EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into this 26th day of June, 1996, but
as of the Effective Date hereinafter defined, by and between COMMUNITY BANK
CORPORATION ("CBC") and XXXXXX X. XXXXXX ("Employee");
WHEREAS, CBC 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 CBC and the Employee; and
WHEREAS, the board of directors of CBC 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 CBC as may from time to time be reasonably directed by CBC's
Chairman of the Board and/or the CBC board of directors. Among his other
duties, it is contemplated that he will serve as the president and chief
executive officer of CBC's Subsidiary Bank ("Subsidiary Bank"). If,
following the Effective Date of this Agreement, CBC merges with Valley
Ridge Financial Corporation ("VRFC") and the Kent City State Bank and the
Subsidiary Bank are consolidated or merged into one bank (the "Mergers"),
all references in this Agreement to CBC shall refer to the successor
corporation of CBC and VRFC ("Surviving Corporation") and all references in
this Agreement to the Subsidiary Bank shall refer to the successor bank to
the Grant State Bank and the Kent City State Bank (the "Merged Bank").
Following the Mergers, it is not expected that the Employee will serve as
the president and chief executive officer of the Merged Bank. It is,
however, expected that the Employee will continue to be a senior executive
officer of the Merged Bank and of the Surviving Corporation.
2. COMPENSATION. CBC agrees to pay the Employee during the term of
this Agreement a salary in the sum of Seventy Thousand Dollars ($70,000)
per annum 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 CBC 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 CBC. The Employee's salary shall be reviewed by the board of
directors of CBC 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. The Employee's salary shall be
subject to the usual withholding taxes 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 CBC 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 CBC or the Subsidiary Bank relating to pension, thrift,
deferred profit-sharing, group life insurance, medical coverage,
education, or other retirement or employee benefits that CBC 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 CBC'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.
5. TERM. The term of employment under this Agreement shall be a
period commencing on the Effective Date hereof and ending five (5) years
thereafter.
6. EFFECTIVE DATE. For purposes of this Agreement the "Effective
Date" is July 1, 1996.
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 CBC.
8. VACATIONS. The Employee shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under
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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.
(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 CBC 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 1 week of
vacation each year to be used during the first 3 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 CBC 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 CBC 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 CBC or
the Subsidiary Bank;
(ii) Willful breach of a fiduciary duty involving
personal profit;
(iii) Willful violation of any law, rule, or regulation
materially relating to the operation of CBC or the
Subsidiary Bank;
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(iv) The order of any court or supervising agency with
jurisdiction over the affairs of CBC 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 CBC'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 CBC 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 CBC 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
CBC'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 CBC or upon such shorter
period as may be agreed upon between the Employee and the board
of directors of CBC. In the event of such termination without
Good Reason, CBC 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 CBC for
"Good Reason" which shall mean the following:
(i) A material change made by CBC in the Employee's
status or position as a senior executive officer of CBC or
the Subsidiary Bank except as contemplated in Section 1 of
this Agreement;
(ii) The assignment to the Employee of any duties or
responsibilities which are materially inconsistent with such
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status or position, or a material reduction in the duties
and responsibilities previously exercised by the Employee
except as contemplated in Section 1 of this Agreement;
(iii) The imposition of any requirement, whether by
relocation of CBC'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
Grant, Michigan;
(iv) Failure of CBC to elect the Employee as a senior
executive officer and a director of the Subsidiary Bank; or
(v) Material breach by CBC of any material provision
of Agreement, if CBC fails to cure the breach within a
reasonable time after Employee has given CBC's board of
directors written notice of the breach.
(d) If the Employee's employment is terminated by CBC
without Cause or terminated by the Employee for Good Reason, the
Employee shall be entitled to continuation of his salary and
benefits as follows:
(i) if the termination occurs before a Change in
Control of CBC, the Employee's salary and benefits will be
continued through June 30, 2001, as if termination of his
employment had not occurred; or
(ii) if the termination occurs after a Change in
Control or is In Contemplation of a Change in Control, the
Employee's salary and benefits will be continued, as if
termination of his employment had not occurred, through June
30, 2001 or, if longer, until three (3) years after the date
of the Change in Control, provided that the amount of salary
and benefit continuation attributable to the period beyond
June 30, 2001 will be subject to reduction to the extent of
any portion of such amount that constitutes an Excess
Parachute Payment.
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
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 competitive with CBC
or the Subsidiary Bank. 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,
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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.
(e) In the event of the death of the Employee while still
employed under this Agreement (or while receiving salary and
benefit continuation under section 9(d)), the Employee's estate
or beneficiary (designated in writing) shall be entitled to
receive the salary (or salary continuation under section 9(d))
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 CBC's affairs at the request of
or by the order of any court or supervising agency with
jurisdiction over CBC, CBC's obligations under this Agreement
shall not terminate and the 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,
CBC'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 CBC's affairs by the final order
of any court or supervising agency with jurisdiction over CBC,
all obligations of CBC under this Agreement shall terminate, as
of the effective date of the order, but vested rights of the
parties shall not be affected.
(h) All obligations under this Agreement may be terminated,
except to the extent determined that continuation of the
Agreement is necessary for the continued operation of CBC:
(i) By the Federal Deposit Insurance Corporation
("FDIC") at the FDIC enters into an agreement to provide
assistance to or on behalf of CBC; 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 CBC or when CBC
is determined by the FRB to be in an unsafe or unsound
condition. Any rights of the parties that have already
vested, however, shall not be affected by such action.
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(i) As used in subparagraph 9(d):
(i) the term "Change in Control" shall mean the
occurrence of any one or more of the following, except that
it shall not mean the Mergers:
(1) Any person is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of CBC representing
twenty-five percent (25%) or more of the combined
voting power of CBC's then outstanding securities; or
(2) Any of the following occur:
(A) Any merger or consolidation of CBC, other
than a merger or consolidation in which the
voting securities of CBC immediately prior to
the merger or consolidation continue to
represent (either by remaining outstanding or
being converted into securities of the
surviving entity) more than fifty percent
(50%) or more of the combined voting power of
CBC or surviving entity immediately after the
merger or consolidation with another entity;
(B) Any sale, exchange, lease, mortgage, pledge,
transfer or other disposition (in a single
transaction or a series of related
transactions) of assets or earning power
aggregating more than fifty percent (50%) of
the assets or earning power of CBC on a
consolidated basis;
(C) Any complete liquidation or dissolution of
CBC;
(D) Any reorganization, reverse stock split, or
recapitalization of CBC which would result in
a Change in Control; or
(E) Any transaction or series of related
transactions having, directly or indirectly,
the same effect as any of the foregoing.
(ii) the term "In Contemplation of a Change in Control"
shall mean a termination within 12 months before a Change in
Control, in anticipation of such Change in Control.
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(iii) the term "Excess Parachute Payments" means
Parachute Payments subject to an excise tax on "excess
parachute payments" as provided under 280G of the
Internal Revenue Code.
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 CBC and the
Subsidiary Bank; and
(b) He shall not be entitled to receive salary payments
pursuant to this Employment Agreement.
11. NO ASSIGNMENTS. This Agreement is personal to each of the
parties hereto, and neither party may assign or delegate any of the rights
or obligations hereunder without first obtaining the written consent of the
other party. However, this Agreement shall be binding upon any successor
or assignee of CBC.
12. OTHER CONTRACTS. All other prior agreements regarding conditions
of employment, whether written or oral, are hereby superseded by this
Agreement.
13. 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.
14. AMENDMENTS. No amendments or additions to this Agreement shall
be binding unless in writing and signed by both parties, except as herein
otherwise provided.
15. 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.
16. 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.
17. GOVERNING LAW. Agreement shall be governed by the laws of the
United States of America and the State of Michigan.
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IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first above written.
COMMUNITY BANK CORPORATION
By /S/ XXXX XXXXXXXX
President
Employer
/S/ XXXXXX X. XXXXXX
Xxxxxx X. Xxxxxx
Employee
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