATION
7.1 Trade Secrets; Confidentiality. a. Company acknowledges that in order
to perform the services called for in this Agreement, it shall be necessary for
Client to disclose to Company certain Trade Secrets. Company further
acknowledges that the work will of necessity incorporate such Trade Secrets.
Company agrees that it shall not disclose, transfer, use, copy, or allow access
to any such Trade Secrets to any employees of the Company or to any third
parties, excepting those who have a need to know such Trade Secrets in order to
perform the services hereunder and who have bound themselves to respect and
protect the confidentiality of such Trade Secrets. Unless Company is compelled
to disclose Trade Secrets by judicial or regulatory process, Company shall not
disclose any such Trade Secrets to any third parties, including but not limited
to the member/owner of Company or their affiliates or their directors, officers
or employees. b. Company also acknowledges, and Client understands, that Company
is a company which has as members banks or affiliates of banks which may be
competitors of Client. Company has therefore adopted internal policies and
procedures, including confidentiality agreements with Company's personnel, which
assure that the Trade Secrets of Client are not communicated or otherwise
transmitted or made available by Company or its personnel to (i) the
member/owners of Company; (ii) corporate parents, affiliates, or subsidiaries of
the member/owners of Company; or (iii) officers, directors, agents or employees
of the member/owners of Company or of the member/owners' corporate parents,
affiliates, or subsidiaries.
7.2 Scope of Restriction. As used herein, the term "Trade Secrets" shall
mean any Client data, financial and other information, or formulas, including
but not limited to any data or information pertaining to a deposit or loan
customer of Client, that is not generally known in the industry or to the
public.
Section 8
WARRANTIES
8.1 Warranties of Company. Company warrants that Company's performance
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of the services called for by this Agreement do not and shall not violate any
applicable law, rule, or regulation; or any contracts with third parties.
Section 9
LIMITATION OF LIABILITY
9.1 Consulting Services ... Internal Support. The services rendered by
Company consist of consulting services only, with decision making
responsibilities in all instances retained by Client's management. The services
provided by Company are not intended to take the place of legal, accounting and
other professionals, but rather to provide internal support similar to that
which would be provided by Client's own employees.
9.2 No Consequential Damages, etc. In no event shall Company be liable to
Client for any incidental, indirect, or consequential damages or lost profits of
Client.
9.3 Loss of Data. In no event shall Company be liable for loss of data or
records of Client, it being understood that Client shall be responsible for
ensuring proper and adequate back-up and storage procedures.
9.4 Force Majeure. Company shall not be liable to Client for any failure or
delay caused by events beyond Company's control, including, without limitation,
Client's failure to furnish necessary information; sabotage; failure or delays
in transportation or communication; failure or substitutions of equipment; labor
disputes; accidents; shortages of labor, fuel, raw materials or equipment; or
technical failures.
Section 10
HIRING OF COMPANY'S PERSONNEL
10.1 Additional Value From Hiring. Client acknowledges that Company
provides a valuable service by identifying and assigning personnel for Client's
work. Client further acknowledges that Client would receive substantial
additional value, and Company would be deprived of the benefits of its work
force, if Client were to directly hire Company's personnel after they have been
introduced to Client by Company.
10.2 Orderly Transition. In the event that Client hires any personnel of
Company, Client will allow said employee and Company to work out an orderly
transition, up to forty-five (45) days, if necessary.
Section 11
MISCELLANEOUS
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11.1 Governing Law. This Agreement shall be governed and construed in all
respects in accordance with the laws of the State of Maine as they apply to a
contract entered into and performed in that State.
11.2 Independent Contractors. The parties are and shall be independent
contractors to one another, and nothing herein shall be deemed to cause this
Agreement to create an agency, partnership, or joint venture between the
parties. Nothing in this Agreement shall be interpreted or construed as creating
or establishing the relationship of employer and employee between Client and
either Company or any employee or agent of Company.
11.3 Notices. All notices required or permitted hereunder shall be given in
writing addressed to the respective parties as set forth herein, unless another
address shall have been designated, and shall be delivered by hand or by
registered or certified mail, postage prepaid.
11.4 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto and supersedes all prior representations, proposals,
discussions, and communications, whether oral or in writing. This Agreement may
be modified only in writing and shall be enforceable in accordance with its
terms when signed by the party sought to be bound.
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11.5 Parties in Interest. This Agreement is enforceable only by Company and
Client. The terms of this Agreement are not a contract or assurance regarding
compensation, continued employment, or benefit of any kind to any personnel
assigned to Client's work, or any beneficiary of any such personnel, and no such
personnel (or any beneficiary thereof) shall be a third-party beneficiary under
or pursuant to the terms of this Agreement.
11.6 Arbitration of Disputes. All disputes between the parties under this
Agreement shall be submitted to binding arbitration in accordance with the rules
of the American Arbitration Association (the "Association"). The procedure for
arbitration shall be in accordance with the Association's then existing rules,
except that if the parties are unable to agree on a single arbitrator within
five days after arbitration is sought, each party shall select one arbitrator,
and the two selected arbitrators shall choose a third arbitrator. If either
party fails to select an arbitrator within ten days after arbitration is sought,
or the two arbitrators fail to select a third arbitrator within 15 days after
arbitration is sought, the Association shall make the selection.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives, on the date and year first above
written.
COMPANY:
M&M CONSULTING LIMITED LIABILITY COMPANY
By: /s/ Xxx X. Xxxxxxxxx
(Signature)
Xxx X. Xxxxxxxxx, CEO
---------------------------------------------------------------
Typed Name Title
CLIENT:
XXXXXXX MERCHANTS BANK
By: /s/ Xxxxx X. Xxxxx
(Signature)
Xxxxx X. Xxxxx President
---------------------------------------------------------------
Typed Name Title
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(SCHEDULE A)
XXXXXXX MERCHANTS TRUST COMPANY
PROPOSAL FOR COMPLIANCE AND RISK MANAGEMENT SERVICES
COMPLIANCE RELATED SERVICES
Given the strong existing Compliance capability, M & M's role will be targeted
to specific areas where additional resources are required.
o Cash Management relative to Repos and Sweeps
o Automated Clearing house (ACH) and electronic funds transfer related
o Review of M & I forms relative to Clearing House rules, Federal Reserve
Regs and the Uniform Commercial Code
o Help develop an ACH policy
o Commercial Lender Training
o Regulatory requirements
o Bank Policy
o Responsibility for compliance
o Responsibilities, support functions and communications
o help bridge the gap over ownership/involvement in developing policies and
procedures
Who has responsibility for compliance with laws and policy?
Materiality issue
Technology solutions???
o Support on
o Deposit compliance
o Commercial compliance
o Perform an independent BSA review (including BSA and KYC policy)
o Ongoing Review of Advertisements and Disclosures
o Provide guidance with respect to specific technical questions and issues
o Potentially automate home mortgage application template
o generate ratios
o compare ratios to underwriting standards
o identify critical missing information
RISK MANAGEMENT SERVICES
o Open Issue Tracking
o Managing Change:
o new products
o systems changes
o new marketing approaches
o new forms
o new markets
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(SCHEDULE B)
XXXXXXX MERCHANTS TRUST COMPANY
PROPOSAL FOR COMPLIANCE AND RISK MANAGEMENT SERVICES
For the services outlined in schedule A, the client will be charged $***
annually, billed monthly, exclusive of expenses.
The cost of the services provided shall be $*** for the year, billed monthly,
plus expenses.
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* [Confidential portions of this Exhibit have been omitted and filed separately
with the Commission. Omitted terms are indicated by ***.]
