Exhibit 10.3
[EXECUTION COPY]
Inland Financial Corporation
0000 Xxxx Xxxxxxx, Xxxxx X
Xxxxxxx, Xxxxxxxxxx 00000
As of November 1, 1999
Xxxxxx Xxxxx
Chicago Advisory Group
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxx:
Inland Financial Corporation (the "Company") desires to engage
Chicago Advisory Group ("CAG") as a consultant, and CAG desires to be so engaged
by the Company, all subject to the terms and conditions set forth in this letter
agreement (this "Agreement").
Accordingly, in consideration of the mutual covenants
hereinafter set forth and intending to be legally bound, the Company and CAG
hereby agree as follows:
1. Engagement; Term. The Company hereby engages CAG, and
CAG hereby accepts such engagement and agrees to serve as a consultant to the
Company, upon the terms and conditions hereinafter set forth, for a term
commencing on November 1, 1999 (the "Effective Date") and (unless sooner
terminated as hereinafter provided) expiring twelve months after the Effective
Date (such term being hereinafter referred to as the "Initial Term").
Thereafter, this Agreement shall automatically be extended for one or more
additional three-month periods unless CAG or the Company gives written notice,
no less than ninety (90) days prior to the end of the Initial Term, or, as
applicable, sixty (60) days prior to the end of any extension thereof, of CAG's
or the Company's election not to renew the Agreement. As used in this Agreement,
"Term" shall be defined as the Initial Term and, if applicable, any extension
thereof.
2. Duties; Conduct.
(a) During the Term, CAG shall make available to the
Company the services of Xxxxxx Xxxxx ("Xxxxx") who shall serve in the capacity
of a senior advisor to the Company; as such, CAG shall render consulting
services from time to time as hereinafter provided on such project or projects
relating to the business, affairs and management of the Company as may be
reasonably delegated to CAG by the Board of Directors, the Co-Chief Executive
Officers, or, as applicable, Chief Executive Officer, or the Chief Operating
Officer of
the Company or of Walnut Financial Services, Inc. ("Walnut"). CAG agrees that it
shall use its best efforts to perform such services faithfully and diligently,
and to the best of its ability, and shall use its best efforts to cause Xxxxx to
use his best efforts to perform such services faithfully and diligently, and to
the best of his ability.
(b) To the extent practicable, the services to be
provided by CAG shall be performed at such times as are reasonably convenient to
CAG. The Company acknowledges that CAG and Xxxxx may have other activities,
obligations and engagements which may command its or his time and attention and
the Company will exercise its best efforts to respect such other commitments.
(c) The services to be provided hereunder may require
travel. Domestic travel shall be as reasonably required for the performance of
the duties hereunder; except as provided below, CAG shall not need prior
approval for any domestic travel required hereunder unless and until it incurs
business expenses in connection with such travel in the aggregate amount of
$10,000 per annum. Once such threshold has been exceeded, CAG shall obtain the
consent of Walnut's Chief Operating Officer prior to incurring any additional
domestic travel expense. The parties agree that, subject to the prior two
sentences, (i) business class (as opposed to coach) and (ii) the costs of
upgrade certificates pursuant to frequent flier programs (not to exceed $100 per
flight) shall be deemed to be reasonable expenses. Foreign travel shall be as
the Company and CAG shall mutually agree.
3. Compensation and Expenses.
(a) Except as otherwise provided in Section 3(b), as
full compensation for all services to be provided by CAG hereunder during the
Term, the Company will pay CAG and CAG will accept consulting fees at an annual
rate of Fifty Thousand Dollars ($50,000). Such consulting fees will be paid
monthly in arrears.
(b) The Company will reimburse CAG for all reasonable
travel, business entertainment and other business expenses as may be incurred by
it during the Term in the performance of the duties and responsibilities
assigned to it under this Agreement. Such reimbursements shall be made by the
Company on a timely basis upon submission by CAG of proper accounts therefor in
accordance with the Company's standard procedures.
4. Termination.
(a) The Company may terminate the consulting
engagement hereunder and this Agreement at any time for Cause. For purposes of
this Agreement, the term "Cause" shall mean any of the following: (i) conviction
of a felony by Xxxxx; (ii) perpetration of an intentional and knowing fraud by
CAG or Xxxxx against or adversely affecting the Company, Walnut or any of the
Company's affiliates or any customer, client, agent, or employee of any of the
foregoing; (iii) any action or conduct by CAG or Xxxxx in any manner which would
reasonably be expected to harm the reputation or goodwill of the Company, Walnut
or any of the Company's affiliates; (iv) willful breach of a covenant set forth
in Section 5 or 6 by CAG or Xxxxx; (v) substantial failure of CAG to perform its
duties hereunder; or (vi) subject to Section
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2(b) above and after taking into account Xxxxx'x reasonable personal commitments
and vacation time, CAG's failure or inability to make Xxxxx available to provide
the services contemplated hereunder for any reason as determined in good faith
by the Board of Directors of the Company or of Walnut; provided, however, that a
termination pursuant to clause (iii), (v) or (vi) shall not become effective
unless CAG fails to cure such action, conduct or failure to perform within
fifteen (15) days after written notice from the Company, such notice to describe
such action, conduct or failure to perform and identify what reasonable actions
shall be required to cure such action, conduct or failure to perform, if such
action, conduct or failure to perform is susceptible of cure.
No act or failure to act on CAG's or Xxxxx'x part
shall be considered "willful" under this Section 4(a) unless it is done, or
omitted to be done, by CAG or Xxxxx in bad faith or without reasonable belief
that its or his action or omission was in the best interests of the Company. Any
act or failure to act that is based upon authority given pursuant to a
resolution duly adopted by the Board of Directors of the Company or of Walnut,
or upon direction or authority of the Co-Chief Executive Officers or, as
applicable, Chief Executive Officer of the Company or of Walnut, or upon the
advice of counsel for the Company or Walnut, shall be conclusively presumed to
be done, or omitted to be done, by CAG in good faith and in the best interests
of the Company.
(b) The Term shall terminate forthwith upon a sale of
all or substantially all of the stock or assets of the Company or Walnut.
(c) CAG may terminate the consulting engagement
hereunder and this Agreement at any time in the event of any material breach of
this Agreement by the Company; provided, however, that such termination shall
not become effective unless the Company fails to cure such breach within fifteen
(15) days after written notice from CAG, such notice to describe such breach and
identify what reasonable actions shall be required to cure such breach.
(d) In the event of a termination pursuant to any of
Section 4(a), (b) or (c) above, CAG shall be entitled to, and the Company shall
pay to CAG within thirty (30) days after any such termination, any accrued but
unpaid consulting fees to the date of termination and any accrued but unpaid
expenses required to be reimbursed pursuant to Section 3(b) above. In the event
of a termination pursuant to Section 4(c) above, CAG shall be entitled to
continued payment of the consulting fees pursuant to Section 3(a) above until
the expiration of the Term as if such termination had not occurred, with such
payments being in addition to the payments described in the previous sentence.
5. Noncompetition and Nonsolicitation; Nondisclosure of
Proprietary Information; Surrender of Records.
5.1 Noncompetition and Nonsolicitation. In view of
the unique and valuable services it is expected CAG and Xxxxx will render to the
Company, CAG's and Xxxxx'x knowledge of the customers, trade secrets, and other
proprietary information relating to the business of the Company, Walnut and the
Company's affiliates and their customers and
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suppliers, and in consideration of compensation to be received hereunder, CAG
and Xxxxx each agrees that during the consulting engagement hereunder it and he
will not compete with or be engaged in any business which, during the consulting
engagement hereunder, is engaged in the business of factoring or financing of
receivables in the United States or Canada, provided that the provisions of this
Section will not be deemed breached merely because CAG or Xxxxx owns less than
10% of the outstanding common stock of a publicly-traded company or is a passive
investor who owns less than 10% of the outstanding common stock of a
privately-held company.
In further consideration of the payment by the Company to CAG
of amounts that may hereafter be paid to CAG pursuant to this Agreement, CAG and
Xxxxx each agrees that during the Term and for a period of one year subsequent
to any termination hereunder, CAG and Xxxxx shall not (i) directly or indirectly
solicit or attempt to solicit any of the employees, agents, consultants or
representatives of the Company, Walnut or the Company's affiliates to terminate
his, her, or its relationship with the Company, Walnut or the Company's
affiliates; or (ii) directly or indirectly solicit or attempt to solicit any of
the employees, agents, consultants (other than Xxxx Xxxxxx and/or Windy City,
Inc.) or representatives of the Company, Walnut or the Company's affiliates to
become employees, agents, representatives or consultants of any other person or
entity; (iii) directly or indirectly solicit or attempt to solicit any customer
of the Company or Pacific Financial Services Corp. ("Pacific Financial") with
respect to any product or service being furnished, made, sold or leased by the
Company or Pacific Financial; or (iv) persuade or seek to persuade any customer
of the Company or Pacific Financial to cease to do business or to reduce the
amount of business which any customer has customarily done or contemplates doing
with the Company or Pacific Financial, whether or not the relationship between
the Company or Pacific Financial and such customer was originally established in
whole or in part through CAG's or Xxxxx'x efforts.
5.2 Proprietary Information. CAG and Xxxxx each
acknowledges that during the course of the consulting engagement hereunder CAG
and Xxxxx will necessarily have access to and make use of proprietary
information and confidential records of the Company, Walnut and the Company's
affiliates. CAG and Xxxxx each covenants that it and he shall not during the
Term or at any time thereafter, directly or indirectly, use for its or his own
purpose or for the benefit of any person or entity other than the Company, nor
otherwise disclose, any such proprietary information to any individual or
entity, unless such disclosure has been authorized in writing by the Company or
is otherwise required by law.
For purposes of this Section 5, "proprietary
information" shall not include information which (i) is or becomes generally
available to the public other than as a result of a breach of this Agreement by
CAG or Xxxxx; (ii) was within CAG's or Xxxxx'x possession or knowledge prior to
its being furnished to the Company, provided that the information was not
obtained in connection with the consulting engagement hereunder or Xxxxx'x prior
employment by Walnut; (iii) is independently developed by CAG or Xxxxx other
than in connection with the consulting engagement hereunder; or (iv) is obtained
by
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CAG or Xxxxx in its or his capacity as an investor in Walnut or Walnut's (or its
subsidiaries') portfolio companies and not in connection with the performance of
the duties hereunder, provided that information obtained by CAG or Xxxxx under
circumstances under which it or he has any obligation to keep such information
confidential shall be "proprietary information" to the extent of such
obligation.
5.3 Confidentiality and Surrender of Records. CAG and
Xxxxx each agrees that it or he shall not during the Term or at any time
thereafter (irrespective of the circumstances under which the consulting
engagement terminates), except as required by law, directly or indirectly
publish, make known or in any fashion disclose any confidential records to, or
permit any inspection or copying of confidential records by, any individual or
entity other than in the course of such individual's or entity's employment or
retention by the Company, nor shall CAG or Xxxxx retain, and will deliver
promptly to the Company, any of the same following termination of the consulting
engagement hereunder for any reason or upon request by the Company. For purposes
hereof, "confidential records" means all correspondence, memoranda, files,
manuals, books, lists, financial, operating or marketing records, magnetic tape
or electronic or other media or equipment of any kind which may be in CAG's or
Xxxxx'x possession or under its or his control or accessible to it or him which
contain any proprietary information of the Company, Walnut or the Company's
affiliates. All confidential records shall be and remain the sole property of
the Company, or, as applicable, Walnut or the Company's affiliates during the
Term and thereafter.
5.4 Enforcement. CAG and Xxxxx each agrees that the
remedy at law for any breach or threatened breach of any covenant contained in
this Section 5 would be inadequate and that the Company, in addition to such
other remedies as may be available to it at law or in equity, shall be entitled
to institute proceedings in any court or courts of competent jurisdiction to
obtain damages for breach of this Section 5 and injunctive relief.
6. No Conflict. CAG covenants that neither it nor Xxxxx
is now, and shall not become, party to or subject to any agreement, contract,
understanding or covenant, or under any obligation, contractual or otherwise, in
any way restricting or adversely affecting its or his ability to act for the
Company in all of the respects contemplated hereby.
7. Cooperation. CAG shall cooperate fully with the
Company in the prosecution or defense, as the case may be, of any and all
actions, governmental inquiries or other legal proceedings in which CAG's or
Xxxxx'x assistance may be requested by the Company. Such cooperation shall
include, among other things, making documents relating to the Company, Walnut or
the Company's affiliates or any of their respective businesses in CAG's or
Xxxxx'x custody or control available to the Company or its counsel, making Xxxxx
available for interviews by the Company or its counsel, and making Xxxxx
available to appear as a witness, at deposition, trial or otherwise. Any
reasonable vouchered out-of-pocket expenses incurred by CAG in fulfilling its
obligations under this Section 7 shall be promptly reimbursed by the Company.
The provisions of this Section 7 shall survive the
termination or expiration of this Agreement and the Term; provided, however,
that CAG's obligations under this Section 7 subsequent to the expiration of this
Agreement and the Term shall be on terms to be negotiated between CAG and the
Board of Directors of the Company or of Walnut in good faith.
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8. Notices. Any notice, consent, request or other
communication made or given in accordance with this Agreement shall be in
writing either (i) by personal delivery to the party entitled thereto, (ii) by
facsimile with confirmation of receipt, or (iii) by registered or certified
mail, return receipt requested. The notice, consent, request or other
communication shall be deemed to have been received upon personal delivery, upon
confirmation of receipt of facsimile transmission, or, if mailed, three days
after mailing. Any notice, consent, request or other communication made or given
in accordance with this Agreement shall be made to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:
To the Company:
Inland Financial Corporation
c/o Walnut Financial Services, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxx, Esq.
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
To Chicago Advisory Group:
Chicago Advisory Group
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: _______________
9. Miscellaneous.
(a) The failure of either party at any time to
require performance by the other party of any provision hereunder will in no way
affect the right of that party thereafter to enforce the same, nor will it
affect any other party's right to enforce the same, or to enforce any of the
other provisions in this Agreement; nor will the waiver by either party of the
breach of any provision hereof be taken or held to be a waiver of any prior or
subsequent breach of such provision or as a waiver of the provision itself.
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(b) This Agreement is a personal contract calling for
the provision of unique services by Xxxxx, and CAG's rights and obligations
hereunder may not be sold, transferred, assigned, pledged or hypothecated by CAG
or Xxxxx. The rights and obligations of the Company hereunder will be binding
upon and run in favor of the successors and assigns of the Company, but no
assignment by the Company shall release the Company from its obligations
hereunder, and the Company shall not assign this Agreement to any entity outside
of the Company.
(c) Each of the covenants and agreements set forth in
this Agreement are separate and independent covenants, each of which has been
separately bargained for and the parties hereto intend that the provisions of
each such covenant shall be enforced to the fullest extent permissible. Should
the whole or any part or provision of any such separate covenant be held or
declared invalid, such invalidity shall not in any way affect the validity of
any other such covenant or of any part or provision of the same covenant not
also held or declared invalid. If any covenant shall be found to be invalid but
would be valid if some part thereof were deleted or the period or area of
application reduced, then such covenant shall apply with such minimum
modification as may be necessary to make it valid and effective.
(d) This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be wholly performed within that State, without regard to the principles
of conflicts of law.
(e) This Agreement sets forth the entire
understanding between the parties as to the subject matter of this Agreement and
merges and supersedes all prior agreements, commitments, representations,
writings and discussions between the parties with respect to that subject
matter. This Agreement may be terminated, altered, modified or changed only by a
written instrument signed by both parties hereto.
(f) The Section headings contained herein are for
purposes of convenience only and are not intended to define or list the contents
of the Sections.
(g) The provisions of this Agreement which by their
terms call for performance subsequent to termination of the Term, or of this
Agreement, shall so survive such termination.
(h) In rendering the services to be rendered by CAG
hereunder, CAG shall be an independent contractor. Neither CAG nor Xxxxx shall
be considered as having an employee status or being entitled to participate in
any employee plans, arrangements or distributions by the Company. Neither CAG
nor Xxxxx shall act as an agent of the Company and neither shall be entitled to
enter into any agreements, incur any obligations on behalf of the Company, or be
authorized to bind the Company in any manner whatsoever, and neither shall refer
to the Company as a customer in any manner or format without the prior written
consent of the Company. No form of joint venture, partnership or similar
relationship between the parties is intended or hereby created.
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As an independent contractor, CAG shall be solely
responsible for determining the means and methods for performing the
professional and/or technical services described herein, and CAG shall have
complete charge and responsibility for Xxxxx. All of CAG's activities will be at
its own risk and CAG is hereby given notice of its responsibility for
arrangements to guard against physical, financial, and other risks, as
appropriate.
Except as otherwise required by law, the Company
shall not withhold any sums from the payments to be made for Social Security or
other federal, state or local tax liabilities or contributions, and all
withholding, liabilities, and contributions shall be solely CAG's
responsibility.
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Please confirm CAG's agreement with the foregoing by signing
and returning the enclosed copy of this letter, following which this will be a
legally binding agreement between us as of the date first written above.
Very truly yours,
Inland Financial Corporation
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Vice President
Accepted and Agreed:
Chicago Advisory Group
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Xxxxxx Xxxxx hereby accepts, and agrees to abide by, the terms
of Section 5 of the Agreement.
/s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx
