eZ Community Xxxx.Xxx
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Employment Agreement with
Xxxx X. Xxxxxx
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AGREEMENT entered into and effective this ________ day of ________________, 2001
by and between eZ Community Xxxx.Xxx (the "Bank") and Xxxx X. Xxxxxx (the
"Employee").
WHEREAS, the Employee serves as the Bank's President and Chief Executive Officer
and is experienced in all phases of the business of the Bank; and
WHEREAS, the Board of Directors (the "Board") of the Bank believes it is in the
best interests of the Bank to enter into this Agreement with the Employee
in order to assure continuity of management of the Bank and to reinforce
and encourage the continued attention and dedication of the Employee to his
assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
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When used anywhere in this Agreement, the following terms shall have the meaning
set forth herein.
(a) "Change in Control" shall mean any one of the following
events: (i) the acquisition of ownership, holding or power to vote more than 25%
of the voting stock of the Bank or of the Company, (ii) the acquisition of the
ability to control the election of a majority of the Bank's or the Company's
directors, (iii) the acquisition of a controlling influence over the management
or policies of the Bank or of the Company by any person or by persons acting as
a "group" (within the meaning of Section 13(d) of the Securities Exchange Act of
1934), (iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute the Board
of Directors of the Bank or of the Company (the "Existing Board") cease for any
reason to constitute at least two-thirds thereof, provided that any individual
whose election or nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director, or (v) the acquisition of
control of the Bank or the Company under 12 C.F.R. Part 225. Notwithstanding the
foregoing, the Company's ownership of the Bank shall not of itself constitute a
Change in Control for purposes of the Agreement. Further, "Change in Control"
shall not include the acquisition of securities by an employee benefit plan
of the Bank or the Company. For purposes of this paragraph only, the term
"person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
(b) "Company" shall mean eZ Bancorp, Inc.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code ss.280G Maximum" shall mean the product of 2.99 and the
Employee's "base amount" as defined in Code ss.280G(b)(3).
(e) "Disability" shall mean a physical or mental infirmity which
impairs the Employee's ability to substantially perform his duties under this
Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Bank's long-term disability plan (or, if the Bank
has no such plan in effect, which impairs the Employee's ability to
substantially perform his duties under this Agreement for a period of 180
consecutive days).
(f) "Effective Date" shall mean the date referenced in the
opening paragraph of this Agreement.
(g) "Good Reason" shall mean any of the following events, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than 30 miles from his primary office as of
the later of the Effective Date and the most recent voluntary relocation by the
Employee; (ii) a material reduction in the Employee's base compensation under
this Agreement as the same may be increased from time to time; (iii) the failure
by the Bank or the Company to continue to provide the Employee with compensation
and benefits provided under this Agreement as the same may be increased from
time to time, or with benefits substantially similar to those provided to him
under any of the employee benefit plans in which the Employee now or hereafter
becomes a participant, or the taking of any action by the Bank or the Company
which would directly or indirectly reduce any of such benefits or deprive the
Employee of any material fringe benefit enjoyed by him under this Agreement;
(iv) the assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position; (v) a failure to
reelect the Employee to the Board of Directors of the Bank or the Company; or
(vi) a material diminution or reduction in the Employee's responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank.
(h) "Just Cause" shall mean, in the good faith determination of
the Bank's Board of Directors, the Employee's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless
he has acted, or failed to act, with an absence of good faith and without a
reasonable belief that his action or failure to act was in the best interest of
the Bank and the Company.
(i) "Protected Period" shall mean the period that begins on the
date six months before a Change in Control and ends on the later of the second
annual anniversary of the Change in Control or the expiration date of this
Agreement.
2. Employment. The Employee is employed as the President and Chief Executive
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Officer of the Bank. The Employee shall render such administrative and
management services for the Bank as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Employee shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank. The Employee's other duties shall be
such as the Board may from time to time reasonably direct, including normal
duties as an officer of the Bank.
3. Base Compensation. The Bank agrees to pay the Employee during the term of
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this Agreement a salary at the rate of $100,000 per annum, payable in cash not
less frequently than monthly. The Board shall review, not less often than
annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an equitable manner
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with all other senior management employees of the Bank in discretionary bonuses
that the Board may award from time to time to the Bank's senior management
employees. No other compensation provided for in this Agreement shall be deemed
a substitute for the Employee's right to participate in such discretionary
bonuses.
5. Participation in Retirement, Medical and Other Plans.
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(a) The Employee shall be eligible to participate in any of the
following plans or programs that the Bank may now or in the future maintain:
group hospitalization, disability, health, dental, sick leave, life insurance,
travel and/or accident insurance, auto allowance/auto lease, retirement,
pension, and/or other present or future qualified or nonqualified plans provided
by the Bank, generally which benefits, taken as a whole, must be at least as
favorable as those in effect on the Effective Date.
(b) The Employee shall also be eligible to participate in any
fringe benefits which are or may become available to the Bank's senior
management employees, including for example: any stock option or incentive
compensation plans, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Bank.
6. Term. The Bank hereby employs the Employee, and the Employee hereby accepts
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such employment under this Agreement, for the period commencing on the Effective
Date and ending 36 months thereafter (or such earlier date as is determined in
accordance with Section 10 or 12 hereof). Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of employment
shall be extended for an additional one-year period beyond the then effective
expiration date, provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards,
and that this Agreement shall be extended. Only those members of the Board of
Directors who have no personal interest in this Employment Agreement shall
discuss and vote on the approval and subsequent review of this Agreement.
7. Loyalty; Noncompetition.
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(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder; provided, however, from
time to time, the Employee may serve on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Bank or any of its subsidiaries or
affiliates, or unfavorably affect the performance of the Employee's duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Bank.
(b) Nothing contained in this Section shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.
8. Standards. The Employee shall perform his duties under this Agreement in
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accordance with such reasonable standards as the Board may establish from time
to time. The Bank will provide the Employee with the working facilities and
staff customary for similar executives and necessary for him to perform his
duties.
9. Vacation and Sick Leave. At such reasonable times as the Board shall in its
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discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Bank.
(b) The Employee shall not receive any additional compensation
from the Bank on account of his failure to take a vacation or sick leave, and
the Employee shall not accumulate unused vacation or sick leave from one fiscal
year to the next, except in either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Bank for such additional periods of time
and for such valid and legitimate reasons as the Board may in its discretion
determine. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
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Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.
(b) Disability. (1) The Bank may terminate the Employee's
employment after having established the Employee's Disability, in which event
the Employee shall be entitled to the compensation and benefits provided for
under this Agreement for (i) any period during the term of this Agreement and
prior to the establishment of the Employee's Disability during which the
Employee is unable to work due to the physical or mental infirmity, and (ii) any
period of Disability which is prior to the Employee's termination of employment
pursuant to this Section 10(b); provided that any benefits paid pursuant to any
long term disability plan of the Bank will continue as provided in such plan
without reduction for payments made pursuant to this Agreement.
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically
and mentally able to do so, he shall furnish such information, assistance and
documents so as to assist in the continued ongoing business of the Bank and, if
able, shall make himself available to the Bank to undertake reasonable
assignments consistent with his prior position and his physical and mental
health. The Bank shall pay all reasonable expenses incident to the performance
of any assignment given to the Employee during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause. Notwithstanding the foregoing, in the event of
termination for Just Cause there shall be delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
that purpose (after reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard before the Board),
such meeting and the opportunity to be heard to be held prior to, or as soon as
reasonably practicable following, termination, but in no event later than 60
days following such termination, finding that in the good faith opinion of the
Board the Employee was guilty of conduct set forth above in the second sentence
of this Subsection (c) and specifying the particulars thereof in detail. If
following such meeting the Employee is reinstated, he shall be entitled to
receive back pay for the period following termination and continuing through
reinstatement.
(d) Without Just Cause; Constructive Discharge. The Board may, by
written notice to the Employee, immediately terminate his employment at any time
for a reason other than his Disability or Just Cause, in which event the
Employee shall be entitled to receive the following compensation and benefits
(unless such termination occurs during the Protected Period, in which event the
benefits and compensation provided for in Section 12 shall apply):
(i) the salary provided pursuant to Section 3 hereof,
up to the expiration date of this Agreement, including any renewal term (the
"Expiration Date"), plus said salary for an additional 12-month period, and
(ii) at the Employee's election either (A) cash in an
amount equal to the cost to the Employee of obtaining all health, life,
disability and other benefits which the Employee would have been eligible to
participate in through the Expiration Date based upon the benefit levels
substantially equal to those that the Bank provided for the Employee at the date
of termination of employment or (B) continued participation under such Bank
benefit plans through the Expiration Date, but only to the extent the Employee
continues to qualify for participation therein.
All amounts payable to the Employee shall be paid, at the option of the
Employee, either (I) in periodic payments, through the Expiration Date, or (II)
in one lump sum within ten days of such termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an event
that constitutes Good Reason, (unless such voluntary termination occurs during
the Protected Period, in which event the benefits and compensation provided for
in Section 12 shall apply).
(f) Termination or Suspension Under Federal Law. (1) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Sections 8(e)(3) or
8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(3) and
(g)(1)), all obligations of the Bank under this Agreement shall terminate, as of
the effective date of the order, but vested rights of the parties shall not be
affected.
(2) If the Bank is in default (as defined in Section
3(x)(1) of FDIA), all obligations under this Agreement shall terminate as of
the date of default; however, this Paragraph shall not affect the vested rights
of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1)
of the FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily
prohibits the Employee from participating in the conduct of the Bank's affairs,
the Bank's obligations under this Agreement shall be suspended as of the date of
such service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Bank may in its discretion (i) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(4) All obligations under this Agreement shall
terminate, except to the extent determined that continuation of this Agreement
is necessary for the continued operation of the Bank by the Department of
Consumer and Industry Services of the State of Michigan or the Federal Deposit
Insurance Corporation ("FDIC"), or his or her designee, at the time that (i) the
FDIC enters into an agreement to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) of FDIA; or (ii) the State of
Michigan or the FDIC approves a supervisory merger to resolve problems related
to operation of the Bank or when the Bank is determined by the State of Michigan
or the FDIC to be in an unsafe or unsound condition. Such action shall not
affect any vested rights of the parties.
(5) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(g) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the Bank during
the term of this Agreement, upon at least 90 days' prior written notice to the
Board of Directors, in which case the Employee shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination (unless such termination occurs pursuant to Section 10(d) hereof or
within the Protected Period, in Section 12(a) hereof, in which event the
benefits and compensation provided for in Sections 10(d) or 12, as applicable,
shall apply).
(h) Post-termination Health Insurance. If the Employee's
employment terminates with the Bank for any reason other than Just Cause, the
Employee shall be entitled to purchase from the Bank, at his own expense which
shall not exceed applicable COBRA rates, family medical insurance under any
group health plan that the Bank maintains for its employees. This right shall be
(i) in addition to, and not in lieu of, any other rights that the Employee has
under
this Agreement, and (ii) shall continue until the Employee first becomes
eligible for participation in Medicare.
11. No Mitigation. The Employee shall not be required to mitigate the amount of
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any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
12. Change in Control.
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(a) Trigger Events. The Employee shall be entitled to collect the
severance benefits set forth in Subsection (b) hereof in the event that either
(i) the Employee voluntarily terminates employment for any reason within the
30-day period beginning on the date of a Change in Control, (ii) the Employee
voluntarily terminates employment within 90 days of an event that both occurs
during the Protected Period and constitutes Good Reason, or (iii) the Bank or
the Company or their successor(s) in interest terminate the Employee's
employment without his written consent and for any reason other than Just Cause
during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled
to collect severance benefits pursuant to Section 12(a) hereof, the Bank shall
pay the Employee a severance benefit equal to the difference between the Code
ss.280G Maximum and the sum of any other "parachute payments" as defined under
Code ss.280G(b)(2) that the Employee receives on account of the Change in
Control. The Employee shall be entitled to determine which and how much of any
other parachute payments shall be reduced, if necessary, to reach the Code
ss.280G Maximum.
The amount payable under this Section 12(b) shall be paid in
one lump sum within ten days of the later of the date of the Change in Control
and the Employee's last day of employment with the Bank or the Company, unless
otherwise elected by the Employee in a manner which is deemed to be effective
for federal income tax purposes. Deferred amounts shall bear interest from the
date on which they would otherwise be payable until the date paid at a rate
equal to 150% of the applicable federal rate, compounded semiannually, as
determined under Code Section 1274(d) and the regulations thereunder.
In the event that the Employee, the Bank, and the Company
jointly agree that the Employee has collected an amount exceeding the Code
ss.280G Maximum, the parties may agree in writing that such excess shall be
treated as a loan ab initio, which the Employee shall repay to the Bank, on
terms and conditions mutually agreeable to the parties, together with interest
at the applicable federal rate provided for in Section 7872(f)(2)(B) of the
Code.
(c) Payment Limitation Any payments made to the Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
13. Indemnification. The Bank and the Company agree that their respective Bylaws
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shall continue to provide for indemnification of directors, officers, employees
and agents of the Bank and the Company, including the Employee during the full
term of this Agreement, and to at all times provide adequate insurance for such
purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the event that any
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dispute arises between the Employee and the Bank as to the terms or
interpretation of this Agreement, whether instituted by formal legal proceedings
or otherwise, including any action that the Employee takes to defend against any
action taken by the Bank or the Company, the Employee shall be reimbursed for
all costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that the Employee obtains either a
written settlement or a final judgement by a court of competent jurisdiction
substantially in his favor. The Employee shall also be reimbursed for any costs
and expenses, including reasonable attorney's fees, arising from the Employee's
collection of change in control benefits. Such reimbursement shall be paid
within ten days of the Employee's furnishing to the Bank written evidence, which
may be in the form, among other things, of a canceled check or receipt, of any
costs or expenses incurred by the Employee. The Bank shall also reimburse the
Employee in an amount equal to 150% of any excise taxes payable by the Employee
under Code Section 4999 due to the inadvertent violation of the payment limit
described in Section 12(b) of this Agreement.
15. Federal Income Tax Withholding. The Bank may withhold all federal and state
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income or other taxes from any benefit payable under this Agreement as shall be
required pursuant to any law or government regulation or ruling.
16. Successors and Assigns.
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(a) Bank. This Agreement shall not be assignable by the Bank,
provided that this Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.
(b) Employee. Since the Bank is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Bank; provided, however, that nothing in this paragraph shall
preclude (i) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors, administrators, or
other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement shall be binding
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unless made in writing and signed by all of the parties, except as herein
otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the laws of
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the State of Michigan shall govern this Agreement in all respects, whether as to
its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed severable and
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the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto and shall supersede any prior
agreement between the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement
on the day and year first hereinabove written.
ATTEST: eZ Community Xxxx.Xxx
________________________________ By:___________________________________
Secretary Its Chairman of the Board
WITNESS:
________________________________ ______________________________________
Xxxx X. Xxxxxx
