EXHIBIT 10.1

CONSULTING AND TRANSITION AGREEMENT

 

            This Consulting and Transition Agreement (this "Agreement") is
entered into by and between Independent Bank Corporation, a bank holding company
incorporated under the laws of the State of Michigan (the "Company"),
Independent Bank, a Michigan banking corporation and wholly-owned subsidiary of
the Company (the "Bank"), and Michael M. Magee, Jr. ("Mr. Magee"), the President
and Chief Executive Officer ("CEO") of the Company and the Bank.

           

Background

 

            A.        Mr. Magee currently serves as President and CEO and as a
director of both the Company and the Bank.  He has been employed with the Bank
since 1987 and has served in the role of President and CEO since January 1,
2005.  Mr. Magee intends to resign his employment with the Company and the Bank
as of the date and on the terms and conditions set forth below (the
"Separation").

 

            B.        The Company is prohibited from making any "golden
parachute payment," as that term is defined in Section 111 of the Emergency
Economic Stabilization Act of 2008, as amended by the American Recovery and
Reinvestment Act of 2009, and applicable regulations and/or guidance previously
or hereafter issued, to Mr. Magee upon the termination of his employment with
the Company pursuant to the Company's participation and acceptance of the terms
and conditions of the U.S. Treasury's Capital Purchase Program under the
Troubled Asset Relief Program ("CPP Rules").  Mr. Magee has duly acknowledged
said prohibition pursuant to (i) certain waivers executed by Mr. Magee on
December 12, 2008 and April 6, 2010 (the "Waivers") and (ii) a Letter Agreement
between Mr. Magee and the Company dated December 12, 2008 (the "SEO
Agreement"). 

 

            C.        The Company desires for Mr. Magee to assist in the
transition of his duties, and Mr. Magee desires to assist in such transition, on
the terms and conditions set forth below.

 

Agreement

 

            NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged by all parties, the parties agree as
follows:

 

            1.         Executive Positions.  Effective April 1, 2011, Mr. Magee
shall resign from his position as President of the Company and the Bank, but
shall continue to serve as CEO of both the Company and the Bank at the pleasure
of their respective Boards of Directors.  Effective January 1, 2013 (the
"Separation Date"), Mr. Magee shall resign from his position as CEO of both the
Company and the Bank and from any other position he then holds with the Company,
the Bank, or any of their respective affiliates.  All of Mr. Magee's
compensation and benefits as an employee of the Company, the Bank, and/or any of
their respective affiliates shall terminate on the Separation Date.

 

            2.         Board Positions.  Effective immediately following the
2011 annual meeting of the Company's shareholders, Mr. Magee shall be appointed
as Chairman of the Board of Directors of both the Company and the Bank and shall
remain in such role until December 31, 2012, subject to his continuing
nomination by the Board and election by the shareholders of the Company. 
Effective on the Separation Date, Mr. Magee shall resign as a director of both
the Company and the Bank.

 

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            3.         Consulting Services.  In order to facilitate a smooth and
orderly transition within the Company and the Bank upon the Separation, and to
assure access to Mr. Magee's unique and valuable services, the Company and the
Bank desire to retain the services of Mr. Magee as a consultant for two
consecutive years beginning on the Separation Date and ending December 31, 2014,
unless earlier terminated in accordance with Section 5 below (the "Consulting
Term"). During the Consulting Term, Mr. Magee shall perform such consulting and
advisory services (the "Services") as the Company or the Bank may direct or
request from time to time.  Mr. Magee shall perform the Services faithfully, to
the best of his ability, and on a timely basis.  At a minimum, during the
Consulting Term, Mr. Magee shall meet with the Bank's executive management (i)
on a monthly basis and (ii) upon not less than forty-eight (48) hours' advance
notice.  It is also contemplated that Mr. Magee may be required to provide
periodic reports to the Bank's President as to matters which are the subject of
the Services.  As a consultant, Mr. Magee shall refer to and utilize whatever
resources and materials he deems necessary or advisable and shall take whatever
steps he deems best to provide the Services from time to time for the Company
and the Bank. 

 

            4.         Compensation.  In consideration for Mr. Magee's
availability to render the Services, the Services to be rendered by Mr. Magee
during the Consulting Term, and the other provisions of this Agreement, the
Company shall compensate (or cause the Bank to compensate) Mr. Magee as follows
(the "Compensation"):

 

                        (a)        The Company shall pay (or cause the Bank to
pay) Mr. Magee the sum of Five Hundred Thousand Dollars ($500,000), payable in
eight quarterly installments of Sixty-two Thousand Five Hundred Dollars
($62,500) each, in advance, on the first day of each calendar quarter during the
Consulting Term.

 

                        (b)        During the Consulting Term, the Company shall
pay (or cause the Bank to pay) all premiums and other costs associated with
providing Mr. Magee and his dependents with health insurance benefits at the
coverage levels in effect as of the Separation Date.  After the Consulting Term,
Mr. Magee shall be eligible to participate in the Company's health insurance
plan as a retiree.

 

                        (c)        The Company shall reimburse (or cause the
Bank to reimburse) Mr. Magee for the out-of-pocket costs reasonably incurred by
Mr. Magee during the Consulting Term to perform the Services.  Such
reimbursement shall be made in accordance with the Company's policies regarding
expense reimbursement.

 

            5.         Termination for Cause.  Mr. Magee's engagement for the
performance of the Services shall immediately terminate if the Company or the
Bank elects to terminate this Agreement for Cause.  For purposes of this
Agreement, "Cause" shall mean (i) any act by Mr. Magee of fraud,
misappropriation, embezzlement, or dishonesty with respect to the Company or the
Bank or any other conduct by Mr. Magee that is reasonably likely to adversely
affect the business or reputation of the Company or the Bank; (ii) the
conviction of, or plea of guilt or no contest to, any felony by Mr. Magee; (iii)
negligence or intentional misconduct by Mr. Magee in the performance of his
duties that is not promptly remedied upon receipt of notice thereof from the
Company or the Bank; (iv) the disregard by Mr. Magee of any lawful policy
established by the Board of Directors, President, or CEO of the Company or the
Bank that is not promptly remedied upon receipt of notice thereof from the
Company or the Bank; or (v) any breach by Mr. Magee of any provision of this
Agreement that is not promptly remedied upon receipt of notice thereof from the
Company or the Bank.  Upon a termination of this Agreement for Cause, Mr. Magee
shall be entitled to all accrued Compensation through the date of termination
with no further payment obligation pursuant to this Agreement on the part of the
Company or the Bank.

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            6.         Independent Contractor Status.  When performing the
Services, Mr. Magee shall act as an independent contractor and nothing in this
Agreement shall create the relationship of partners or employer and employee
between the parties after the Separation Date.  Mr. Magee shall retain control
of the manner and means by which he performs the Services, including the
determination of the time, energy, and skill devoted to the Services.

 

            7.         No Corporate Authority.  After the Separation Date, Mr.
Magee understands and agrees that he shall not hold himself out as having any
corporate authority to act on behalf of or to bind the Company or the Bank.  Mr.
Magee also agrees that he shall take no action or create any impression, whether
actual or implied, that he has authority to act on behalf of the Company or the
Bank or which shall in any way bind the Company or the Bank during the
Consulting Term. 

 

            8.         Releases and Covenant Not to Sue.  Each of the parties
agrees as follows:

 

                        (a)        In consideration for the Company and the Bank
entering into this Agreement, Mr. Magee agrees to forever release and discharge,
and covenants not to sue or make any claim against, the Company or the Bank;
each of the present, former, and future parent companies, subsidiaries,
affiliates, predecessors, successors, and assigns of the Company or the Bank;
each of the present, former, or future shareholders, owners, directors,
officers, partners, employees, agents and representatives of the Company or the
Bank; and each of their respective affiliates, predecessors, successors, and
assigns (collectively, the "Released Parties"), from any and all damages,
losses, obligations, liabilities, claims, demands, actions or causes of action,
costs, or expenses (including reasonable attorneys' fees) (collectively,
"Losses"), of any kind or nature, whether known or unknown, matured or unmatured
or otherwise, that could have been filed, brought, or asserted by Mr. Magee
prior to the date of this Agreement against any of the Released Parties.  The
foregoing release of claims, discharge, and covenant not to sue includes, but is
not limited to, the following: (i) any and all claims of age discrimination
under the Age Discrimination in Employment Act of 1967 (including, but not
limited to, the Older Workers Benefit Protection Act), (ii) any and all claims
under any state statutory or decisional law pertaining to termination of
employment, wrongful discharge, wage and hour, discrimination, retaliation,
infliction of emotional distress, breach of contract, breach of public policy,
misrepresentation, or defamation, (iii) any and all claims under Title VII of
the Civil Rights Act of 1964, the Federal Rehabilitation Act of 1973, the Family
and Medical Leave Act, the Employee Retirement Income Security Act of 1974, the
Fair Labor Standards Act, the Americans With Disabilities Act and any other
federal, state or local statute, law, rule, regulation, ordinance, common law or
other legal requirement, (iv) any and all claims that Mr. Magee has or may have
relating to his employment by the Bank or the Company prior to the date of this
Agreement and any and all matters, transactions and things occurring prior to
the date of this Agreement, and (v) any and all other tort or contract claims
and other theories of recovery (collectively, the "Releases").  The foregoing
Releases of claims, discharge and covenants not to sue by Mr. Magee do not apply
to Mr. Magee's right to enforce this Agreement against the Company and the
Bank.  The parties expressly understand and agree that the Releases contained in
this Agreement are to be construed as broadly as all applicable laws allow. 

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                        (b)        In consideration of Mr. Magee's performance
of this Agreement and of the mutual covenants and undertakings provided in this
Agreement, the Company and the Bank each agrees to forever release and discharge
Mr. Magee, his agents, and attorneys from any and all Losses of any kind or
nature, whether known or unknown, matured or unmatured or otherwise, arising out
of Mr. Magee's employment with the Bank or the Company prior to the date of this
Agreement and all other aspects of their relationship with Mr. Magee prior to
the date of this Agreement, with the exception of any claims arising as a result
of Mr. Magee's intentional or willful misconduct, gross negligence, or criminal
activity in the course of his employment with the Bank or the Company.

 

            9.         Consideration and Revocation Periods.  Mr. Magee has been
advised to seek legal advice from an attorney of his own choosing before signing
this Agreement. Mr. Magee acknowledges that he has twenty-one (21) days to
consider the Releases contained in Section 9 of this Agreement.  Mr. Magee also
acknowledges that he has seven (7) days from the date he signs this Agreement to
revoke the Releases (the "Revocation Period") and that this Agreement shall not
become effective or enforceable until after the Revocation Period expires.  Mr.
Magee expressly understands that no Compensation shall be paid if he timely
revokes this Agreement.  This Agreement shall become effective on the day
following the expiration of the Revocation Period (the "Effective Date").  If
Mr. Magee chooses to revoke this Agreement, then he must do so in writing by
delivering the revocation letter by the close of business on the last day of the
revocation period to Michael Wooldridge, Varnum LLP, 333 Bridge Street, NW,
Suite 1700, Grand Rapids, Michigan 49504.

 

            10.       Acknowledgement by Mr. Magee.  Mr. Magee represents that
he has carefully read and fully understands all the provisions of this
Agreement, including the Releases, has had ample and adequate opportunity to
thoroughly discuss all aspects of the Releases with legal counsel of his
choosing, is voluntarily entering into this Agreement, and that no
representations have been made other than those set forth explicitly in this
Agreement.  Mr. Magee acknowledges and agrees that he has not been represented
by or advised in any respect by the Company's legal counsel concerning this
Agreement.  Further, Mr. Magee understands and agrees that this Agreement shall
have no force or effect unless signed by him and not revoked prior to the
expiration of the Revocation Period.

 

            11.       Restrictive Covenants.  Mr. Magee understands and agrees
that a further material inducement for the Company and the Bank to enter into
this Agreement includes Mr. Magee's agreement to abide by certain restrictive
covenants set forth below.  The Company's and the Bank's respective obligations
owed to Mr. Magee under this Agreement are expressly conditioned upon his
compliance with these restrictive covenants.  In consideration of the provisions
of this Agreement, Mr. Magee agrees to the following:

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                        (a)        Agreement Not to Compete or Solicit.  During
the term of Mr. Magee's employment with the Bank or the Company and during the
Consulting Term, Mr. Magee agrees that he will not directly or indirectly become
employed by, serve as a director for, advise or consult with, finance, take an
ownership interest in, or otherwise work or perform services for, or assist any
entity or enterprise that is or is planning to become in competition with the
Company or the Bank anywhere within the State of Michigan.  In addition, during
the same period, Mr. Magee agrees that he will not directly or indirectly
solicit, induce, or attempt to induce any employee of the Company or the Bank to
leave his or her employment with the Company or the Bank.  It is the parties'
intent to make this restrictive covenant as broad as the law allows.  Nothing in
this Section 14(a) shall prohibit Mr. Magee from owning 1% or less of the voting
stock of any publicly traded entity.

  

                        (b)        Confidential Information.  During the term of
Mr. Magee's employment with the Bank or the Company, during the Consulting Term,
and thereafter, Mr. Magee shall not divulge or furnish any Confidential
Information (as defined below) to any person, firm, or corporation, other than
the Company or the Bank or any of their affiliates, or use any such Confidential
Information directly or indirectly for Mr. Magee's own benefit or for the
benefit of any person, firm or corporation other than the Company or the Bank or
any of their affiliates, since such Confidential Information is confidential and
shall at all times remain the property of the Company or the Bank or their
affiliates, as applicable.

 

                        (c)        Non-disparagement.  Mr. Magee shall not
publicly disparage or make or publish any negative statements or comments about
any of the Released Parties.

 

                        (d)       Independent Covenants.  The Company's or the
Bank's breach of any provision of this Agreement shall not serve as a release
from or as an excuse for Mr. Magee not to fully perform the restrictive
covenants set forth in this Section 14.

 

                        (e)        Blue Pencil.  To the extent a court of
competent jurisdiction determines any part of the foregoing restrictive
covenants is not enforceable, the parties agree that the court may apply the
"blue pencil" doctrine to reformat the restrictive covenants by reducing the
scope, duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.

 

            12.       Return of Company Property.  Mr. Magee covenants and
agrees that, as of the Separation Date, he shall return to the Company any
Confidential Information that is in his possession or control, or the location
of which he knows, and he shall return to the Company or the Bank, as
applicable, all equipment, computers, credit cards, keys, access cards,
passwords and other property of the Company or the Bank that are in his
possession or control, or the location of which he knows, and shall cease using
any of the foregoing, except (in each case) as the Company and Mr. Magee
mutually agree are necessary to provide the Services. 

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            13.       Definition of Confidential Information. The term
"Confidential Information" includes any non-public information pertaining to:

 

                        (a)        Inventions, trade secrets, business
information, data, formula, know-how, improvements, discoveries, developments,
and other works of authorship and techniques, whether conceived, created or
invented by Mr. Magee, and whether or not reduced to practice;

 

                        (b)        Nonpublic information regarding research,
development, new products and services, marketing and selling, business plans
and strategy, proposals, budgets, unpublished financial statements, licenses,
contracts, prices and costs, suppliers, customers, customer lists; and;

 

                        (c)        Nonpublic information regarding the skills
and compensation of other employees of the Company or the Bank.

 

            14.       Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, representatives,
successors, and assigns of the parties; provided, however, that Mr. Magee may
not assign this Agreement, in whole or in part, or delegate any of his duties
under this Agreement, whether voluntarily or by operation of law, without the
express written consent of the Company and the Bank.

 

            15.       Breach of Agreement.  In the event that Mr. Magee breaches
any of the provisions of this Agreement ("Consultant Breach"), the Company's
obligations with respect to the payments set forth in Section 4 of this
Agreement shall be deemed fully and finally discharged and will be of no further
force or effect.  The death or disability of Mr. Magee shall not be deemed an
automatic breach of this Agreement.  A breach of this Agreement by the Company
or the Bank does not excuse Mr. Magee from fully performing all of his
obligations pursuant to this Agreement.

 

            16.       Death or Disability.  If Mr. Magee becomes permanently
disabled during the Consulting Term, it is the Company's and the Bank's intent
to continue this Agreement in full force and effect, with the obligations of the
parties continuing for the balance of the Consulting Term.  If Mr. Magee dies
during the Consulting Term, then the Company shall pay (or cause the Bank to
pay) within three (3) months of his death, the remaining Compensation described
in Section 4, if any is due, to Mr. Magee's estate. 

 

            17.        Miscellaneous.  This Agreement constitutes the entire
agreement of the parties with respect to its subject matter and supersedes all
prior agreements and understandings, written or oral, among them with respect to
such subject matter.  This Agreement may be modified only by a written
instrument signed by all parties.  This Agreement shall not amend or affect any
written employee benefit plan of the Company or the Bank, and Mr. Magee's
benefits, if any, under such plans shall be governed by the terms of each plan
in which Mr. Magee is or was a participant.  No failure or delay by the Company
or the Bank in exercising any right or remedy under this Agreement shall operate
as a waiver of such right or remedy, nor shall any single or partial exercise of
any right or remedy preclude any other right or further exercise of any other
right or remedy.   This Agreement, including the Releases, shall be governed by,
construed, and enforced in accordance with the laws of the State of Michigan
without giving effect to the conflicts or choice of law provisions.  Any action
or proceeding seeking to enforce any provision of, or based upon any right
arising out of, this Agreement shall be brought against any of the parties in
the state or federal courts (Western District of the State of Michigan) of
Michigan.  This Agreement may be executed in one or more counterparts each of
which shall be deemed an original and all of which taken together shall
constitute one and the same agreement.

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            18.       Remedies.  Mr. Magee acknowledges and agrees that a breach
by him of any provision of this Agreement cannot be reasonably or adequately
compensated in damages in an action at law, and that the Company and the Bank
shall each be entitled to seek injunctive relief and any other remedies that may
be available at law or in equity, all of which remedies shall be cumulative and
in addition to any rights and remedies available by contract, law, rule,
regulation, or order, without any requirement to post a bond or other security
therefor.

 

            19.       Waivers and CPP Compliance/Recovery.  Notwithstanding
anything to the contrary in this Agreement or in any other agreement, plan,
program, or arrangement of the Company or the Bank, Mr. Magee agrees that he
shall not be entitled to receive any payments from the Company or the Bank that
would conflict with the terms of the Waivers or the SEO Agreement or would
otherwise violate the CPP Rules or any other compensation rules applicable to
the Company or the Bank (collectively, the "Restrictions").  In the event of a
determination by the Company's primary federal banking regulator, the U.S.
Department of the Treasury ("Treasury"), the U.S. Internal Revenue Service, or
any other applicable federal government agency or body (each a "Government
Agency") that any payments made or to be made to Mr. Magee under this Agreement
would conflict with or violate the Restrictions, the Company agrees to provide
prompt notice of such determination to Mr. Magee and to take reasonable steps to
promptly request approval from the applicable Government Agency to make such
payments to Mr. Magee in accordance with the Restrictions and/or to reasonably
seek a waiver from the applicable Government Agency that would permit such
payments to Mr. Magee if the determination is that the payment violates the
Restrictions.  Mr. Magee also agrees that, in the event that the Company is
obligated to pay, or has previously paid, any amount to him that is determined
by any applicable Government Agency to violate the terms of the Restrictions or
as to which the applicable Government Agency has not provided a waiver in
response to the Company's request, then (a) in the case of any unpaid
obligation, the Company shall cease to have an obligation to pay such amounts to
him and (b) in the case of previously paid amounts, to the extent required by
the applicable Government Agency, he shall be required to repay the gross amount
of any such compensation to the Company within ten (10) business days of
receiving written demand from the Company, or such shorter time period as may be
required by such Government Agency or under the Restrictions.  Subject to
compliance with the Restrictions, the Company agrees that in the event any
amounts to be paid to Mr. Magee under this Agreement pursuant to Section 4 have
not been fully paid to him (or have had to be repaid by him to the Company)
because of this Section 24, and as he explicitly agrees under such circumstances
to continue to fulfill his obligations under this Agreement, the Company agrees
that within ten (10) business days of the date on which the Restrictions no
longer prohibit such payment to Mr. Magee, the Company shall pay him in a lump
sum any such unpaid amounts; provided, however, that the parties agree that any
payments that are delayed beyond the timing specified in Section 4 are intended
to be made in compliance with Treasury Regulation Section 1.409A-2(b)(7)(ii) so
as to avoid the imposition of an additional tax under Section 409A of the
Internal Revenue Code.

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[Signature Page Follows]

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            IN WITNESS WHEREOF, the parties have caused this Consulting and
Transition Agreement to be executed as of the date first above written.

 

 

 

COMPANY:

Independent Bank Corporation

 

 

                                                           

By:

Its:

 

 

 

 

 

 

BANK:

Independent Bank

 

 

                                                           

By:

Its:

 

 

 

 

 

 

MAGEE:

 

 

                                                           

Michael M. Magee, Jr.

 

 

 

 

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