Form of Employment Agreement
EXHIBIT 10.6
THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is made effective as of the ____ day of ________, 2009 (the “Effective
Date”), by and between Michigan Commerce Bancorp Limited, a Michigan
corporation (the “Company”)
and [_________________]
(the “Executive”).
Background
The Board of Directors of the Company
(the “Board”)
has determined that it is in the best interests of the Company and its
shareholders to employ the Executive. The Company and the Executive
desire to enter into this Agreement to state the terms and conditions of such
employment relationship in its entirety. This Agreement shall
represent the entire understanding and agreement between the parties with
respect to the Executive’s employment with the Company.
NOW, THEREFORE, in consideration of the
foregoing and the terms and conditions set forth herein, the parties agree as
follows:
Terms and
Conditions
1. Employment
Period. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to be employed by the Company, subject to the terms and
conditions of this Agreement for the Employment Period. The “Employment
Period” shall mean the period commencing on the Effective Date and ending
on the third anniversary of the Effective Date, unless the employment of the
Executive is terminated earlier in accordance with Section 3.
2. Terms
of Employment.
(a) Position
and Duties.
(i) During
the Employment Period, the Executive shall serve as the [______________________] of
the Company, and in such other position or positions with the Company and its
subsidiaries as are consistent with the Executive’s positions as [__________________________]
of the Company, and shall have such duties and responsibilities as are assigned
to him by the Board. The Executive agrees to serve as a member of the
Board of Directors of the Company, [and as the [__________] of the Board
of Directors of the Company,] if elected to serve in those positions
during the Employment Period.
(ii) During
the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs of
the Company, to discharge the responsibilities assigned to the Executive
hereunder to use the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (A) be
employed by Michigan Commerce Bancorp Limited or any of its subsidiaries or
affiliates,
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(B) serve
on corporate, civic or charitable boards or committees, (C) deliver lectures,
fulfill speaking engagements or teach at educational institutions and
(D) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement.
(b) Compensation.
(i) Base Salary.
During the
Employment Period, the Executive shall receive an annual base salary (the “Annual Base
Salary”) at least equal to ________________ Dollars ($________), which
shall be paid in accordance with the Company’s normal payroll practices for
senior executive officers of the Company as in effect from time to
time. During the Employment Period, the Annual Base Salary shall be
reviewed at least annually. Any increase in the Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement. Annual Base Salary shall not be reduced after any
such increase (unless otherwise agreed to by the Executive) and the term “Annual
Base Salary” as utilized in this Agreement shall refer to the Annual Base Salary
as so increased.
(ii) Annual
Bonus. In addition to the Annual Base Salary, for each fiscal
year ending during the Employment Period, the Executive shall be eligible for an
annual cash bonus (the “Annual
Bonus”) pursuant to the terms of the Company’s Omnibus Incentive and
Equity Plan (“EIP”) (or
any successor plan thereof), as determined by the Compensation Committee of the
Board. Each such Annual Bonus awarded to the Executive shall be paid
no later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) Long-Term
Incentive Compensation. During the Employment Period, the
Executive shall be entitled to participate in any stock option, performance
share, performance unit or other equity based long-term incentive compensation
plan, program or arrangement (the “Plans”)
generally made available to senior executive officers of the Company, on
substantially the same terms and conditions as generally apply to such other
officers, except that the size of the awards made to the Executive shall reflect
the Executive’s position with the Company and the Compensation Committee’s
views. During each fiscal year during the Employment Period, the
Executive shall receive an annual award with a target award value (which value
shall be as determined in accordance with the policies and practices generally
applicable to other senior executive officers of the Company) of not less than
[________] times the Executive’s Base Salary as expected to be in effect at the
end of such fiscal year; it being understood that the form of the award shall be
determined by the Compensation Committee and such form shall be subject to the
terms of the applicable plan or plans of the Company. The preceding
sentence shall not limit any power or discretion of the Board or the
Compensation Committee in the administration of any such long-term incentive
plan. The Compensation Committee may increase the award value of any
award made in respect of any such fiscal year in its discretion. The
actual benefits conveyed to the Executive in respect of any such awards may be
less than, greater than or equal to the targeted award value, as such benefits
will be dependent on a series of performance and other factors, such as the
value of the Company’s common stock and satisfaction of any applicable vesting
requirements and performance conditions.
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(iv) Welfare Benefit
Plans. During the Employment Period, the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and programs)
to the extent available generally or to other senior executive officers of the
Company.
(v) Expenses. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the plans, practices, policies and programs of the
Company.
(vi) Perquisites,
Support Staff. During the Employment Period, the Executive
shall be entitled to receive such perquisites and support as are generally
provided to other senior executive officers of the Company, in accordance with
the then current policies of the Company.
(vii) Vacation.
During the Employment Period, the Executive shall be entitled to paid
vacation in accordance with the plans, practices, policies and programs of the
Company consistent with the treatment of other senior executive officers of the
Company.
(c) Recoupment of Unearned Incentive
Compensation. If the Board of Directors of the Company, or an appropriate
committee thereof, determines that any fraud, negligence, or intentional
misconduct by the Executive is a significant contributing factor to the Company
having to restate all or a portion of its financial statements, the Board of
Directors or committee may require reimbursement of any bonus or incentive
compensation paid to the Executive if and to the extent that (a) the amount of
incentive compensation was calculated based upon the achievement of certain
financial results that were subsequently reduced due to a restatement, (b) the
Executive engaged in any fraud or misconduct that caused or significantly
contributed to the need for the restatement, and (c) the amount of the bonus or
incentive compensation that would have been awarded to the Executive had the
financial results been properly reported would have been lower than the amount
actually awarded.
3. Termination
of Employment.
(a) Early Termination of the Employment
Period. Notwithstanding Section 1, the Employment Period shall
end upon the earliest to occur of (i) the Executive’s death, (ii) a Termination
due to Disability, (iii) a Termination for Cause, (iv) the Termination Date
specified in connection with any exercise by the Company of its Termination
Right or (v) a Termination for Good Reason. If the Employment Period
terminates as of a date specified under this Section 3, the Executive agrees
that, upon written request from the Company, he shall resign from any and all
positions he holds with the Company and any of its subsidiaries and affiliates,
effective immediately following receipt of such request from the Company (or at
such later date as the Company may specify).
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(b) Benefits
Payable Under Termination.
(i) In the
event of the Executive’s death during the Employment Period or a Termination due
to Disability, the Executive or his beneficiaries or legal representatives shall
be provided the Unconditional Entitlements, including, but not limited to, any
such Unconditional Entitlements that are or become payable under any Company
plan, policy, practice or program or any contract or agreement with the Company
by reason of the Executive’s death or Termination due to
Disability.
(ii) In the
event of the Executive’s Termination for Cause, the Executive shall be provided
the Unconditional Entitlements.
(iii) In the
event of a Termination for Good Reason or the exercise by the Company of its
Termination Rights, the Executive shall be provided the Unconditional
Entitlements and the Company shall provide the Executive the Conditional
Benefits.
(c) Unconditional
Entitlements. For purposes of this Agreement, the “Unconditional
Entitlements” to which the Executive may become entitled under Section
3(b) are as follows:
(i) Earned
Amounts. The Earned Compensation shall be paid
within thirty (30) days following the termination of the Executive’s
employment hereunder, or if any part thereof constitutes a bonus which is
subject to or conditioned upon any performance conditions, within thirty (30)
days following the determination that such conditions have been met, provided
that in no event shall the bonus be paid later than 90 days following his
termination of employment.
(ii) Benefits.
All benefits payable to the Executive under any employee benefit plans
(including, without limitation any pension plans or 401(k) plans) of the Company
or any of its affiliates applicable to the Executive at the time of termination
of the Executive’s employment with the Company and all amounts and benefits
(other than the Conditional Benefits) which are vested or which the Executive is
otherwise entitled to receive under the terms of or in accordance with any plan,
policy, practice or program of, or any contract or agreement with, the Company,
at or subsequent to the date of his termination without regard to the
performance by the Executive of further services or the resolution of a
contingency, shall be paid or provided in accordance with and subject to the
terms and provisions of such plans, it being understood that all such benefits
shall be determined on the basis of the actual date of termination of the
Executive’s employment with the Company. Notwithstanding the
immediately preceding sentence, the Executive shall not be entitled to any
benefits under any severance plan or policy of the Company or any of its
subsidiaries.
(iii) Indemnities. Any
right which the Executive may have to claim a defense and/or indemnity for
liabilities to or claims asserted by third parties in connection with the
Executive’s activities as an officer, director or employee of the Company shall
be unaffected by the Executive’s termination of employment and shall remain in
effect in accordance with its terms.
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(iv) Medical
Coverage. The Executive shall be entitled to such continuation
of health care coverage as is required under, and in accordance with, applicable
law or otherwise provided in accordance with the Company’s
policies. The Executive shall be notified in writing of his rights to
continue such coverage after the termination of his employment pursuant to this
Section 3(c)(iv), provided that the Executive timely complies with the
conditions to continue such coverage. The Executive understands and
acknowledges that the Executive is responsible to make all payments required for
any such continued health care coverage that the Executive may choose to
receive.
(v) Business
Expenses. The Executive shall be entitled to reimbursement, in accordance
with the Company’s policies regarding expense reimbursement as in effect from
time to time, for all business expenses incurred by him prior to the termination
of his employment.
(vi) Stock
Options/Equity Awards. Except to the extent additional rights are
provided upon the Executive’s qualifying to receive the Conditional Benefits,
the Executive’s rights with respect to any stock options and/or other granted to
him by the Company shall be governed by the terms and provisions of the plans
(including plan rules) and award agreements pursuant to which such stock options
and equity awards were awarded, as in effect at the date the Executive’s
employment terminated.
(d) Conditional Benefits. For
purposes of this Agreement, the “Conditional
Benefits” to which the Executive may become entitled are as
follows:
(i) Severance Amount.
The Company shall pay the Executive a lump sum amount equal to the
Severance Amount. The Severance Amount shall be paid on the date that
is six (6) months and one day after the Termination Date (or upon the
Executive’s death, if earlier).
(ii) Stock
Options. All of the Executive’s stock options shall become
exercisable in accordance with the applicable Original Stock Option Award
Documents, on the same basis as such options would have become vested and
exercisable if the Executive had remained employed under this Agreement through
the Scheduled Expiration Date. Once exercisable, all stock options
shall remain exercisable until the stock option termination date. All
of the Executive’s stock options that were vested and exercisable at the
Termination Date shall remain exercisable until the expiration date of such
stock options. Except as otherwise expressly provided herein, all
stock options shall continue to be subject to the Original Stock Option Award
Documents.
(iii) Equity Awards.
Any restrictive stock or other equity award subject to vesting shall
continue to vest in accordance with the terms of the Original Award Documents,
regardless of the Executive’s termination of employment. Except as
otherwise expressly provided herein, all such restricted stock or other equity
awards shall be subject to, and administered in accordance with, the Original
Award Documents.
(iv) Pro-Rated Current
Year Bonus. A pro rata annual bonus for the year in which the Termination
Date occurs, determined on the basis of an assumed full-year
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target
bonus and the number of days in the applicable fiscal year occurring on or
before the Termination Date. Such pro-rata current year bonus shall
be paid no later than the later of (i) two and a half months after the end of
the Executive’s tax year in which the Termination Date occurs and (ii) two and a
half months after the end of the Company’s tax year in which the Termination
Date occurs.
(v) Additional
Distribution Rules in Respect of Conditional Benefits. The
following additional rules shall apply with respect to distribution of the
payments and benefits, if any, to be provided to the Executive under Sections
3(d)(i) and (iv):
(A) It is
intended that each installment of the payments and benefits provided under
Sections 3(d)(i) and (iv) shall be treated as a separate “payment” for purposes
of Section 409A of the Code (“Section
409A”). Neither the Company nor the Executive shall have the
right to accelerate or defer the delivery of any such payments or benefits
except to the extent specifically permitted or required by Section
409A;
(B) Each
installment of the payments and benefits due under Sections 3(d)(i) and (iv)
that would, absent this subsection, be paid within the six (6) month period
following the Executive’s “separation from service” (within the meaning of
Section 409A of the Code and as provided in Section 3(g) hereof) from the
Company shall not be paid until the date that is six (6) months and one day
after such after such separation from service (or, if earlier, the Executive’s
death), with any such installments that are required to be delayed being
accumulated during the six (6) month period and paid in a lump sum on the date
that is six (6) months and one day following the Executive’s separation from
service; provided, however, that the preceding provisions of this sentence shall
not apply to any installment of payments and benefits if and to the maximum
extent that that such installment is deemed to be paid under a separation pay
plan that does not provide an a deferral of compensation by reason of the
application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation
pay upon an involuntary separation from service). (Any installments
that qualify for the exception under Treasury Regulation Section
1.409A-1(b)(9)(iii) must be paid no later than the last day of the Executive’s
second taxable year following the taxable year of the Executive’s in which the
separation from service occurs.) Any subsequent installments that
would be payable more than six (6) months following the Executive’s separation
from service shall be paid in accordance with the dates and terms set forth
herein.
(e) Definitions. For
purposes of this Agreement, the following terms shall have the meanings ascribed
to them below:
(i) “Affiliate”
means any corporation, partnership, limited liability company, trust or other
entity which directly, or indirectly through one or more intermediaries,
controls, is under common control with, or is controlled by, the
Company.
(ii) “Change in
Control” means the first occurrence of:
(A) any
Person acquires “beneficial ownership” (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange
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Act”)),
directly or indirectly, of securities of the Company representing 25% or more of
the combined Voting Power of the Company’s securities;
(B) within
any 24-month period, the persons who were directors of the Company at the
beginning of such period (the “Incumbent
Directors”) shall
cease to constitute at least a majority of the Board or the board of directors
of any successor to the Company; provided that any director elected or nominated
for election to the Board by a majority of the Incumbent Directors still in
office shall be deemed to be an Incumbent Director for purposes of this
subclause 3(e)(ii)(A);
(C) the
effective date of the consummation of any merger, consolidation, share exchange,
division, sale or other disposition of all or substantially all of the assets of
the Company (a “Corporate
Event”), if immediately following the consummation of such Corporate
Event those Persons who were shareholders of the Company immediately prior to
such Corporate Event do not hold, directly or indirectly, a majority of the
Voting Power, in substantially the same proportion as prior to such Corporate
Event, of (x) in the case of a merger or consolidation, the surviving or
resulting corporation or (y) in the case of a division or a sale or other
disposition of assets, each surviving, resulting or acquiring corporation which,
immediately following the relevant Corporate Event, holds more than 25% of the
consolidated assets of the Company immediately prior to such Corporate
Event;
(D) the
approval by shareholders of the Company of a plan of liquidation with respect to
the Company; or
(E) the
occurrence of any other event occurs which the Board declares to be a Change in
Control.
(iii) “Code”
means the Internal Revenue Code of 1986, as amended.
(iv) “Earned
Compensation” means the sum of (a) any Annual Base Salary earned, but
unpaid, for services rendered to the Company on or prior to the date on which
the Employment Period ends pursuant to Section 3(a) (but excluding any salary
and interest accrued thereon payment of which has been deferred) and (b) if the
Executive’s employment terminates due to the Executive’s death or in a
Termination due to Disability or a Termination for Good Reason or due to the
Company’s exercise of its Termination Right, in any case, after the end of a
fiscal year, but before the Annual Bonus payable for services rendered in that
fiscal year has been paid, the Annual Bonus that would have been payable to the
Executive for such completed fiscal year in accordance with Section
3(b).
(v) “Original Stock
Option Award Documents” means, with respect to any
stock option, the terms and provisions of the award agreement and plan pursuant
to which such stock option was granted, each as in effect on the Termination
Date.
(vi) “Original Award
Documents” means, with respect to
any restricted stock or other equity award, the terms and provisions of the
award agreement related to and the plan governing, such restricted stock or
other equity award, each as in effect on the Termination Date.
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(vii) “Person”
shall have the same meaning as ascribed to such term in Section 3(a)(9) of
the Exchange Act, as supplemented by Section 13(d)(3) of the Exchange Act,
and shall include any group (within the meaning of Rule 13d-5(b) under the
Exchange Act); provided that Person shall not include (1) the Company or
any of its Affiliates, or (2) any employee benefit plan (including an
employee stock ownership plan) sponsored by the Company or any of its
Affiliates.
(viii) “Scheduled
Expiration Date” means _____________________, 2012 [or evergreen formula
date].
(ix) “Severance
Amount” means an amount equal to the aggregate Annual Base Salary which
would have been earned by the Executive under this Agreement (including any
scheduled increase therein) for the period commencing on the day after the
Termination Date and ending on the Scheduled Expiration Date.
(x) “Termination for
Cause” means a termination of the Executive’s employment by the Company
due to the Executive’s (i) gross negligence, (ii) gross misconduct, (iii)
willful nonfeasance or (iv) willful material breach of this Agreement, which
termination may be effected (A) immediately upon notice from the Company if the
Company shall reasonably and in good faith determine that the conduct or cause
specified in such notice is not curable (it being understood that such notice
shall describe in reasonable detail the conduct or cause giving rise to such
notice and shall state the reason(s) why the Company has determined that such
conduct or cause if not curable); or (B) upon twenty (20) business days notice
from the Company, if the Company shall reasonably and in good faith determine
that the conduct or cause specified in such notice is curable (it being
understood that such notice shall describe in reasonable detail the conduct or
cause giving rise to such notice and shall state the reason(s) why the Company
has determined that such conduct or cause is curable and what steps the Company
believes should or could be taken to cure such conduct or cause); provided that
the Company shall not be entitled to terminate the Executive’s employment for
Cause, if the Executive has, within five (5) business days after the date notice
in accordance with subclause (B) has been given personally to the Executive or
otherwise has been received by the Executive, commenced in good faith to cure
the conduct or cause specified in such notice and completes such cure within
twenty (20) business days following the date such notice was
received.
(xi) “Termination
Date” means the earlier to occur of (i) the date the Company specifies in
writing to the Executive in connection with the exercise of its Termination
Right or (ii) the date the Executive specifies in writing to the Company in
connection with any notice to effect a Termination for Good Reason.
(xii) “Termination due
to Disability” means a termination of the Executive’s employment by the
Company because the Executive has been incapable, after reasonable
accommodation, of substantially fulfilling the positions, duties,
responsibilities and obligations set forth in this Agreement because of
physical, mental or emotional incapacity resulting from injury, sickness or
disease for a period of (i) six (6) consecutive months or (ii) an aggregate of
nine (9) months (whether or not consecutive) in any twelve (12) month
period. Any question as to the existence, extent or potentiality of
the Executive’s disability shall be determined by a qualified physician selected
by the Company with the consent of the Executive,
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which
consent shall not be unreasonably withheld. The Executive or his
legal representatives or any adult member of his immediate family shall have the
right to present to such physician such information and arguments as to the
Executive’s disability as he, she or they deem appropriate, including the
opinion of the Executive’s personal physician.
(xiii) “Termination for
Good Reason” means a termination of the Executive’s employment by the
Executive within thirty (30) days of the Company’s failure to cure, in
accordance with the procedures set forth below, any of the following events: (i)
a reduction in any of the Executive’s compensation rights hereunder (that is,
the Annual Base Salary or target long-term incentive award specified in Section
2(b)(iii)), it being understood that the failure of the Executive to receive in
respect of any equity award granted an amount that is equal to or greater than
the annual target incentive value ascribed to such award is not a reduction in
such compensation rights, but a failure to effect a scheduled increase in the
Annual Base Salary would be a reduction in such compensation rights; (ii) the
removal of him by the Company from the position
of_______________________________; (iii) a material reduction in the Executive’s
duties and responsibilities as in effect immediately prior to such reduction;
(iv) the assignment to the Executive of duties that are materially inconsistent
with his position or duties or that materially impair the Executive’s ability
function as __________________ or any other position in which he is then
serving; (v) the relocation of the Executive’s principal office to a location
that is more than 50 miles outside of Lansing, Michigan; or (vi) a material
breach of any material provision of this Agreement by the
Company. Notwithstanding the foregoing, a termination shall not be
treated as a Termination for Good Reason (A) if the Executive shall have
consented in writing to the occurrence of the event giving rise to the claim of
Termination for Good Reason, or (B) unless the Executive shall have delivered a
written notice to the Board of Directors within three (3) months of his having
actual knowledge of the occurrence of one of such events stating that he intends
to terminate his employment for Good Reason and specifying the factual basis for
such termination, and such event, if capable of being cured, shall not have been
cured within thirty (30) days of the receipt of such notice.
(xiv) “Termination
Right” means the right of the Company, in its sole, absolute and
unfettered discretion, to terminate the Executive’s employment under this
Agreement for any reason or no reason whatsoever. For the avoidance
of doubt, any Termination for Cause effected by the Company shall not constitute
the exercise of the its Termination Right.
(xv) “Voting
Power” means such number of Voting Securities as shall enable the holders
thereof to cast all the votes which could be cast in an annual election of
directors of a company.
(xvi) “Voting
Securities” means all securities entitling the holders thereof to vote in
an annual election of directors of a company.
(f) Conflict with
Plans. As permitted under the terms of the applicable Plans,
the Company and the Executive agree that the definitions of Termination for
Cause or Termination for Good Reason set forth in this Section 3 shall apply in
place of any similar definition or comparable concept applicable under either of
the Plans (or any similar definition in any successor plan).
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(g) Section 409A. To the extent
applicable, it is intended that this Agreement comply with the requirements of
Section 409A, and this Agreement shall be interpreted in a manner consistent
with this intent. Notwithstanding anything else contained herein to
the contrary, any payment required to be made to the Executive hereunder upon
his termination of employment (including any payment to this Section 3) shall be
made promptly after the six (6) month anniversary of the Executive’s date of
termination to the extent necessary to avoid imposition on the Executive of any
tax penalty imposed under Section 409A of the Code. Solely for
purposes of determining the time and form of payments due the Executive under
this Agreement (including any payments due under Sections 3(b) or 5) or
otherwise in connection with his termination of employment with the
Company. The Executive shall not be deemed to have incurred a
termination of employment unless and until he shall incur a “separation from
service” within the meaning of Section 409A of the Code. The parties
agree, as permitted in accordance with the final regulations thereunder, a
“separation from service” shall occur when the Executive and the Company
reasonably anticipate that the Executive’s level of bona fide services for the
Company (whether as an employee or an independent contractor) will permanently
decrease to no more than forty (40) percent of the average level of bona fide
services performed by the Executive for the Company over the immediately
preceding thirty six (36) months. The determination of whether and
when a separation from service has occurred shall be made in accordance with
this subparagraph and in a manner consistent with Treasury Regulation Section
1.409A-1(h). To the extent that the Company and the Executive
determine that any provision of this Agreement could reasonably be expected to
result in the Executive being subject to the payment of interest or additional
tax under Section 409A, the Company and the Executive agree, to the extent
reasonably possible as determined in good faith, to amend this Agreement,
retroactively, if necessary, in order to avoid the imposition of any such
interest or additional tax under Section 409A. All reimbursements and in-kind
benefits provided under this Agreement shall be made or provided in accordance
with the requirements of Section 409A to the extent that such reimbursements or
in-kind benefits are subject to Section 409A, including, where applicable, the
requirements that (i) any reimbursement is for expenses incurred during the
Executive’s lifetime (or during a shorter period of time specified in this
Agreement), (ii) the amount of expenses eligible for reimbursement during a
calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made
on or before the last day of the calendar year following the year in which the
expense is incurred and (iv) the right to reimbursement is not subject to set
off or liquidation or exchange for any other benefit.
4. Executive
Remedy. The Executive shall be under no obligation to seek other
employment or other engagement of his services. The Executive
acknowledges and agrees that the payment and rights provided under Section 3 are
fair and reasonable, and are the Executive’s sole and exclusive remedy, in lieu
of all other remedies at law or in equity, for termination of his employment by
the Company upon exercise of its Termination Right pursuant to this Agreement or
upon a Termination for Good Reason.
5. Additional
Payments Following a Change in Control.
(a) If,
during the Employment Period, the Company shall terminate the Executive’s
employment other than due to the Executive’s death, a Termination for Cause, a
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Termination
due to Disability or if the Executive shall terminate employment for Good Reason
within two (2) years after a Change of Control:
(i) the
Company shall pay to the Executive, in a lump sum in cash within thirty (30)
days after the Termination Date, the aggregate of the following
amounts:
(A) the
Unconditional Entitlements; and
(B) the
amount equal to the product of three (3) times the sum of (x) the Executive’s
Annual Base Salary, and (y) the greater of the target bonus for the then current
fiscal year under the Company’s EIP or any successor annual bonus plan and the
average annual bonus paid to or for the benefit of the Executive for the prior
three (3) full years (or any shorter period during which the Executive has been
employed by the Company).
(ii) the
Company shall provide the Executive the Conditional Benefits.
(b) In the
event that the aggregate of all payments or benefits made or provided to the
Executive under this Agreement and under all other plans, programs or
arrangements of the Company (the “Aggregate
Payment”) constitutes a parachute payment, as such term is defined in
Section 280G(b)(2) of the Code (a “Parachute
Payment”), such payments and benefits shall be reduced or eliminated, as
determined by the Company, in the following order: (i) any cash
payments, (ii) any taxable benefits, (iii) any nontaxable benefits, and (iv) any
vesting or accelerated delivery of equity awards, in each case in reverse order
beginning with the payments or benefits that are to be paid the farthest in time
from the date that triggers the applicable excise tax, until the amount of the
remaining Aggregate Payment is one dollar less than the amount that would
constitute as a parachute payment. The determination of whether the
Aggregate Payment constitutes a Parachute Payment and, if so, the amount to be
paid to the Executive and the time of payment pursuant to this Section 5 shall
be made by an independent accounting firm (the “Accounting
Firm”) selected by the Company prior to the Change in
Control. The Accounting Firm shall be a nationally recognized United
States public accounting firm which has not, during the two years preceding the
date of its selection, acted in any way on behalf of (x) the Company or any
affiliate thereof or (v) the Executive.
(c) The
Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and such amounts shall not be reduced whether
or not the Executive obtains other employment. The Company agrees to
pay as incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus, in each case, interest on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code.
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6. Confidentiality.
(a) Confidentiality. Without the
prior written consent of the Company, except (i) as reasonably necessary in the
course of carrying out his duties hereunder or (ii) to the extent required by an
order of a court having competent jurisdiction or under subpoena from an
appropriate government agency. The Executive shall not disclose any
Confidential Information unless such Confidential Information has been
previously disclosed to the public by the Company or has otherwise become
available to the public (other than by reason of the Executive’s breach of this
Section 6(a)). The term “Confidential
Information” shall include, but shall not be limited to: (i) the
identities of the existing and prospective customers or clients of the Company
and its Affiliates, including names, addresses, credit status, and pricing
levels; (ii) the buying and selling habits and customs of existing and
prospective customers or clients of the Company and its Affiliates;
(iii) financial information about the Company and its Affiliates;
(iv) product and systems specifications, concepts for new or improved
products and other product or systems data; (v) the identities of, and
special skills possessed by, employees of the Company and its Affiliates;
(vi) the identities of and pricing information about the suppliers and
vendors of the Company and its Affiliates; (vii) training programs
developed by the Company or its Affiliates; (viii) pricing
studies, information and analyses; (ix) current and prospective products
and inventories; (x) financial models, business projections and market
studies; (xi) the financial results and business conditions of the Company
and its Affiliates; (xii) business plans and strategies of the Company and
its Affiliates; (xiii) special processes, procedures, and services of
suppliers and vendors of the Company and its Affiliates; and (xiv) computer
programs and software developed by the Company or its Affiliates.
(b) Company Property. Promptly
following the Executive’s termination of employment, the Executive shall return
to the Company all property of the Company, and all copies thereof in the
Executive’s possession or under his control, except that the Executive may
retain his personal notes, diaries, rolodexes, mobile devices, calendars and
correspondence of a personal nature.
7. Successors.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal
representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
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8. Miscellaneous.
(a) This
Agreement shall be construed in accordance with, and governed by, the laws of
the State of Michigan, without regard to the conflicts of law rules of such
state. Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of the courts of the State of Michigan or any federal
court with subject matter jurisdiction located in the Western District of
Michigan (and any appeals court therefrom) in the event any dispute arises out
of this Agreement or any transaction contemplated hereby, (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, and (c) agrees that it will
not bring any action relating to this Agreement or any transaction contemplated
hereby in any court other than such courts. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the
Executive: [________________]
[________________]
[________________]
If to the
Company: Michigan
Commerce Bancorp Limited
000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxx
Xxx
Xxxxxxx,
Xxxxxxxx 00000
Attention: General
Counsel
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
(e) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the
executive to terminate employment for Good Reason shall not be deemed to be a
waiver of such provision of right or any other provision or right of this
Agreement.
(f) This
Agreement, and all agreements, documents, instruments, schedules, exhibits or
certificates prepared in connection herewith, represent the entire understanding
and agreement between the parties with respect to the subject matter hereof,
supersede all prior
13
agreements
or negotiations between such parties, and may be amended, supplemented or
changed only by an agreement in writing which makes specific reference to this
Agreement or the agreement or document delivered pursuant hereto, as the case
may be, and which is signed by the party against whom enforcement of any such
amendment, supplement or modification is sought.
Signatures
on the Following Page
14
IN
WITNESS WHEREOF, the Company and the Executive have executed this Agreement as
of the date first above written.
|
The
Executive:
___________________________
[__________________]
|
The
Company:
Michigan
Commerce Bancorp Limited
By: ___________________________
Name: _________________________
Title: __________________________
|
Signature
Page to Employment Agreement
