EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
10.1
This
EXECUTIVE EMPLOYMENT
AGREEMENT (this “Agreement”) is made and entered into effective as of the
23rd
day of February 2010, by and between Grand River Commerce, Inc., a Michigan
corporation (the “Company”), and Xxxxxx X. Xxxxxxx, an individual
resident of the State of New Jersey (the “Executive”).
WHEREAS, the Executive has
served as the Company’s President and Chief Executive Officer since the
Company’s inception and has devoted substantial time and efforts to such roles
and expects to continue to do so;
WHEREAS, the Company desires
to compensate the Executive for his services as President and Chief Executive
Officer, subject to and on the terms and conditions set forth in this Agreement;
and
WHEREAS, both the Company 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 Company agree as follows:
A. DURATION
1. This
Agreement shall become effective (the “Effective Date”) upon the date first set
forth above and, subject to Paragraph 2 below, will
expire and terminate by its own terms two years after the Effective Date, unless
earlier terminated as provided herein.
2. Both the
Company 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 two-year term, this Agreement shall
renew annually for an additional one (1) year term if the Company provides
notice of such renewal to the Executive at least thirty (30) days prior to the
expiration of the then current term. Both parties acknowledge and
agree that, in the event this Agreement does not renew, this Agreement shall
terminate automatically upon the expiration of the then current term without any
additional liability or obligation on the part of either party, except as
expressly provided herein.
B. COMPENSATION
3. All
payments of salary and other compensation to the Executive shall be payable in
accordance with the Company’s ordinary payroll and other policies and
procedures.
a. During
the term of this Agreement, the Company agrees to pay the Executive a base
salary of not less than $50,000.00 annually, appropriately prorated for partial
months at the commencement and end of the term of this Agreement.
b. The
Company shall have the right to deduct from any payment of compensation to the
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 the Executive.
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c. The
Executive shall also be entitled to participate in any benefit programs
applicable to all employees of the Company or to executive employees of the
Company in accordance with Company policy and the provisions of said benefit
programs.
4. The
Company also shall 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
or her 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 Company or such other officer designated by the Board of
Directors to verify such expenses prior to any reimbursements.
5. The Board
of Directors or a delegated committee shall review the amount of the Executive’s
compensation, including his or her base salary, not less than annually, to
determine if adjustments to such compensation are merited in the discretion of
the Board of Directors or such committee; provided, however, that the
Executive’s base salary shall not be less than the amount set forth in
Paragraph 3 at any time during the term of this
Agreement.
6. All
employee benefits provided to the Executive by the Company 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.
7. The
parties hereto acknowledge that the compensation set forth herein and the other
covenants and agreements of the Company contained herein are fair and adequate
compensation for the Executive’s services and for the covenants of the Executive
as set forth herein.
C. RESPONSIBILITIES
8. The
Executive shall be employed as President and Chief Executive Officer of the
Company and shall faithfully devote his or her best efforts to his or her
position(s) with the Company.
9. The
Executive acknowledges and agrees that the duties and responsibilities of the
Executive required by his or her position as the President and Chief Executive
Officer of the Company 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.
10. The
Executive acknowledges and agrees that, during the term of this Agreement, he or
she has a fiduciary duty of loyalty to the Company, and that he or she 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 Company or the reputation of the Board of Directors.
11. The
Executive shall not directly or indirectly engage in competition with the
Company at any time during the existence of the employment relationship between
the Company and the Executive, and the Executive will not on his or her own
behalf, or as another’s agent or employee, engage in any of the same or similar
duties and/or Company-related responsibilities required by the Executive’s
position with the Company, other than as an employee of the Company 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 Company.
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D. TERMINATION
12. 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 Company
without Good Cause, as defined in this Agreement, the Company shall provide the
Executive with the severance set forth in Paragraph
22 of this Agreement.
13. For purposes of this
Agreement, “Good Cause” shall be defined as the occurrence of one of the
following events:
a. The
determination by the Board of Directors, in the exercise of its reasonable
judgment, that Executive has violated any provision of this Agreement or is
negligent in the performance of his duties hereunder, and has failed to cure
such violation or the effects of such negligence within a reasonable period
after written notice to the Executive by the Company specifying in reasonable
detail the alleged violation;
b. The
determination by 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 Company 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 charged with a misdemeanor involving moral turpitude or a
felony;
d. The
determination by 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 Company including indecency, immorality, gross
insubordination, dishonesty, unlawful harassment, or use of illegal
drugs;
e. The
determination by 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 Company specifying in reasonable detail the nature of the unsatisfactory
performance;
f. The
Executive is prohibited from engaging in the business of banking by any
governmental regulatory agency having jurisdiction over the Company;
or
g. The
Company has entered into a formal administrative action.
14. 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
Company. 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.
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15. If
Executive dies during the term of this Agreement and while in the employ of the
Company, this Agreement will terminate automatically, without notice, on the
date of the Executive’s death and the Company shall not 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 Company 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 Company, the Company shall provide or maintain health
insurance benefits, at the Company’s expense, for Executive’s
spouse.
16. This
Agreement will terminate immediately, without notice, in the event the Executive
is prevented from performing his duties hereunder by reason of becoming
physically or mentally disabled. For purposes of this Agreement, the
term “disabled” shall have the meaning set forth in the Company’s long-term
disability plan or, if the Company has no long-term disability plan in effect at
the time of the Executive’s disability, then “disabled” shall mean that
Executive has become physically or mentally incapable (excluding infrequent and
temporary absences due to ordinary illness) of performing the essential
functions of his duties under this Agreement for a continuous period of three
(3) months, as determined by the Board of Directors upon the advice of a
qualified physician. In the event a dispute arises between Executive
and the Company concerning Executive’s physical or mental ability to continue or
return to the performance of his duties, then Executive shall submit to an
examination by a competent physician mutually agreeable to the
parties. The physician’s opinion as to the Executive’s capability to
perform his duties will be final and binding. During any period prior
to termination during which the Executive fails to perform his duties as a
result of incapacity due to physical or mental illness, the Executive shall
continue to receive his full salary at the rate then in effect for such period
until his or her employment terminates pursuant to this Paragraph 16, provided
that payments so made to the Executive during such period shall be reduced by
the sum of the amounts, if any, payable to the Executive under any disability
benefit plans of the Company that were not previously applied to reduce such
payment.
In the event of a termination pursuant
to this Paragraph 16, the Company shall be relieved of all its obligations under
this Agreement, except that Company shall pay to the Executive, or to his estate
in the event of his subsequent death, the Executive’s base salary under
Paragraph 3(a) 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 Company and by any death benefits
payable under the benefit plans referenced in Paragraph 3. All such
payments to the Executive or to his estate shall be made in the same manner as
other payroll obligations.
17. 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 Company’s business, and any and all other
documents containing Propriety Information furnished to the Executive by any
representative of the Company or otherwise acquired or developed by the
Executive in connection with his or her duties under this Agreement
(collectively, the “Recipient Materials”) shall at all times be the property of
the Company. Within three calendar days of the termination of this
Agreement, the Executive shall return to the Company, all Recipient Materials
(including all confidential information and trade secrets of the Company) that
is in his or her possession, custody or control.
18. The
provisions of provisions of Paragraphs 17-22 and 27 shall survive the
termination of this Agreement.
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E.
CHANGE OF CONTROL
19. 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 Company and the direction of the
Company provided by the current Board of Directors. Upon a “Change of
Control,” as defined below, the Executive may, at his option, notify the Company
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 Company 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 20 upon written notice to the Company, in
which case the severance provisions of Paragraph 22 shall not
apply.
20. In the
event that the Executive elects to terminate this Agreement based upon the
Change of Control, the Company shall pay to the Executive, within thirty (30)
days of Company’s receipt of a notice of the Executive’s election to terminate
this Agreement, a cash lump sum payment equal to 1.99 times his Base Amount as
defined in section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(“Code”).
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 Company 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 Company, 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
Company’s ordinary payroll policies and procedures.
21. 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 Company, in each case, with respect to which the shareholders of the
Company, 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 bank’s then outstanding voting
securities; provided, however that a Change of Control shall not be deemed to
have occurred upon the formation of a holding company for the Company if each
shareholder of the Company immediately prior to the formation of the holding
company retains substantially the same percentage ownership of the holding
company following such formation as he or she owned of the Company prior the
formation.
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b. The sale,
transfer or assignment of all or substantially all of the assets of the Company
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 Company where such
acquisition causes any such Person to own twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding capital stock then
entitled to vote generally in the election of directors; provided however, that
a Change of 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 Company’s
then outstanding capital stock solely as a result of the repurchase of voting
securities by the Company.
d. During
any period of two consecutive years, the persons who were directors of the
Company 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 Company’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 or she 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 of Control and who effects a Change of
Control, or such termination otherwise occurred in connection with, or in
anticipation of, a Change of Control which later actually occurs, then for all
purposes hereof, a Change of Control shall be deemed to have occurred on the day
immediately prior to the date of such termination of his or her
employment.
X. XXXXXXXXX
22. Except as
otherwise expressly provided herein, if Company terminates Executive’s
employment for any reason other than Good Cause (as defined in 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 or she remained
employed for twelve (12) months following termination. In the event
that the Executive is entitled to any payment under Section E, above, no payment
shall be due under this Section F. Any severance pay due to Executive
pursuant to this Section F shall be paid in accordance with the terms of normal
payroll procedure of the Company.
G. SEVERABILITY
23. 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.
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H. WAIVER
24. The
parties acknowledge and agree that the failure of either party to enforce any
provision of this Agreement shall not constitute a waiver of that particular
provision, or of any other provisions of this Agreement.
I. SUCCESSORS
AND ASSIGNS
25. The
Executive acknowledges and agrees that this Agreement may be assigned by the
Company 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 Company.
26. The
Executive acknowledges and agrees that his or her 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.
J. CHOICE
OF LAW
27. 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 THE EXECUTIVE HAS OR WILL HAVE REGULAR CONTACT WITH
THE STATE OF MICHIGAN IN THE PERFORMANCE OF THIS AGREEMENT.
K. MISCELLANEOUS
28. 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.
29. When a
reference is made in this Agreement to a Paragraph or a Section, such references
shall be to a Paragraph or a Section 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.
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L. NOTICES
30. 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 given properly if (a) delivered personally, (b)
delivered by a recognized overnight courier service, (c) sent by United States
mail, postage prepaid, 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
Company:
Xxxxx
Xxxxxx
0000
Xxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
If to
Executive:
Xxxxxx
Xxxxxxx
00
Xxxxxxx Xxxxx
Xxxxxxxx,
XX 00000
31. 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.
[signature
page follows]
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[signature
page to Employment Agreement]
EXECUTED
AS OF THE DATE FIRST WRITTEN.
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EXECUTIVE
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/s/
Xxxx Xxxxxxx
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/s/
Xxxxxx X. Xxxxxxx
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WITNESS
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Xxxxxx
X. Xxxxxxx
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GRAND
RIVER COMMERCE, INC.
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/s/
Xxxxxxxx X. Xxxxx
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By:
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/s/
Xxxxx Xxxxxx
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WITNESS
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Xxxxx
Xxxxxx, Vice President and Corporate Secretary
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