EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into January 13, 1998, but as of
the Effective Date hereinafter defined, by and between VALLEY RIDGE FINANCIAL
CORPORATION ("VRFC") and XXXXXXX MC XXXX ("Employee");
WHEREAS, VRFC has retained the services of the Employee as a
senior executive officer, and the Employee has accepted such employment; and
WHEREAS, the parties have operated in an employment
relationship for several years; and
WHEREAS, the parties desire to enter into this Agreement, which
is intended to set forth in its entirety the terms and conditions of the
employment relationship between VRFC and the Employee; and
WHEREAS, the board of directors of VRFC has approved this
Agreement and authorized the chairman of the board to enter into this Agreement
with the Employee;
NOW, THEREFORE, IT IS AGREED as follows:
1. EMPLOYMENT. The Employee is employed to render such executive
services to VRFC as may from time to time be reasonably directed by VRFC's
Chairman of the Board and/or the VRFC board of directors. Among his other
duties, it is contemplated that he will serve as the Secretary and Treasurer,
and Chief Financial Officer of VRFC and Executive Vice President and Chief
Financial Officer of VRFC's subsidiary, Valley Ridge Bank ("Subsidiary Bank").
2. COMPENSATION. VRFC agrees to pay the Employee during the term
of this Agreement a salary in the sum of at least Eighty Thousand Three
Hundred Forty Dollars ($80,340) per annum ("Minimum Salary") provided, however,
that any salary and bonuses (other than bonuses provided for in section 3 of
this Agreement) paid to the Employee by any subsidiary of VRFC shall be deemed
to reduce the salary paid to the Employee pursuant to this section 2. The salary
provided herein shall be payable in accordance with the periodic payment
procedures for all employees of VRFC. The Employee's salary shall be reviewed
by the board of directors of VRFC not less often than annually beginning on the
date one (1) year subsequent to the Effective Date ("First Anniversary Date")
and may be increased (but not decreased) from time to time in such amounts as
the board in its discretion may determine; any such increased salary shall
become the new Minimum Salary. The Employee's salary shall be subject to the
usual payroll withholding required with respect to compensation paid by a
corporation to an employee.
3. DISCRETIONARY BONUSES. In addition to the salary provided for
in section 2, the Employee shall be entitled to participate in discretionary
bonuses as may be from time to time authorized and declared by the board of
directors of VRFC or the Subsidiary Bank to their respective executive
employees. No other compensation provided for in this Agreement shall be deemed
a substitute for the Employee's right to participate in such bonuses when and as
declared by the board of directors.
4. RETIREMENT, EMPLOYEE BENEFIT PLANS, AND FRINGE BENEFITS.
(a) The Employee shall be entitled to participate
in any plan of VRFC or the Subsidiary Bank relating to pension,
thrift, deferred profit-sharing, group life insurance, medical
coverage, education, or other retirement or employee benefits
that VRFC or the Subsidiary Bank may adopt for the benefit of
its executive employees.
(b) The Employee shall be eligible to participate
in any other fringe benefits which may be, or may later become,
applicable to VRFC's or the Subsidiary Bank's executive or
salaried employees, including, but not limited to, the
following: health plans; insurance plans; use of a company
automobile; membership in various social business and trade
organizations; a reasonable expense account; the payment of
reasonable expenses for attending annual and periodic meetings
of trade associations; and any other benefits which are
commensurate with the responsibilities and functions to be
performed by the Employee under this Agreement.
(c) VRFC shall continue to pay the $3,000 annual
premium to keep the Northwestern Mutual Life Insurance Policy
owned by Employee in effect.
(d) VRFC shall continue to pay the premiums to
maintain Employee's disability insurance coverage under the
current Provident Companies executive disability policy.
5. TERM. The initial term of this Agreement shall be a period of
five years commencing on the Effective Date, subject to earlier termination as
provided herein. Reference herein to the term of this Agreement shall refer to
such term.
6. EFFECTIVE DATE. For purposes of this Agreement the "Effective
Date" is January 13, 1998.
7. STANDARDS. The Employee shall perform his duties under this
Agreement in accordance with reasonable standards established from time to time
by the board of directors of VRFC.
-2-
8. VACATIONS. The Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment under
this Agreement, all such voluntary absences to count as vacation time, provided
that:
(a) The Employee shall be entitled to annual
vacation time of not less than four (4) weeks per year, and
five (5) personal days each year.
(b) The timing of vacations shall be scheduled in
a reasonable, mutually agreeable manner. The Employee shall
not be entitled to receive any additional compensation from
VRFC on account of his failure to take vacation time, nor shall
he be entitled to accumulate vacation time from one calendar
year to the next, except that Employee may carry over up to one
(1) week of vacation each year to be used during the first six
(6) months of the following year.
(c) In addition to the aforesaid vacation time,
the Employee shall be entitled, without loss of pay, to
disability leave with pay for any continuous absence of up to
ninety (90) days due to disability; after 90 continuous days,
paragraph 10 shall apply. Employee may also absent himself
voluntarily from the performance of his employment with VRFC
for such additional periods of time and for such valid and
legitimate reasons as the board of directors in its sole
discretion may determine. Further, the board of directors
shall be entitled to grant to the Employee, at the Employee's
request, additional leaves of absence with or without pay at
such time or times and upon such terms and conditions as the
board, in its discretion, may determine.
9. TERMINATION OF EMPLOYMENT.
(a) The Employee's employment under this Agreement
may be terminated at any time by the board of directors of VRFC
for "Cause" (as defined below). The Employee shall have no
right to receive severance pay or any other remuneration
whatsoever under this Agreement for any period after voluntary
termination without "Good Reason" (as defined below) or
termination for Cause. For purposes of Agreement, for "Cause"
shall mean termination for only the following reasons:
(i) Willful misconduct materially adverse
to VRFC or the Subsidiary Bank;
(ii) Willful breach of a fiduciary duty
involving personal profit;
-3-
(iii) Willful violation of any law, rule, or
regulation materially relating to the operation of VRFC
or the Subsidiary Bank;
(iv) The order of any court or supervising
agency with jurisdiction over the affairs of VRFC or
the Subsidiary Bank; or
(v) The Employee's intentional material
violation of any material provision of this Agreement,
if Employee fails to cure the breach within a
reasonable time after written notice from VRFC's board
of directors informing him of the breach.
For purposes of this Agreement, no act or
failure to act on the Employee's behalf shall be considered
"willful" or "intentional" unless done, or admitted to be done,
by him not in good faith and unless he knew or should have
known that his action or omission was not in, or was opposed
to, the best interests of VRFC or the Subsidiary Bank;
provided, that any act or omission to act on the Employee's
behalf in reliance upon an opinion of counsel to VRFC shall not
be deemed to be willful. The Employee shall not be deemed to
have been terminated for cause unless or until there shall have
been delivered to him a copy of a certification of a majority
of the non-officer members of the VRFC's board of directors
finding that, in the good faith opinion of such majority, the
employee was guilty of conduct deemed to be cause and
specifying the details thereof, after reasonable notice to the
Employee and an opportunity for him, together with his counsel,
to be heard before such majority. No such determination of the
board shall affect Employee's right to determination through
the legal system of whether there was in fact cause for
termination.
(b) The Employee may terminate his employment at
any time upon ninety (90) days' written notice to VRFC or upon
such shorter period as may be agreed upon between the Employee
and the board of directors of VRFC. In the event of such
termination without Good Reason, VRFC shall be obligated only
to continue to pay the Employee's salary and provide the other
benefits provided by this Agreement up to the date of the
termination.
(c) The Employee may terminate his employment with
VRFC for "Good Reason", which shall mean, the occurrence of any
of the following events without Employees consent:
-4-
(i) A material demotion or other adverse
change made by VRFC in the Employee's status or
position as a senior executive officer of VRFC or the
Subsidiary Bank;
(ii) The assignment to the Employee of any
duties or responsibilities which are materially
inconsistent with such status or position, or a
material reduction in the duties and responsibilities
previously exercised by the Employee;
(iii) The imposition of any requirement,
whether by relocation of VRFC's offices or otherwise,
that the Employee perform his normal day-to-day duties
and responsibilities outside of an area within a thirty
(30) mile radius of Kent City, Michigan;
(iv) Failure of VRFC to elect the Employee
as chief financial officer and a director of the
Subsidiary Bank; or
(v) Material breach by VRFC of any
material provision of Agreement, if VRFC fails to cure
the breach within a reasonable time after Employee has
given VRFC's board of directors written notice of the
breach.
Before terminating his employment for good reason pursuant to
this section 9(c), the Employee shall give written notice to
VRFC's board of directors of the act or omission constituting
"Good Reason," within 60 days after the occurrence of such act
or omission. If the board of directors promptly corrects such
act or omission, and takes reasonable measures to prevent its
recurrence, Employee shall not be entitled to terminate the
employment with Good Reason. Otherwise, Employee may terminate
the employment for Good Reason within 60 days after such notice
to the board of directors. If Employee fails to give notice as
provided above, Employee may not terminate the Employment for
Good Reason on account of such act or omission.
(d) If the Employee's employment is terminated by
VRFC without Cause or terminated by the Employee for Good
Reason, the Employee shall be entitled to continuation of his
salary and benefits until the end of the Term of this Agreement
as if termination of his employment had not occurred.
Payment of salary and continuation of benefits
as provided in this subparagraph 9(d) shall continue regardless
of whether the Employee finds new employment following such
-5-
termination, and without reduction due to any earnings of
Employee from any other employment or self employment, as long
as the new employment or self employment is not materially
competitive with VRFC or the Subsidiary Bank. Any amounts
received under VRFC's director deferred compensation program,
any retirement plans or VRFC's Supplemental Executive
Retirement Plan (SERP) shall not reduce the pay continuation
under this paragraph 9(d). The salary continuation provided in
this subparagraph 9(d) shall be reduced, however (but not below
zero) by any disability benefits received by the Employee
during the Severance Pay Period (other than benefits received
under the policy referred to in paragraph 4(d) of this
Agreement). If continuation of a specific benefit is not
possible under applicable law, Employee shall be provided with
an equal substitute benefit or, if that is not possible, with
cash in lieu of such benefit; such substitute benefit or cash
shall be structured or supplemented as necessary to place
Employee in the same economic position, after all applicable
taxes, as if the benefit had been continued.
If any payment to or benefit continuation for
the Employee (or the Employee's estate or beneficiary, pursuant
to paragraph 12(b) constitutes a "parachute payment "under
Internal Revenue Code section 280(G) and, when added to all
other payments to the Employee that are "parachute payments"
would result in "excess parachute payments" to Employee (as
defined under IRC 280(G) being nondeductible by the
Corporation under IRC 280(G), then the payments and
benefit continuation provided for under this section 9(d) shall
be reduced (but not below 0) or delayed until there are no such
excess parachute payments. The amount of any reduction or
delay shall be determined by VRFC's certified public
accountants, in consultation with the Employee.
(e) In the event of the death of the Employee
while still employed under this Agreement the Employee's estate
or beneficiary shall not be entitled to salary and benefit
continuation under section 9(d), but shall be entitled to
receive the salary due the Employee through the last day of the
calendar month in which his death shall have occurred, plus
such other benefits as shall have accrued under this Agreement
up to the date of death, plus an additional amount equal to the
Employee's annual salary as of the date of death.
(f) If the Employee is temporarily prohibited from
participating in the conduct of the affairs of VRFC or the
Subsidiary Bank at the request of or by the order of any court
or supervising agency with jurisdiction over VRFC, VRFC's
obligations under this Agreement shall not terminate and the
-6-
Employee shall be placed on administrative leave with or
without pay in the discretion of the board of directors. If
the charges in the proceeding out of which such request or
order is issued mature into a permanent prohibition order,
unless stayed by appropriate proceedings, VRFC's obligations
hereunder shall terminate as of the effective date of such
permanent order.
(g) If the Employee is permanently prohibited from
participating in the conduct of VRFC's affairs or those of the
Subsidiary Bank by the final order of any court or supervising
agency with jurisdiction over VRFC, all obligations of VRFC
under this Agreement shall terminate, as of the effective date
of the order; vested rights of the parties shall not be
affected, but Employee shall not be entitled to salary or
benefit continuation under section 9(d) of this Agreement if
his employment is terminated pursuant to this section 9(g).
(h) All obligations under this Agreement may be
terminated, except to the extent it is determined that
continuation of the Agreement is necessary for the continued
operation of VRFC or the Subsidiary Bank:
(i) By the Federal Deposit Insurance
Corporation ("FDIC") at the time the FDIC enters into
an agreement to provide assistance to or on behalf of
VRFC or the Subsidiary Bank; and
(ii) By the Federal Reserve Board ("FRB"),
or any other agency, at the time the FRB approves a
supervisory merger to resolve problems related to the
operation of VRFC or when VRFC or the Subsidiary Bank
is determined by the FRB to be in an unsafe or unsound
condition. Any rights of the parties that have already
vested, shall not be affected by such action, but
Employee shall not be entitled to salary or benefit
continuation under Section 9(d) of this Agreement if
his employment is terminated pursuant to this section
9(h).
10. DISABILITY. If the Employee shall become and remain disabled
or incapacitated to the extent that he is unable to perform his duties under
this Agreement for a continuous period of ninety (90) days or more, then, in
that event, from the time that such period shall have elapsed until such
disability or incapacity shall have ceased:
(a) he shall be entitled to receive disability
benefits of the type provided for executive employees of VRFC
and the Subsidiary Bank (including at least the benefits
-7-
provided by the disability policy referred to in paragraph 4(d)
of this Agreement); and
(b) he shall not be entitled to receive salary
payments pursuant to this Employment Agreement.
If Employee remains disabled or incapacitated as defined above
for a continuous period of 6 months, or for a total of 12 months in any two
calendar year period, the Board of Directors of VRFC may terminate Employee's
employment without salary or benefit continuation under section 9(d).
11. ATTORNEY FEES. In the event that VRFC exercises its right of
Termination for Cause, but it is determined by a court of competent jurisdiction
or by an arbitrator that cause did not exist for such termination, or if in any
event it is determined by any such court or arbitrator that VRFC or the
Subsidiary Bank has failed to make timely payment of any amounts owed to the
Employee under this Agreement, the Employee shall be entitled to reimbursement
for all reasonable costs, including attorneys' fees, incurred in challenging
such termination or collecting such amounts. Such reimbursement shall be in
addition to any rights to which the Employee is otherwise entitled under this
Agreement.
12. No Assignments.
(a) This Agreement is personal to each of the
parties hereto, and neither party may assign or delegate any of
its rights or obligations hereunder without first obtaining the
written consent of the other party; provided, however, that
VRFC shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of VRFC
or the Subsidiary, by an assumption agreement in form and
substance satisfactory to the Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that VRFC would be required to perform it if no
such succession or assignment had taken place. Failure of VRFC
to obtain such an assumption agreement prior to the
effectiveness of any such succession or assignment shall be a
breach of this Agreement and shall entitle the Employee to
compensation from VRFC in the same amount and on the same terms
as the compensation pursuant to section 9(d) hereof. For
purposes of implementing the provisions of this section 12(a),
the date on which any such succession becomes effective shall
be deemed the Date of Termination.
(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's
personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the
-8-
Employee should die while any amounts would still be payable to the
Employee hereunder if the Employee had continued to live (including but
not limited to salary and benefit continuation to which Employee
becomes conditioned under section 9(d) as a result of a covered
termination of the Employment before Employee's death) all such amounts,
unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee, legatee or other
designee or if there is no such designee, to the Employee's estate.
13. OTHER CONTRACTS. All other prior agreements regarding
conditions of employment, whether written or oral, are hereby superseded by this
Agreement.
14. NOTICES. Any notices under this Agreement shall be deemed
given when in writing and delivered personally or sent by certified mail,
postage prepaid, to the last known address of the party to whom notice is
given. If sent by mail, notice shall be deemed given on the second day
after mailing.
15. AMENDMENTS. No amendments or additions to this Agreement shall
be binding unless in writing and signed by both parties, except as herein
otherwise provided.
16. PARAGRAPH HEADINGS. The paragraph headings used in this
Agreement are included solely for convenience and shall not affect or be used in
connection with the interpretation of this Agreement.
17. SEVERABILITY. The provisions of this Agreement shall be deemed
severable, and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. GOVERNING LAW. Agreement shall be governed by the laws of the
United States of America and the State of Michigan.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first above written.
VALLEY RIDGE FINANCIAL CORPORATION
By /s/ XXXXXX X. XXXXXXXXX
Xxxxxx Xxxxxxxxx,
Chairman of the Board
Employer
/s/ XXXXXXX XXXXXX
Xxxxxxx Mc Xxxx
Employee
-9-
