EXECUTIVE EMPLOYMENT AGREEMENT
This
EXECUTIVE
EMPLOYMENT AGREEMENT
(“Agreement”) is made and entered into as of this 20th day of December, 2004, by
and between Bank of Birmingham, a Michigan state bank (“Bank”), and Xxxxxx Xxxx,
an individual resident of the State of Michigan (“Executive”).
WHEREAS,
the
Executive has considerable experience, expertise and training in management
related to banking and services offered by the Bank; and
WHEREAS,
the
Bank desires for the Executive to be employed as President and Chief Executive
Officer of the Bank, and Executive desires to accept employment, subject to
and
on the terms and conditions set forth in this Agreement; and
WHEREAS,
both
the Bank and the Executive have read and understood the terms and provisions
set
forth in this Agreement and have been afforded a reasonable opportunity to
review this Agreement with their respective legal counsel.
NOW,
THEREFORE,
in
consideration of the mutual promises and covenants set forth in this Agreement,
the Executive and the Bank agree as follows:
A.
DURATION
1. This
Agreement shall become effective (the “Effective Date”) upon the date that the
Bank opens for business shall continue in full force and effect, subject to
Paragraph 2
below,
until the third anniversary date of the Effective Date, unless earlier
terminated as provided herein.
2. The
Bank
and the Executive acknowledge and agree that the parties may agree to continue
the employment relationship upon such terms as they may mutually agree.
Following the initial three year term of this Agreement, the Agreement shall
automatically renew annually for a term of one year, unless either party elects
to terminate this Agreement by sending written notice of non-renewal at least
thirty (30) calendar days prior to the expiration of the then current term.
If
this Agreement expires as a result of non-renewal, the employment of the
Executive shall automatically terminate upon the expiration of the then current
term.
B.
COMPENSATION
3. All
payments of salary and other compensation to the Executive shall be payable
in
accordance with the Bank’s ordinary payroll and other policies and
procedures.
a. During
the term of this Agreement, the Bank agrees to pay Executive a base salary
of
not less than $135,000 annually, appropriately prorated for partial months
at
the commencement and end of the term of this Agreement.
b. The
Bank
shall have the right to deduct from any payment of compensation to Executive
hereunder any federal, state or local taxes required by law to be withheld
with
respect to such payments and any other amounts specifically authorized to be
withheld or deducted by Executive.
c. During
the term of this Agreement, it is anticipated that the Board of Directors or
a
delegated committee thereof will adopt an executive incentive bonus plan based
upon the asset growth and profitability of the Bank. The Executive will be
entitled to participate in such plan. Executive shall also be entitled to
participate in any benefit programs applicable to all employees of the Bank
or
to executive employees of the Bank in accordance with Bank policy and the
provisions of said benefit programs.
d. Executive
shall receive options to purchase shares of common stock of the Bank at an
exercise price of $10.00 per share, the number of options to be equal to 50,000.
The options shall have a term of ten years from the date of issuance, which
shall be the Effective Date, and to the extent permitted by law, shall be
treated as incentive stock options. The options shall be evidenced by a stock
option agreement, which shall have such terms as are consistent with those
set
forth above and such additional terms, including with respect to vesting, as
may
be set forth in the stock option agreement or the stock option plan pursuant
to
which the options are granted.
4. The
Bank
shall provide the Executive with an automobile allowance in the amount of $750
per month. The Bank shall also provide the Executive with a cellular phone
and
laptop computer for use in the performance of his duties and obligations under
this Agreement.
The Bank
shall also reimburse the Executive for all reasonable expenses, including,
but
not limited to, travel expenses, lodging expenses, and meals and entertainment
expenses, that the Executive may incur in the performance of his duties and
obligations under this Agreement; provided, however, that the Executive shall
be
required to submit receipts or other acceptable documentation to the cashier
of
the Bank or such other officer designated by the Board to verify such expenses
prior to any reimbursements.
In
addition to the reimbursement of expenses listed in this Paragraph, the Bank
shall pay, or reimburse Executive, for reasonable initiation fees for trade
association memberships deemed to be acceptable and appropriate by the Board
of
Directors. The
Bank
shall also pay, or reimburse Executive, for all membership fees and monthly
membership dues, up to a maximum amount of $500 per month, on behalf of
Executive and his immediate family at a country club, which club must be
acceptable to the Board of Directors.
5. Subject
to the provisions of Paragraph 9
of this
Agreement, the Executive shall be entitled to receive employee and dependent
health insurance, dental insurance, paid sick leave and four (4) weeks of paid
vacation per year, and any additional benefits provided to all Bank employees
all in accordance with the Bank’s employment policies.
6. The
Bank
shall also provide the Executive with a salary continuation plan, with such
terms as are approved by Executive and the Board of Directors of the Bank.
7. The
Bank
shall also provide the Executive with term life insurance coverage in an amount
not less than $500,000 and having a term not less than ten years.
8. The
Board
of Directors or a delegated committee shall review the amount of Executive’s
compensation, including his base salary, not less than annually and shall
increase such base salary as a result of such review and to provide reasonable
cost of living adjustments, all in the discretion of the Board of Directors
or
such committee and consistent with safe and sound banking practices; provided
however that Executive’s base salary, bonuses, vacation and car allowance shall
not be less than the amounts set forth in Paragraphs 3,
4, and
5 at any time during the term of this Agreement.
9. All
employee benefits provided to the Executive by the Bank incident to the
Executive’s employment shall be governed by the applicable plan documents,
summary plan descriptions or employment policies, and may be modified, suspended
or revoked at any time, in accordance with the terms and provisions of the
applicable documents.
10. The
parties hereto acknowledge that the compensation set forth herein and the other
covenants and agreements of the Bank contained herein are fair and adequate
compensation for Executive’s services and for the covenants of Executive as set
forth herein.
C.
RESPONSIBILITIES
11. The
Executive shall be employed as President and Chief Executive Officer of the
Bank
and shall faithfully devote his best efforts and his primary focus to his
positions with the Bank.
12. The
Executive acknowledges and agrees that the duties and responsibilities of the
Executive required by his position as President and Chief Executive Officer
of
the Bank are wholly within the discretion of its Board of Directors, and may
be
modified, or new duties and responsibilities imposed by the Board of Directors,
at any time, without the approval or consent of the Executive. However, these
new duties and responsibilities may not constitute immoral or unlawful acts.
In
addition, the new duties and responsibilities must be consistent with the
Executive’s role as President or Chief Executive Officer of a financial
institution.
13. The
Executive acknowledges and agrees that, during the term of this Agreement,
he
has a fiduciary duty of loyalty to the Bank, and that he will not engage in
any
activity during the term of this Agreement, which will or could, in any
significant way, harm the business, business interests, or reputation of the
Bank or the reputation of the Board of Directors.
14. The
Executive shall not directly or indirectly engage in competition with the Bank
at any time during the existence of the employment relationship between the
Bank
and the Executive, and the Executive will not on his own behalf, or as another’s
agent or employee, engage in any of the same or similar duties and/or
Bank-related responsibilities required by the Executive’s position with the
Bank, other than as an employee of the Bank pursuant to this Agreement or as
specifically approved by the Board of Directors. In addition, without the prior
written consent of the Board of Directors, Executive shall not usurp for himself
any corporate opportunity available to the Bank.
D.
NONINTERFERENCE
15. Executive
acknowledges that, as part of his employment with the Bank, he will become
familiar with the salary, pay scale, capabilities, experiences, skill and
desires of the Bank’s employees. Executive agrees to maintain the
confidentiality of such information. Executive further covenants and agrees
that, for a period of one year subsequent to the termination of this Agreement,
whether such termination occurs at the insistence of the Bank or the Executive,
the Executive shall not recruit, hire, or attempt to recruit or hire, directly
or by assisting others, any other employees of the Bank, nor shall the Executive
contact or communicate with any other employees of the Bank for the purpose
of
inducing other employees to terminate their employment with the Bank. For
purposes of this covenant, “other employees” shall refer to employees who are
still actively employed by or were employed by the Bank within the prior year,
or doing business with, the Bank at the time of the attempted recruiting or
hiring.
16. In
his
position of employment, the Executive will be exposed to confidential
information and trade secrets (hereafter “Proprietary Information”) pertaining
to, or arising from, the business of the Bank and its affiliates (if any).
The
Executive hereby agrees and acknowledges that such Proprietary Information
is
unique and valu-able to the Bank’s business and that the Bank would suffer
irreparable injury if this information were publicly disclosed. There-fore,
the
Executive agrees to keep in strict secrecy and confidence, both during and
after
the period of his employment, any and all Proprietary Information which the
Executive acquires, or to which the Executive has access, during employment
by
the Bank, that has not been publicly disclosed by the Bank. The Proprietary
Information covered by this Agreement shall include, but shall not be limited
to: (i) the identities of the Bank’s existing and prospective customers or
clients, including names, addresses, credit status, and pricing levels; (ii)
the
buying and selling habits and customs of the Bank’s existing and prospective
customers or clients; (iii) financial information about the Bank; (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,
the Bank’s employees; (vi) the identities of and pricing information about the
Bank’s suppliers and vendors; (vii) training programs developed by the Bank;
(viii) pricing studies, information and analyses; (ix) current and prospective
products and inventories; (x) financial models, business projections and market
studies; (xi) the Bank’s financial results and business conditions; (xii)
business plans and strategies; (xiii) special processes, procedures, and
services of the Bank and its suppliers and vendors; and (xiv) computer programs
and software developed by the Bank or its consultants. The
provisions and agreements entered into herein shall survive the term of the
Employee’s employment to the extent reasonably necessary to accomplish their
purpose in protecting the interests of the Bank in any Proprietary Information
disclosed to, or learned by, the Executive while employed.
17. The
Executive expressly represents that he has no agreements with, or obligations
to, any party which conflict, or may conflict, with the inter-ests of the Bank
or with the Executive’s duties as an employee of the Bank.
18. Executive
acknowledges that the special relationship of trust and confidence between
him,
the Bank, and its clients and customers creates a high risk and opportunity
for
Executive to misappropriate the relationship and goodwill existing between
the
Bank and its clients and customers. Executive further acknowledges and agrees
that it is fair and reasonable for the Bank to take steps to protect itself
from
the risk of such misappropriation. Executive further acknowledges that, at
the
outset of his employment with the Bank and throughout his employment with the
Bank, Executive will be provided with access to and informed of Proprietary
Information, which will enable him to benefit from the Bank’s goodwill and
know-how.
19. Executive
acknowledges that it would be inevitable in the performance of his duties as
a
director, officer, employee, investor, agent or consultant of any person,
association, entity, or company which competes with the Bank, or which intends
to or may compete with the Bank, to disclose and/or use Proprietary Information,
as well as to misappropriate the Bank’s goodwill and know-how, to or for the
benefit of such other person, association, entity, or company. Executive also
acknowledges that, in exchange for the execution of the non-solicitation
restriction set forth in these NONINTERFERENCE provisions, he has received
substantial, valuable consideration, including: (i) confidential trade secret
and proprietary information relating to the identity and special needs of the
Bank’s current and prospective customers, the Bank’s current and prospective
services, the Bank’s business projections and market studies, the Bank’s
business plans and strategies, the Bank’s studies and information concerning
special services unique to the Bank; (ii) employment; and (iii)
compensation and benefits as described in this Agreement. Executive further
acknowledges and agrees that this consideration constitutes fair and adequate
consideration for the execution of the non-solicitation restriction set forth
herein.
20. In
consideration for the above-recited valuable consideration, as well as to
protect the vital interests described in these NONINTERFERENCE provisions,
the
Executive understands and agrees that during the continuation of this Agreement
and for a period of one year following the termination of this Agreement by
either party, for whatever reason, the Executive will not be or become engaged
in any way (directly or indirectly), as an individual proprietor, beneficiary,
trustee, owner, partner, stockholder, officer, director, executive, investor,
lender, sales representative, or in any other capacity, whatsoever, in any
activity or endeavor which competes or conflicts with the Bank’s business or the
business of the Bank or the business of any of their respective affiliates
(if
any), as such business has been conducted during the years of the Executive’s
employment with the Bank, within [describe
noninterference area].
It is
the parties’ desire that these restrictions be enforced to the fullest extent
allowed by law.
21. Executive
agrees that the restriction set forth above is ancillary to an otherwise
enforceable agreement, is supported by independent valuable consideration,
and
that the limitations as to time, geographical area, and scope of activity to
be
restrained by Paragraph 20
are
reasonable and acceptable, and do not impose any greater restraint than is
reasonably necessary to protect the goodwill and other business interests of
the
Bank. This Section creates a narrowly tailored advance approval requirement
in
order to avoid unfair competition and irreparable harm to the Bank and is not
intended or to be construed as a general restraint from engaging in a lawful
profession or a general covenant against competition. Nothing herein will
prohibit (i) beneficial ownership of less than 5% of the publicly traded capital
stock of a corporation listed on a national securities exchange so long as
this
is not a controlling interest, or (ii) ownership of mutual fund investments.
Executive may not avoid the purpose and intent of this paragraph by engaging
in
conduct within the geographically limited area from a remote location through
means such as telecommunications, written correspondence, computer generated
or
assisted communications, or other similar methods. Executive agrees that if,
at
some later date, a court of competent jurisdiction determines that the
non-solicitation agreement set forth in this Section does not meet the criteria
set forth by applicable law, this Section may be reformed by the court and
enforced to the maximum extent permitted under applicable law.
Executive
understands that his obligations under this Section shall not be assignable
by
him.
22. Executive
acknowledges that the covenants set forth in these NONINTERFERENCE provisions
are material conditions to the Bank’s willingness to execute and deliver this
Agreement and to provide Executive the compensation and benefits and other
consideration provided hereunder. The parties agree that the existence of any
claim or cause of action of Executive against the Bank, whether predicated
on
this Agreement or otherwise, will not constitute a defense to the enforcement
by
the Bank of such covenants. It is specifically acknowledged that the periods
following the termination of employment stated in Paragraphs 15
and
20,
during
which the agreements and covenants of Executive made in such Paragraphs are
effective, are to be computed by excluding from such computation any time during
which Executive is in violation of any provision of Paragraph 15
or
20.
The
covenants contained in these NONINTERFERENCE provisions will not be affected
by
any breach of any other provision hereof by any party hereto. In addition,
Executive’s obligations under these NONINTERFERENCE provisions shall survive the
termination of this Agreement and Executive’s employment with the Bank.
Executive’s obligations under these NONINTERFERENCE provisions are in addition
to, and not in limitation or preemption of, all other obligations of
confidentiality which he may have to Bank under general legal or equitable
principles, or other the Bank policies.
E.
REMEDIES
23. In
the
event that the Executive violates any of the provisions set forth in this
Agreement relating to NONINTERFERENCE, Executive acknowledges that the Bank
would suffer immediate and irreparable harm and would not have an adequate
remedy at law for money damages. Accordingly, Executive agrees that, without
the
necessity of proving actual damages or posting bond or other security, the
Bank
shall be entitled to temporary or permanent injunction or injunctions to prevent
breaches of such performance and to specific enforcement of such covenants
in
addition to any other remedy to which the Bank may be entitled, at law or in
equity. In such a situation, the parties agree that the Bank may pursue any
remedy available, including declaratory relief, concurrently or consecutively
in
any order as to any breach, violation, or threatened breach or violation of
any
of the provisions set forth in this Agreement relating to NONINTERFERENCE,
and
the pursuit of any particular remedy or remedies shall not be deemed an election
of remedies or waiver of the right to pursue any other remedy.
F.
TERMINATION
24. The
Board
of Directors shall be entitled to terminate this Agreement, for any reason,
by
providing the Executive with thirty (30) days written notice of the termination.
However, if this Agreement is terminated by the Bank without Good Cause, as
defined in this Agreement, the Bank shall provide the Executive with the
severance set
forth
in paragraph 34
of this
Agreement.
25. For
purposes of this Agreement,“Good
Cause” shall be defined as the occurrence of one of the following
events:
a. The
determination of the Board of Directors, in the exercise of its reasonable
judgment, that Executive has violated any provision of this Agreement or is
grossly negligent in the performance of his duties hereunder, and has failed
to
cure such violation or the effects of such gross negligence within a reasonable
period after written notice to the Executive by the Bank specifying in
reasonable detail the alleged violation;
b. The
determination of the Board of Directors, in the exercise of its reasonable
judgment, that (i) Executive has failed to follow the policies adopted by the
Board of Directors and has failed to cure such failure within a reasonable
period after written notice to the Executive by the Bank specifying in
reasonable detail the alleged failure; or (ii) Executive has engaged in such
actions or omissions that would constitute unsafe or unsound banking
practices;
c. The
Executive is convicted of a misdemeanor involving moral turpitude or a
felony;
d. The
determination of the Board of Directors, in the exercise of its reasonable
judgment, that the Executive has engaged in gross misconduct in the course
and
scope of his employment with the Bank including indecency, immorality, gross
insubordination, dishonesty, unlawful harassment, use of illegal drugs, or
fighting;
e. The
determination of the Board of Directors, in the exercise of its reasonable
judgment and in good faith, that the Executive’s job performance is
substantially unsatisfactory and that Executive has failed to cure such
performance within a reasonable period after written notice to the Executive
by
the Bank specifying in reasonable detail the nature of the unsatisfactory
performance; or
f. The
Executive is prohibited from engaging in the business of banking by any
governmental regulatory agency having jurisdiction over the Bank.
Notwithstanding
anything in this Agreement to the contrary, Executive will not be in breach
of
this Agreement and his action or failure to act shall not be a basis for
termination for Good Cause if Executive’s action or failure to act would
constitute an unsafe or unsound banking practice or be reasonably expected
to
have a material adverse effect on the financial or regulatory condition of
the
Bank.
26. Executive
shall be entitled to terminate this Agreement at any time, for any reason,
with
or without cause, by providing thirty (30) days written notice to the Bank.
The
effective date of such resignation shall be the 30th
calendar
day following the date the notice is given or such other later date as may
be
set forth in the notice. Upon Executive’s resignation, Executive shall be
entitled to receive any base salary which has been earned by him through the
effective date of such resignation.
27. If
Executive dies during the term of this Agreement and while in the employ of
the
Bank, this Agreement will terminate automatically, without notice, on the date
of the Executive’s death and the Bank shall have any further obligation to
Executive or his estate under this Agreement (other than death benefits payable
under any benefit plans to which Executive is a party), except that the Bank
shall pay Executive’s estate that portion of Executive’s base salary accrued
through the date on which Executive’s death occurred. To
the
maximum extent, and for the term, permitted by the health benefit provisions
of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of
1986,
if
Executive dies during
the term of this Agreement and while in the employ of the Bank,
the Bank
shall provide or maintain health insurance benefits, at the Bank’s expense, for
Executive’s spouse.
28. The
Executive acknowledges and agrees that this Agreement will terminate
immediately, without notice, in the event the Executive becomes physically
or
mentally disabled, as defined by 29 C.F.R. § 1630.2(g)(1), and cannot
perform the essential functions of his position, with or without reasonable
accommodation for the period designated by the Executive’s disability insurance
after which disability payments will begin. In the event of a termination
pursuant to this Section, the Bank shall be relieved of all its obligations
under this Agreement, except that the Bank shall pay to Executive, or his estate
in the event of his subsequent death, Executive’s base salary through the date
on which such termination shall have occurred, reduced during such period by
the
amount of any benefits received by Executive under any disability policy
maintained by the Bank.
29. Executive
acknowledges that all memoranda, notes, records, reports, manuals, books,
papers, letters, client and customer lists, contracts, software programs,
information and records, drafts of instructions, guides and manuals, and other
documentation (whether in draft or final form), and other sales or financial
information and aids relating to the Bank’s business, and any and all other
documents containing confidential information furnished to Executive by any
representative of the Bank or otherwise acquired or developed by Executive
in
connection with his duties under this Agreement (collectively, “Recipient
Materials”) shall at all times be the property of the Bank. Within three
calendar days of the termination of this Agreement, Executive shall return
to
the Bank, any Recipient Materials which are in his possession, custody or
control.
30. The
provisions of provisions of Paragraphs 15,
16,
20-23,
29-34,
39,
43
and
45
shall
survive the termination of this Agreement.
G.
CHANGE
IN CONTROL
31. The
parties acknowledge that the Executive has agreed to assume the position of
President and Chief Executive Officer and to enter into this Agreement based
on
his confidence in the current owners of the Bank and the direction of the Bank
provided by the current Board of Directors. Upon a “Change of Control,” as
defined below, the Executive may, at his option, notify the Bank within sixty
(60) days following such Change of Control that he intends to terminate this
Agreement based upon the Change of Control.
In
the
event that Executive is terminated by the Bank within sixty (60) days following
such Change of Control for any reason other than for Good Cause, Executive
shall
be entitled to elect to receive as severance the lump sum amount determined
pursuant to Paragraph 32
upon
written notice to the Bank, in which case the severance provisions of Paragraph
34
shall
not apply.
32. In
the
event that the Executive elects to terminate this Agreement based upon the
Change in Control, the Bank shall pay to the Executive a cash lump sum payment
equal to 199% of his
Base
Amount as defined in section 280G(b)(3) of the Internal Revenue Code of 1986,
as
amended (“Code”)
within
thirty (30) days of such notice.
In
the
event that any compensation payable under this Agreement is determined to be
a
“parachute payment” subject to the excise tax imposed by Section 4999 of the
Code or any successor provision (the “Excise Tax”), the Bank agrees to pay to
the Executive an additional sum (the “Gross Up”) in an amount such that the net
amount retained by the Executive, after receiving both the payment and the
Gross
Up and after paying: (i) any Excise Tax on the payment and the Gross Up, and
(ii) any federal, state, and local income taxes on the Gross Up, is equal to
the
amount of the payment.
For
purposes of determining the Gross Up, the Executive shall be deemed to pay
federal, state, and local income taxes at the highest marginal rate of taxation
in his filing status for the calendar year in which the payment is to be made
based upon the Executive’s domicile on the date of the event that triggers the
Excise Tax. The determination of whether such Excise Tax is payable and the
amount of such Excise Tax shall be based upon the opinion of tax counsel
selected by the Bank, subject to the reasonable approval of the Executive.
If
such opinion is not finally accepted by the Internal Revenue Service, then
appropriate adjustments shall be calculated (with additional Gross Up determined
based on the principals outlined in the previous paragraph, if applicable)
by
such tax counsel based upon the final amount of Excise Tax so determined
together with any applicable penalties and interest. The final amount shall
be
paid, if applicable, within thirty (30) days after such calculations are
completed, but in no event later than April 1st
of the
year following the event that triggers the Excise Tax. Such compensation shall
be payable in equal disbursements in accordance with the Bank’s ordinary payroll
policies and procedures. The Executive will also continue to receive his
automobile allowance provided by the Bank for a period of twelve (12) months
following the date of termination.
33. As
used
in this Agreement, a “Change of Control” shall be deemed to have occurred in
each of the following instances:
a. A
reorganization, merger, consolidation or other corporate transaction involving
the Bank, in each case, with respect to which the shareholders of the Bank,
immediately prior to such transaction do not, immediately after the transaction,
own more than fifty percent (50%) of the combined voting power of the
reorganized, merged or consolidated company’s then outstanding voting
securities.
b. The
sale,
transfer or assignment of all or substantially all of the assets of the Bank
to
any third party.
c. The
acquisition by any individual, entity or “group,” within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act (a “Person”), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act)
of voting securities of the Bank where such acquisition causes any such Person
to own twenty percent (20%) or more of the combined voting power of the Bank’s
then outstanding capital stock then entitled to vote generally in the election
of directors; provided however, that a Change in Control shall not be deemed
to
have occurred if a Person becomes the beneficial owner of twenty percent of
the
combined voting power of the Bank’s then outstanding capital stock solely as a
result of the repurchase of voting securities by the Bank.
d. During
any period of two consecutive years, the persons who were directors of the
Bank
immediately before the beginning of the two year period (the “Incumbent
Directors”) shall cease to constitute at least a majority of the Board of
Directors; provided that any individual becoming a director subsequent to the
beginning of such two year period whose election, or nomination for election
by
the Bank’s shareholders, was approved by at least two-thirds of the directors
then comprising the Incumbent Directors shall be considered as though such
individual were an Incumbent Director unless such individual’s initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act).
Notwithstanding
anything contained herein to the contrary, if Executive’s employment is
terminated and he reasonably demonstrates that such termination was at the
request of a third party who has indicated an intention of taking steps
reasonably calculated to effect a Change in Control and who effects a Change
in
Control, or such termination otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes hereof, a Change in Control shall be deemed to have occurred on the
day
immediately prior to the date of such termination of his
employment.
X.
XXXXXXXXX
34. Except
as
otherwise expressly provided herein, if Bank terminates Executive’s employment
for any reason other than Good Cause (as defined in this Agreement) after the
first anniversary date of the Effective Date of this Agreement, then Executive
shall be entitled to severance pay in an amount not less than the base salary
that would have been due the Executive had he remained employed for six (6)
months following termination. If Bank terminates Executive’s employment for any
reason other than Good Cause (as defined in this Agreement) after the second
anniversary date of the Effective Date of this Agreement, then Executive shall
be entitled to severance pay in an amount equal to the base salary that would
have been due the Executive had he remained employed for one year following
termination. In the event that the Executive is entitled to any payment under
Section G, no payment shall be due under this Section H.
Any
severance pay due to Executive pursuant to this Section H shall be paid in
accordance with the terms of normal payroll procedure of the Bank.
I.
SEVERABILITY
35. If
any
term or other provision of this Agreement is held to be illegal, invalid or
unenforceable by any rule of law or public policy, (A) such term or provision
shall be fully severable and this Agreement shall be construed and enforced
as
if such illegal, invalid or unenforceable provision were not a part hereof;
(B)
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by such illegal, invalid or unenforceable provision
or
by its severance from this Agreement; and (C) there shall be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and still be legal, valid
and enforceable.
If any
provision of this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only as broad as is enforceable.
J.
WAIVER
36. The
parties acknowledge and agree that the failure of either to enforce any
provision of this Agreement shall not constitute a waiver of that particular
provision, or of any other provisions of this Agreement.
K.
SUCCESSORS
AND ASSIGNS
37. The
Executive acknowledges and agrees that this Agreement may be assigned by the
Bank to any successor-in-interest and shall inure to the benefit of, and be
fully enforceable by, any successor and/or assignee; and this Agreement will
be
fully binding upon, and may be enforced by the Executive against, any successor
and/or assignee of the Bank.
38. The
Executive acknowledges and agrees that his obligations, duties and
responsibilities under this Agreement are personal and shall not be assignable,
and that this Agreement shall be enforceable by the Executive only. In the
event
of the Executive’s death, this Agreement shall be enforceable by the Executive’s
estate, executors and/or legal representatives, only to the extent provided
herein.
L.
CHOICE
OF LAW
39. THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND ALL QUESTIONS
CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF MICHIGAN, WITHOUT
GIVING EFFECT TO PROVISION THEREOF REGARDING CONFLICT OF LAWS. IT IS STIPULATED
THAT MICHIGAN HAS A COMPELLING STATE INTEREST IN THE SUBJECT MATTER OF THIS
AGREEMENT, AND THAT EXECUTIVE HAS OR WILL HAVE REGULAR CONTACT WITH THE STATE
OF
MICHIGAN IN THE PERFORMANCE OF THIS AGREEMENT.
M.
MODIFICATION
40. The
parties acknowledge and agree that this Agreement and the other agreements
and
plans referenced herein constitute the complete and entire agreement between
the
parties; that each executed this Agreement based upon the express terms and
provisions set forth herein; that, in accepting employment with the Bank,
Executive has not relied on any representations, oral or written, which are
not
set forth in this Agreement; that no previous agreement, either oral or written,
shall have any effect on the terms or provisions of this Agreement; and that
all
previous agreements, either oral or written, are expressly superseded and
revoked by this Agreement. Except as otherwise expressly provided in this
Agreement, no conditions, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or supplement
the
terms or conditions of this Agreement unless hereafter made in writing and
signed by the party to be bound. No waiver shall be deemed a continuing waiver
or a waiver of any subsequent breach or default, either of a similar or
different nature, unless expressly so stated in writing.
41. Except
as
otherwise expressly provided in this Agreement, no conditions, usage of trade,
course of dealing or performance, understanding or agreement purporting to
modify, vary, explain or supplement the terms or conditions of this Agreement
unless hereafter made (i) in
writing, (ii) referencing an express provision in this Agreement,
(iii) signed by the Executive, and (iv) approved by a disinterested
majority of the Board of Directors.
N.
INDEMNIFICATION
42. During
the term of this Agreement, the Bank shall indemnify the Executive against
all
judgments, penalties, fines, amounts paid in settlement and reasonable expenses
(including, but not limited to, attorneys’ fees) relating to his employment by
the Bank to the fullest extent permissible under the law, including, without
limitation, federal and/or state banking laws and regulations, the Michigan
Banking Code of 1999, as amended, the Michigan Business Corporation Act, as
amended, and the Bank’s Articles of Incorporation. To the extent permitted by
law, the Bank may purchase such indemnification insurance as the Board may
from
time to time determine.
O.
ARBITRATION
43. Any
dispute, controversy, or claim arising out of or relating to this Agreement
or
breach thereof, or arising out of or relating in any way to the employment
of
the Executive or the termination thereof, shall be submitted to arbitration
in
accordance with the Employment Dispute Arbitration Rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator
may
be entered in any court of competent jurisdiction. In reaching his or her
decision, the arbitrator shall have no authority to ignore, change, modify,
add
to or delete from any provision of this Agreement, but instead is limited to
interpreting this Agreement. Notwithstanding the arbitration provisions set
forth in this Agreement, the Executive and the Bank acknowledge and agree that
nothing in this Agreement shall be construed to require the arbitration of
any
claim or controversy arising under the NONINTERFERENCE provisions of this
Agreement. These provisions shall be enforceable by any court of competent
jurisdiction and shall not be subject to this Paragraph of the Agreement. The
Executive and the Bank further acknowledge and agree that nothing in this
Agreement shall be construed to require arbitration of any claim for workers’
compensation or unemployment compensation.
P.
LEGAL
CONSULTATION
44. Each
party acknowledges that it has carefully read this agreement, that it has had
an
opportunity to consult with his or its attorney concerning the meaning, import
and legal significance of this Agreement, that it understands the terms of
the
Agreement, that all understandings and agreements between Executive and the
Bank
relating to the subjects covered in this Agreement are contained in it, and
that
it has entered into the Agreement voluntarily and not in reliance on any
promises or representations by the other than those contained in this
Agreement.
Q.
MISCELLANEOUS
45. The
Executive shall make himself available, upon the request of the Bank, to testify
or otherwise assist in litigation, arbitration, or other disputes involving
the
Bank, or any of the directors, officers, employees, subsidiaries, or parent
corporations of either, at no additional cost during the term of this Agreement
and at any time following the termination of this Agreement.
46. The
Executive shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Agreement be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the date of termination, or otherwise.
47. In
the
event either party institutes arbitration or litigation to enforce or protect
its rights under this Agreement, the prevailing party in such arbitration or
litigation shall be entitled, in addition to all other relief, to reasonable
attorneys fees, out-of-pocket costs, disbursements, and arbitrator’s fees
relating to such arbitration or litigation.
48. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which shall together constitute
one and the same Agreement.
49. The
Bank
shall have no obligation to set aside, earmark or entrust any fund or money
with
which to pay its obligations under this Agreement. The Executive or any
successor-in-interest to Executive shall be and remain simply a general creditor
of the Bank in the same manner as any other creditor having a general unsecured
claim. For purposes of the Code, the Bank intends this Agreement to be an
unfunded, unsecured promise to pay on the part of the Bank. For purposes of
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Bank
intends that this Agreement not be subject to ERISA. If it is deemed subject
to
ERISA, it is intended to be an unfunded arrangement for the benefit of a select
member of management, who is a highly compensated employee of the Bank for
the
purpose of qualifying this Agreement for the “top hat” plan exception under
sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. At no time shall the
Executive have or be deemed to have any lien nor right, title or interest in
or
to any specific investment or to any assets of the Bank. If the Bank elects
to
invest in a life insurance, disability or annuity policy upon the life of
Executive, the Executive shall assist the Bank by freely submitting to a
physical examination and supplying such additional information necessary to
obtain such insurance or annuities.
50. When
a
reference is made in this Agreement to a Paragraph, such reference shall be
to a
Paragraph of this Agreement unless otherwise indicated. The headings contained
in this Agreement are for convenience of reference only and shall not affect
in
any way the meaning or interpretation of this Agreement. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision
in
this Agreement. Each use herein of the masculine, neuter or feminine gender
shall be deemed to include the other genders.
Each
use
herein of the plural shall include the singular and
vice
versa, in each case as the context requires or as is otherwise appropriate.
The
word “or” is used in the inclusive sense. Any agreement or instrument defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement or instrument as from time to time amended, modified or
supplemented, including by waiver or consent.
References to a person are also to its permitted successors or
assigns.
51. Executive
represents that his service as an employee of the Bank will not violate any
agreement: (i) he has made that prohibits him from disclosing any information
he
acquired prior to his becoming employed by the Bank; or (ii) he has made that
prohibits him from accepting employment with the Bank or that will interfere
with his compliance with the terms of this Agreement. Executive further
represents that he has not previously, and will not in the future, disclose
to
Bank any proprietary information or trade secrets belonging to any previous
employer. Executive acknowledges that the Bank has instructed him not to
disclose to it any proprietary information or trade secrets belonging to any
previous employer.
R.
NOTICES
52. All
notices and other communications required or permitted to be given or delivered
hereunder or by reason of the provisions of this Agreement shall be in writing
and shall be deemed to have been properly given if (a) delivered personally,
(b)
delivered by a recognized overnight courier service, (c) sent by United States
mail, or (d) sent by facsimile transmission followed by a confirmation copy
delivered by recognized overnight courier service the next day. Such notices,
requests, consents and other communications shall be sent to the respective
parties as follows (or at such other address for a party as shall be specified
by like notice to the other party):
If
to the
Bank:
________________________
________________________
________________________
Attention:
Chairman
If
to
Executive:
Xxxxxx
Xxxx
53. Any
notice or other communication given pursuant to this Agreement shall be
effective (i) in the case of personal delivery, telex or facsimile transmission,
when received; (ii) in the case of mail, upon the earlier of actual receipt
or
five (5) business days after deposit with the United States Postal Service,
first class certified or registered mail, postage prepaid, return receipt
requested; and (iii) in the case of a recognized overnight courier service,
one
(1) business day after delivery to the courier service together with all
appropriate fees or charges and instructions for overnight delivery. Any and
all
notices of documents or other notices required to be delivered under the terms
of this Agreement shall be addressed to each party as follows:
[signature
page follows]
[signature
page to Employment
Agreement]
EXECUTED
ON THIS DATE FIRST WRITTEN ABOVE IN Birmigham, MICHIGAN.
| EXECUTIVE | ||
| /s/ Xxxxx X. Xxxxxxx | /s/ Xxxxxx Xxxx | |
| WITNESS | Xxxxxx Xxxx | |
| BANK | ||
| /s/ Xxxxxxx X. Xxxxxxxx | By: /s/ Xxxxxxx Xxxxx | |
| WITNESS |
Compensation
Committee Member
|
|
