EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE
EMPLOYMENT AGREEMENT (“Agreement”) is made and
entered into as of this 18 th day of May, 2009, by and between Bank of
Birmingham, a Michigan state bank (“Bank”), and Robert
Farr, an individual resident of the State of Michigan
(“Executive”).
WHEREAS ,
the Bank and the Executive are parties to an employment agreement
dated June 28, 2007 (the “Prior Agreement”)
providing for the Executive to be employed as President and Chief
Executive Officer of the Bank, and Executive desires to continue
such employment, subject to and on the terms and conditions set
forth in this Agreement; and
WHEREAS,
the Bank and the Executive wish to amend and restate the Prior
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:
1. This
Agreement shall become effective (the “Effective Date”)
upon the date of its execution indicated above and shall continue
in full force and effect, subject to Paragraph 2 below, until
the first 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. Each day during the term of this Agreement, the
term of the Agreement shall automatically be extended for one
additional day, unless either party elects to give the other party
written notice of non-renewal. Upon the Bank giving notice of
non-renewal, the Executive shall have the right to remain employed
by the Bank for the one (1) year period following the date the
Bank gives notice of non-renewal unless the termination is for Good
Cause (as hereinafter defined).
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 $145,000 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.
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.
Reimbursement under this Paragraph 4 shall be made in
accordance with the Bank’s expense reimbursement policies,
but in no event later than the last day of the calendar year
following the calendar year in which the expenses are incurred.
Reimbursement under this Paragraph 4 shall not affect the
expenses eligible for reimbursement in any other calendar year and
cannot be liquidated or exchanged for any other benefit.
5. Subject to
the provisions of Paragraph 8 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 term life insurance coverage
in an initial amount not to exceed 200% of Executive’s base
salary, and having a term not less than ten years. If, during the
term of this Agreement, the Bank adopts a plan providing life
insurance benefits to other Bank employees and the maximum coverage
under such plan exceeds the maximum coverage permitted under this
Paragraph, then notwithstanding the limitations of this Paragraph,
Executive shall be entitled to participate in the Bank’s life
insurance benefit plan to the full extent that it is available to
other Bank employees.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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 valuable to the Bank’s business and
that the Bank would suffer irreparable injury if this information
were publicly disclosed. Therefore, 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.
16. The
Executive expressly represents that he has no agreements with, or
obligations to, any party which conflict, or may conflict, with the
interests of the Bank or with the Executive’s duties as an
employee of the Bank.
17. 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.
18. 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.
19. 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 any reason (other than for termination of Executive for
circumstances described in Paragraph 24(e), below), 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 the following
Michigan cities/towns: Bloomfield, Bloomfield Hills, Beverly Hills,
Birmingham, Franklin, and Bingham Farms. It is the parties’
desire that these restrictions be enforced to the fullest extent
allowed by law.
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