Exhibit 10.1
CONSULTING AGREEMENT
BETWEEN
FOUR OAKS BANK & TRUST COMPANY
AND
JOHN W. BULLARD
THIS CONSULTING AGREEMENT ("Agreement") is made and entered into by and
between JOHN W. BULLARD ("Consultant") and FOUR OAKS BANK & TRUST COMPANY
("Bank").
The Bank, Four Oaks Fincorp., Inc. and Longleaf Community Bank are parties
to a Merger Agreement dated April 17, 2008 (the "Merger Agreement").
Consultant's entry into this Agreement is a condition of the Merger Agreement.
Additionally, Consultant has experience beneficial to the Bank's business.
The Bank desires to retain Consultant's consulting services on the terms and
conditions set forth herein, and Consultant desires to provide such consulting
services as an independent contractor and is willing to do so on the terms and
conditions set forth herein.
In consideration of the above and the mutual promises set forth below,
Consultant and the Bank agree as follows:
1. Consulting Services. During the term of this Agreement, Consultant shall
provide to the Bank such consulting services as may be reasonably requested by
the Bank upon reasonable notice to Consultant.
2. Termination of Prior Agreement. The Bank and Consultant acknowledge and
agree that: (i) the Employment Agreement between Consultant and Longleaf
Community Bank dated August 4, 2003 has been involuntarily terminated without
Cause; (ii) the Bank is not obligated to pay Consultant any "Base Salary" under
that Employment Agreement; and, (iii) the "Restriction Period" under that
Employment Agreement has expired.
3. Term. The term of this Agreement shall be for a period of three (3)
years, beginning on the Closing, as defined in the Merger Agreement, and ending
on the third anniversary of that date unless terminated earlier as provided
herein.
4. Consulting Retainer, Fee and Expenses. The Bank shall pay Consultant a
retainer in the amount of Fifty Thousand and No/100 Dollars ($50,000.00) per
year for services rendered and obligations under this Agreement. Said retainer
shall be paid in substantially equal monthly installments on the first business
day of each month of the term of this Agreement. The Bank shall also pay
expenses reasonably incurred by Consultant in rendering such services.
Consultant shall submit monthly invoices for his expenses incurred in rendering
consulting services to the Bank, and the Bank shall pay such invoices within
thirty (30) days of receipt of the same.
5. Independent Contractor Status. The parties hereby acknowledge and agree
that Consultant's consulting services for the Bank shall be provided strictly as
an independent contractor. Nothing in this Agreement shall be construed to
render him an employee, co-venturer, agent, or other representative of the Bank.
Consultant understands that he must comply with all tax laws applicable to a
self-employed individual, including the filing of any necessary tax returns and
the payment of all income and self-employment taxes. The Bank shall not be
required to withhold from the consulting fee any state or federal income taxes
or to make payments for Social Security ("FICA") tax, unemployment insurance, or
any other payroll taxes. The Bank shall not be responsible for, and shall not
obtain, worker's compensation, disability benefits insurance, or unemployment
security insurance coverage for Consultant. Consultant is not eligible for, nor
entitled to, and shall not participate in, any of the Bank's pension, health, or
other benefit plans, if any such plans exist. Consistent with his duties and
obligations under this Agreement, Consultant shall, at all times, maintain sole
and exclusive control over the manner and method by which he performs his
consulting services.
6. Trade Secrets, Confidential Information, Bank Property and Competitive
Business Activities. Consultant acknowledges that by virtue of his position as a
consultant with the Bank, he (i) has or will have access to trade secrets and
Confidential Information (as defined in Section 6.1.5) of the Bank including
valuable information about its business operations and entities with whom it
does business in various locations, and (ii) has developed or will develop
relationships with parties with whom it does business in various locations.
Consultant also acknowledges that the Trade Secrets, Confidential Information
and Competitive Business Activities provisions set forth in this Agreement are
reasonably necessary to protect the Bank's legitimate business interests, are
reasonable as to the time, territory and scope of activities which are
restricted, do not interfere with public policy or public interest and are
described with sufficient accuracy and definiteness to enable him to understand
the scope of the restrictions imposed on him.
6.1. Trade Secrets and Confidential Information. Consultant
acknowledges that: (i) the Bank will disclose to him certain trade secrets and
Confidential Information; (ii) trade secrets and Confidential Information are
the sole and exclusive property of the Bank and the Bank owns all rights therein
under patent, copyright, trade secret, confidential information, or other
property right; and (iii) the disclosure of trade secrets and Confidential
Information to Consultant does not confer upon him any license, interest or
rights of any kind in or to the trade secrets or Confidential Information.
6.1.1. Consultant may use the trade secrets and Confidential
Information only in accordance with applicable Bank policies and procedures and
solely for the Bank's benefit while he is retained by the Bank. Except as
authorized in the performance of services for the Bank, Consultant will hold in
confidence and not directly or indirectly, in any form, by any means, or for any
purpose, disclose, reproduce, distribute, transmit, reverse engineer, decompile,
disassemble, or transfer trade secrets or Confidential Information or any
portion thereof. Upon the Bank's request, Consultant shall return to the Bank
all trade secrets and Confidential Information and all related materials in his
possession, custody or control.
6.1.2. If Consultant becomes subject to a court order or other
government process that could reasonably be expected to require him to disclose
trade secrets or Confidential Information or such disclosure is necessary to
comply with applicable law or defend against claims, he shall: (i) notify the
Bank promptly before any such disclosure is made; (ii) at the Bank's request and
expense cooperate reasonably with steps the Bank takes to defend against such
disclosure, including defending against the enforcement of the court order,
other government process or claims; and (iii) permit the Bank to participate
with counsel of its choice in any proceeding relating to any such court order,
other government process or claims.
6.1.3. Consultant's obligations with regard to trade secrets shall
remain in effect for as long as such information shall remain a trade secret
under applicable law.
6.1.4. Consultant's obligations with regard to Confidential
Information shall remain in effect while he is retained by the Bank and for
three (3) years thereafter.
6.1.5. As used in this Agreement, "Confidential Information" means
information other than trade secrets, that is of value to the Bank and is
treated by the Bank as confidential, including, but not limited to, such
information about the Bank's lending and deposit operations, regulatory
examinations, customer identities, future business plans, pricing, sales
manuals, training manuals, selling and pricing procedures, financing methods,
financial statements, techniques for designing, developing, manufacturing,
testing or marketing advertising campaigns, and information regarding executives
and employees; provided, however, Confidential Information shall not include
information which is in the public domain or becomes public knowledge through no
fault of Consultant.
6.2. Bank Property. Upon the termination of his retention as a
consultant, Consultant shall: (i) deliver to the Bank all records, memoranda,
data, documents and other property of any description which refer or relate in
any way to trade secrets or Confidential Information, including all copies
thereof, which are in his possession, custody or control; (ii) deliver to the
Bank all Bank property (including, but not limited to, keys, credit cards,
client files, contracts, proposals, work in process, manuals, forms, computer
stored work in process and other computer data, research materials, other items
of business information concerning any Bank customers, or business or business
methods, including all copies thereof) which is in his possession, custody or
control; (iii) cooperate reasonably with the Bank to bring all such records,
files and other materials up to date, wind up his work, and transfer that work
to other individuals designated by the Bank.
6.3. Competitive Business Activities. For a period of three (3) years
from the Closing, as defined in the Merger Agreement, regardless of whether this
Agreement may have been terminated earlier than the end of that period,
Consultant will not engage in the following activities:
(a) on his own or on another's behalf, whether as an officer,
director, stockholder, partner, associate, owner, employee, consultant or
otherwise, directly or indirectly compete with the Bank within the geographical
areas set forth in Section 6.3.1;
(b) within the geographical areas set forth in Section 6.3.1, be
retained, employed, or otherwise engaged, in (i) a management capacity, (ii)
other capacity providing the same or similar services which Consultant provided
to the Bank, or (iii) any capacity connected with competitive business
activities by any person or entity that engages in competition with the Bank,
provided, Consultant's services as an independent contractor providing appraisal
or appraisal review services for lending institutions shall not be prohibited by
this Agreement; or
(c) hire, offer employment to, or otherwise solicit for employment
any person who is employed by the Bank at any time during the three (3) year
period following the Closing, as defined in the Merger Agreement, or who was
employed by the Bank as of that date.
6.3.1. The restrictions set forth in Sections 6.3(a) and (b) apply
to Richmond County, North Carolina; any county of North or South Carolina
contiguous thereto; any other county in which the Bank maintains a business
office on the date of termination of this Agreement.
6.3.2. Notwithstanding the foregoing, Consultant's ownership,
directly or indirectly, of not more than one percent of the issued and
outstanding stock of any bank or company the shares of which are regularly
traded on a national securities exchange or in the over-the-counter market shall
not violate Section 5.3.
6.4. Remedies. Consultant acknowledges that his failure to abide by
the Trade Secrets, Confidential Information, Bank Property or Competitive
Business Activities provisions of this Agreement would cause irreparable harm to
the Bank for which legal remedies would be inadequate. Therefore, in addition to
any legal or other relief to which the Bank may be entitled by virtue of
Consultant's failure to abide by these provisions: (i) the Bank may seek legal
and equitable relief, including but not limited to preliminary and permanent
injunctive relief, for Consultant's actual or threatened failure to abide by
these provisions; and (ii) Consultant will indemnify the Bank for all expenses
including attorneys' fees in seeking to enforce these provisions.
6.5. Tolling. The period during which Consultant must refrain from the
activities set forth in Sections 6.1 and 6.3 shall be tolled during any period
in which he fails to abide by these provisions.
6.6. Other Agreements. Nothing in this Agreement shall terminate,
revoke or diminish Consultant's obligations to the Bank or the Bank's rights and
remedies under law or any agreements relating to trade secrets, confidential
information, non-competition and intellectual property which Consultant has
executed in the past or may execute in the future or contemporaneously with this
Agreement.
7. Severability. If a court of competent jurisdiction holds that any
provision or sub-part thereof contained in this Agreement is invalid, illegal or
unenforceable, that invalidity, illegality or unenforceability shall not affect
any other provision in this Agreement. Additionally, if any of the provisions,
clauses or phrases in the Trade Secrets, Confidential Information, Bank
Property, and Competitive Business Activities provisions set forth in this
Agreement are held unenforceable by a court of competent jurisdiction, then the
parties desire that such provisions, clauses, or phrases be "blue-penciled" or
rewritten by the court to the extent necessary to render them enforceable.
8. Termination. Consultant may terminate this Agreement upon thirty (30)
days' written notice to the Bank. The Bank may terminate this Agreement only if
Consultant (i) materially breaches this Agreement; such a breach would include,
but not be limited to, unreasonably refusing, failing to accept, or failing to
complete consulting assignments, provided that the Bank first has given
reasonable notice to Consultant and an opportunity to cure the breach; or (ii)
engages in dishonesty, fraud, felonious conduct or other conduct which is
materially injurious to the Bank. In the event of termination of this Agreement,
regardless of the reason for such termination, Consultant shall be entitled to
receive payment of the monthly retainer amount, prorated through the last date
he performs services, and reimbursement of any then outstanding expenses;
Consultant shall not be entitled to any other payments from the Bank upon
termination.
9. Entire Agreement. This Agreement and any applicable provisions of the
Merger Agreement: (i) supersede all other understandings and agreements, oral or
written, between the parties with respect to its subject matter; and (ii)
constitute the sole agreement between the parties with respect to its subject
matter. Each party acknowledges that with respect to the matters herein: (i) no
representations, inducements, promises or agreements, oral or written, have been
made by any party or by anyone acting on behalf of any party, which are not
embodied in this Agreement; and (ii) no agreement, statement or promise not
contained in this Agreement shall be valid. No change or modification of this
Agreement shall be valid or binding upon the parties unless such change or
modification is in writing and is signed by the parties.
10. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of North Carolina.
[signature page follows]
IN WITNESS WHEREOF, the parties have entered into this Agreement this the
17th day of April, 2008.
CONSULTANT:
By: /s/ John W. Bullard
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John W. Bullard
FOUR OAKS BANK & TRUST COMPANY:
By: /s/ Ayden R. Lee, Jr.
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Name: Ayden R. Lee, Jr.
Title: President and Chief Executive Officer