OHIO LEGACY CORP
EXHIBIT
10.16
ADMINISTRATIVE SERVICES
AGREEMENT
THIS
ADMINISTRATIVE SERVICES AGREEMENT (“ Agreement
”) is entered into effective as of April 28 2008, by and
between JMC MARKETING LTD, an Ohio limited liability company
(“ Company ”), and OHIO LEGACY BANK, N.A.,
national bank organized under the federal laws of the United States
(“ Bank ”).
RECITALS
A. Bank is a mortgage lender which offers, among
other products, loans secured by liens on real estate (“
Mortgage Loans ”).
B. Company desires to provide certain
administrative, training and recruitment services in connection
with the hiring and performance of certain originators of Mortgage
Loans as set forth herein.
NOW, THEREFORE,
in consideration of the mutual agreements contained in this
Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties agree as
follows.
1.
Services . The Bank hereby retains Company to perform
the services described on Exhibit A attached hereto and
incorporated herein by reference.
2.
Responsibilities of
Company . The
responsibilities of Company under this Agreement are as
follows:
(a)
Policies, Standards and
Procedures . Company
shall at all times throughout the term of this Agreement provide
administrative services to the Bank in accordance with all
policies, standards and procedures relating to the operation of the
Bank that have been provided to the Company as may from time to
time be established by the Board of Directors of Bank (the “
Board of the Bank ”), in accordance with any
regulatory requirement to which the Bank is bound and in accordance
with all applicable laws, including, without limitation, the Home
Owners Loan Act and the regulations of the Office of the
Comptroller of the Currency and FDIC promulgated
thereunder.
(b)
Business Expenses of
Company . Company shall
be solely responsible for all costs and expenses incurred in the
performance of the services provided pursuant to this Agreement
including but not limited to its: rent and utilities, equipment,
training, advertising, wages, salaries, workers’ compensation
coverage, licenses and certifications, professional dues,
insurance, postage and delivery, supplies, travel, and employment
taxes related to its employees, assistants, managers and
agents.
(c)
Personnel . Company shall be responsible for providing all
necessary service personnel needed by Company for performing its
services and duties under this Agreement.
(d)
Reports . Company shall provide written reports to the
Board of the Bank concerning the services provided hereunder as
requested by the Board of the Bank but no more frequently than
quarterly. Such reports shall contain such information as is
reasonably requested for the purpose of allowing the Board of the
Bank to assess the performance of Company pursuant to this
Agreement.
(e)
Records . At all times during the terms of this
Agreement, Company shall maintain and upon request, make available
to the Bank records maintained by Company relating to the services
provided hereunder.
3.
Responsibilities of the
Bank . The
responsibilities of the Bank under this Agreement are as
follows:
EXHIBIT
10.16 (continued)
(a)
Access . The Bank shall provide Company with reasonable
access to its facilities and those records that are necessary to
the provision of the administrative services described in Exhibit
A.
(b)
Business Expenses of the
Bank . Bank shall be
responsible for the payment of all expenses related to its
business. Company shall not be responsible for any expenses or
liabilities of the Bank arising from Bank’s business
operations.
(c)
Management and Records of
Profitability . Bank
shall be responsible for the management and oversight of its
employees that are OLB Secondary Marketing Division Employees (as
defined below), as well as determining and maintaining records
relating to the calculation of the Net Divisional Profitability (as
defined below).
4.
Net Divisional
Profitability .
The compensation to be paid by Bank to Company under this Agreement
shall be determined in the manner provided on Exhibit B attached
hereto and incorporated herein by this reference (“ Net
Divisional Profitability ”). The Net Divisional
Profitability shall be paid to Company by Bank within thirty (30)
days following the period to which the Net Divisional Profitability
relates.
5.
Monthly
Minimum . Any
provision in this Agreement to the contrary notwithstanding,
Company guarantee to Bank: (i) from the date hereof until and
including May 31, 2008, that Bank will suffer no losses in
connection with the operation of the OLB Secondary Marketing
Division Employees; and (ii) that commencing June 1, 2008, , and
continuing each month thereafter during the term of this Agreement,
the sum of the Override Fee and the Graduated Funding Fee payable
to Bank as part of the calculation of the Net Divisional
Profitability shall be at least $10,000 per month (“
Monthly Minimum ”). In the event that (a) the Monthly
Minimum is not met, or (b) Bank suffers any losses in connection
with the operation of the OLB Secondary Marketing Division
Employees prior to the effectiveness of the Monthly Minimum,
Company shall promptly pay to Bank such shortfall. In addition to
paying such shortfall, Company agrees to provide additional capital
to the OLB Secondary Marketing Division Employees from time to time
on an as-needed basis and when reasonably requested by Bank. No
payments due Company hereunder shall be made by Bank until each
Monthly Minimum has been received by Bank. Company absolutely and
unconditionally guarantees to Bank and its successors and assigns,
the full and complete Monthly Minimum as and when the same becomes
due and payable. The obligations of Company under this Section
shall be an absolute, unconditional, present and continuing
guaranty of payment and not collectibility. This guaranty shall be
binding upon the Company and its successors and assigns. No waiver,
amendment, release or modification of this Section shall be
established by conduct, custom or course of dealing, but solely by
an instrument in writing duly executed by Bank and
Company.
6.
Employees . Exhibit C to this Agreement sets forth the
number and identity of employees that are employees of Company and
are intended to become employees of Bank as soon as practical
following the date hereof (“ OLB Secondary Marketing
Division Employees ”), and sets forth the following
information for all such persons: job title; office location;
current annual rate of compensation (identifying bonuses
separately) and any change in compensation since January 1, 2006;
vacation accrued and hire date for purposes of vesting and
eligibility to participate in any employee benefit plans (as
defined in Section 3(3) of ERISA); None of the OLB Secondary
Marketing Division Employees is a party to, or is otherwise bound
by, any agreement or arrangement which limits or adversely affects
the performance of the OLB Secondary Marketing Division Employees
to perform such OLB Secondary Marketing Division Employee’s
duties with Company (including, without limitation, any
confidentiality, non-competition or proprietary rights agreements).
All OLB Secondary Marketing Division Employees are “employees
at will.” The parties acknowledge and agree that all
originators recruited by Company and hired by Bank during the term
of this Agreement shall be “OLB Secondary Marketing Division
Employees” for the purposes of this Agreement.
EXHIBIT
10.16 (continued)
7.
Background Checks; Drug
Testing .
Company shall conduct background checks and drug testing of all OLB
Secondary Marketing Division Employees for Bank under this
Agreement prior to initial hiring
and thereafter
on an annual basis. Subject to applicable law, this background
check shall include a search of criminal records (including
misdemeanors and felonies) in all counties and states of residence
of such personnel (including a search of married and maiden names,
where applicable), as well as a records check of national
convictions, for the prior seven (7) year period. Company shall
also search the databases of the General Services Administration
(GSA) and the Office of Inspector General (OIG), as well as the
Global Watch Alert (GWA) list, to ensure that such personnel are
not identified on any such databases. Company will not recommend an
individual to become an OLB Secondary Marketing Division Employee,
and will remove any such individual from providing services
hereunder, if the background checks do not show a clean record or
if the drug testing shows any positive results. Company will either
provide Bank with evidence of the background checks and drug tests
or otherwise certify to Bank in writing that such personnel
recommended as OLB Secondary Marketing Division Employees have
satisfied the background checks and drug testing as described
herein. In addition, Bank shall have the right to conduct an audit
of the records of Company, upon reasonable advance notice to the
Company, to ensure Company’s compliance with the foregoing.
Company may comply with its requirements related to background
checks and drug testing by contracting with one or more agencies or
independent contractors with expertise in background checks and
drug testing.
8.
Standard of Care;
Limitation of Liability . In providing the services described on Exhibit
A, the Company shall act with ordinary care. Any other provision of
this Agreement notwithstanding, however, neither the Company nor
any of its members, managers, officers or agents (collectively, the
“Company Related Persons”) shall have any liability for
any action taken or omitted to be taken by it or him in connection
with the services provided hereunder unless it shall be proved by
clear and convincing evidence in a court of competent jurisdiction
that its or his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
Bank or undertaken with reckless disregard for the best interests
of the Bank (if and to the extent it or he has actual knowledge of
the best interests of the Bank).
9.
Leases . The parties acknowledge that Company leases
certain properties as set forth more fully on Exhibit D, which
properties Company shall sub-lease to Bank on a month-to-month
basis upon terms mutually agreed upon by Bank and
Company.
10.
Term
. The initial term of this Agreement
shall commence as of the date hereof and shall terminate on
September 30, 2008. This Agreement may thereafter be extended for
successive one-year terms upon the agreement of the parties. In the
event the parties do not agree to extend the term of this
Agreement, this Agreement shall automatically terminate as of the
last day of the then current term. In addition to the foregoing,
this Agreement may be terminated in whole or in part prior to the
expiration of any term in accordance with the provision of Section
11.
11.
Termination . Notwithstanding Section 10, this Agreement
may be terminated by the parties as follows:
(a)
Insolvency, etc
. This Agreement shall terminate
automatically if a party (i) admits in writing its inability
to pay its debts generally as they become due; (ii) has a
liquidator, receiver, conservator or statutory successor of such
party appointed by any court or governmental authority having
jurisdiction over it; (iii) commences a proceeding under any
federal or state bankruptcy, insolvency, reorganization or similar
law, or has such a proceeding commenced against it and either has
an order of insolvency or reorganization entered against it or has
the proceeding remain undismissed and unstayed for ninety (90)
days; (iv) makes an assignment for the benefit of creditors; or (v)
has a receiver or trustee appointed for it or for the whole or any
substantial part of its property.
EXHIBIT
10.16 (continued)
(b)
Breach . In the event of a material breach by any party
of any of its covenants under this Agreement or of that certain
Loan Processing Agreement of even date herewith between Bank and
Midwest Mortgage Processing, LLC, an Ohio limited liability company
with common ownership to Company, at the option of the
non-breaching party, the non-breaching party may terminate this
Agreement if the breaching party f
