Document:

exv10w5

 

Exhibit 10.5

Monarch Community Bank

Employment Agreement

     THIS AGREEMENT entered into this September 2, 2003, by and between Monarch
Community Bank located at 375 North Willowbrook Road, Coldwater, Michigan 49036
(the “Bank”), and Charles B. Cook (“Executive”).

     WHEREAS, Executive has served in a position of substantial responsibility
with Marshall Savings Bank, F.S.B. (“Marshall”).

     WHEREAS, Monarch Community Bancorp, Inc. (the “Company”), the parent of
the Bank and MSB Financial, Inc., the parent of Marshall, have entered into an
Agreement and Plan of Merger dated September 2, 2003, pursuant to which MSB
Financial, Inc. and Marshall will merge with the Company and the Bank,
respectively, with the Company and the Bank as the surviving entities (the
“Merger”).

     WHEREAS, the Bank wishes to assure itself of the continued services of
Executive for the period provided in this Agreement; and

     WHEREAS, Executive is willing to serve in the employ of the Bank on a
full-time basis for the term of this Agreement; and

     WHEREAS, the parties desire by this writing to set forth the terms and
conditions of the continuing employment relationship of the Bank and Executive.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties
hereby agree as follows:

1. Employment. During the term of this Agreement, which is effective as of the
Effective Time as defined in the Agreement and Plan of Merger dated as of
September 2, 2003 by and between MSB Financial, Inc. and the Company (the
“Commencement Date”), Executive shall serve in the capacity of Vice President
and Division President of the Marshall Division of the Bank. Executive shall
render such administrative and management services to the Bank as are
customarily performed by persons situated in a similar executive capacity and
follow the policies of the Bank. Executive shall promote the business of the
Bank. Executive’s other duties shall be such as the Chief Executive Officer or
Board of Directors for the Bank (the “Board of Directors” or “Board”) may from
time to time reasonably direct, including normal duties as an officer of the
Bank.

2. Base Compensation. The Bank agrees to pay Executive during the Term of this
Agreement (as hereinafter defined in Section 5) a base salary at the rate of
$132,000 per annum, payable in accordance with the customary payroll practices
of the Bank.

 

 

3. Expenses. During the term of this Agreement, Executive shall be entitled to
receive prompt reimbursement of all reasonable expenses incurred (in accordance
with the policies and procedures of the Bank) in performing services under this
Agreement, provided that Executive properly accounts for expenses in accordance
with the policies of the Bank.

4. Employee Benefits.

     (a) Participation in Employee Benefit Plans. Executive shall be entitled,
while employed under the terms of this Agreement, to receive all benefits under
any employee benefit plan or arrangement in effect as of the date of this
Agreement or that the Bank implements at any time during the term of this
Agreement. Executive shall be entitled to participate in such future plans or
arrangements on the same terms as other employees of the Bank. In addition,
the Bank will, to the extent it maintains a health insurance plan which
provides for retiree coverage, provide Executive access to such health
insurance coverage, at Executive’s cost, until September 1, 2013.

     (b) Paid Leave Time. Executive shall be entitled to leave time in
accordance with the standard policies or practices of the Bank for senior
executive officers. Executive shall also be entitled to paid legal holidays in
accordance with the policies of the Bank.

     (c) Automobile. The Bank shall provide Executive with, and Executive
shall have the primary use of, an automobile owned or leased by the Bank and
the Bank shall pay (or reimburse Executive) for all expenses of insurance,
registration, operation and maintenance of the automobile during the term of
this Agreement. Executive shall comply with reasonable reporting and expense
limitations on the use of such automobile, as the Board of Directors may
establish from time to time, and the Bank shall annually include on Executive’s
Form W-2 any amount attributable to Executive’s personal use of such
automobile. Upon the expiration of the term of this Agreement, the Bank shall
award such automobile to Executive.

5. Term of Agreement. Executive’s employment under this Agreement shall be
deemed to have commenced as of the Commencement Date and shall continue for a
period of twelve (12) calendar months from the Commencement Date.

6. Noncompetition and Confidentiality.

     (a) Executive shall devote his full time and attention to the performance of
his duties under this Agreement. Upon any termination of Executive’s
employment hereunder pursuant to Sections 7(b) or (e) of this Agreement (other
than a termination which occurs after the effective date of a Change in
Control), Executive agrees not to compete with the Bank for a period of one (1)
year following such termination in any city, town or county in which
Executive’s normal business office is located or in which the Bank or its
affiliates has an office or has filed an application for regulatory approval to
establish an office, determined as of the effective date of such termination,
except as agreed to pursuant to a resolution duly adopted by the Board of
Directors. Executive agrees that during such period and within said cities,
towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business

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activities of the Bank. The parties hereto, recognizing that irreparable
injury will result to the Bank, and their business and property in the event of
Executive’s breach of this Section 6(a), agree that in the event of any such
breach by Executive, the Bank will be entitled, in addition to any other
remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive’s partners, agents, servants, employees and all
persons acting for or under the direction of Executive. Executive represents
and admits that in the event he terminates employment with the Bank pursuant to
Sections 7(b) or (e) of this Agreement, Executive’s experience and capabilities
are such that Executive can obtain employment in a business engaged in other
lines and/or of a different nature than the Bank, and that the enforcement of a
remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Bank from
pursuing any other remedies available to the Bank for breach or threatened
breach, including the recovery of damages from Executive.

     (b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank is a
valuable, special and unique asset of the business of the Bank. Executive will
not, during or after the term of his employment (regardless of the reason for
his termination of employment), disclose any knowledge of the past, present,
planned or considered business activities of the Bank to any person, firm,
corporation, or other entity for any reason or purpose whatsoever.
Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely
and exclusively derived from the business plans and activities of the Bank.
Further, Executive may disclose information regarding the business activities
of the Bank to the Office of Thrift Supervision (“OTS”) or other regulatory or
judicial body pursuant to a formal regulatory request or subpoena.

     (c) Nothing contained in this Section 6 shall be deemed to prevent or
limit the right of Executive to invest in any entity which conducts business
similar to that of the Bank, solely as a passive or minority investor.

7. Termination.

     Executive’s employment under this Agreement shall be terminated upon any
of the following occurrences:

     (a) Death. Executive’s employment under this Agreement shall terminate
upon his death. Executive’s estate shall be entitled to receive payments of
base salary for thirty (30) days following Executive’s death and any other
compensation accrued as of the date of his death.

     (b) Termination of Employment by the Board of Directors Without Cause. In
the event the Board of Directors terminates Executive’s employment without
“Cause” (as defined in Section 7(d)), Executive shall be entitled to:

	 	(i)	 	a payment equal to the remainder of the Base
Compensation due under this Agreement; and

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	 	(ii)	 	coverage under the Bank’s life, medical, health,
disability and dental plans (each being a “Welfare Plan”) in
the same manner in which Executive received coverage on the
last day of his employment with the Bank. Executive and his
covered dependents (if any) shall continue participating in
such Welfare Plans, subject to the same premium contributions
(if any) on the part of Executive as were required immediately
prior to his termination until the earlier of (i) his death
(ii) his employment by another employer other than one of
which he is the majority owner or (iii) the remaining term of
this Agreement. If the Bank does not offer the Welfare Plans
at any time after Executive’s termination under this Section
7, then the Bank shall provide Executive with a payment equal
to the premiums for such benefits for the period which runs
until the earlier of (i) his death (ii) his employment by
another employer other than one of which he is the majority
owner or (iii) the remaining term of this Agreement.

     (c) Disability. If, as a result of Executive’s incapacity due to physical
or mental illness rendering him unable to perform the duties required of him
under this Agreement for a period of 90 days in a 120-day period, and within
thirty (30) days after written notice of potential termination is given he
shall not have returned to the full-time performance of his duties, the Bank
may terminate Executive’s employment for “Disability.” The determination of
“incapacity due to physical or mental illness” shall be made by a medical board
certified physician mutually acceptable to the Bank and Executive (or
Executive’s legal representative, if one has been appointed), and if the
parties cannot mutually agree to the selection of a physician, then each party
shall select a physician and the two physicians selected shall select a third
physician who shall make this determination.

     (d) Termination of Employment by the Board of Directors for Cause. In the
event Executive’s employment is terminated for “Cause,” no continued payments
or benefits shall be due under this Agreement. For purposes of this Agreement,
termination for “Cause” shall be defined as termination due to Executive’s
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, or to
follow one or more specific written directives of the Board or the Chief
Executive Officer, reasonable in nature and scope, 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 (which is not curable within thirty (30) days after its occurrence
and notice to Executive). Any determination of “Cause” as defined by this
Section 7(d) shall be determined by a majority vote of the Board of Directors,
after reasonable written notice to Executive and the opportunity for Executive
to address the Board, in person and with the assistance of counsel, regarding
the matters specified in such written notice to Executive.

     (e) Termination by Executive.

	 	(i)	 	If this Agreement is terminated by Executive for “Good
Reason,” Executive shall be entitled to his Base Compensation
for the remainder of the term of this Agreement, if Executive
provides notice to the Chief

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	 		 	Executive Officer specifying the facts and circumstances surrounding his
belief that “Good Reason” exists and if those matters are not cured
within thirty (30) days from the date of notice. Such notice
shall be given as provided by Section 13 of this Agreement.

	 	(ii)	 	If this Agreement is terminated by Executive for
“Good Reason,” Executive shall be entitled to coverage under
the Bank’s Welfare Plans in the same manner in which Executive
received coverage on the last day of his employment with the
Bank. Executive and his covered dependents (if any) shall
continue participating in such Welfare Plans, subject to the
same premium contributions (if any) on the part of Executive
as were required immediately prior to his termination until
the earlier of (i) his death (ii) his employment by another
employer other than one of which he is the majority owner or
(iii) the remaining term of this Agreement. If the Bank does
not offer the Welfare Plans at any time after Executive’s
termination under this Section 7(d) of the Agreement, then the
Bank shall provide Executive with a payment equal to the
premiums for such benefits for the period which runs until the
earlier of (i) his death (ii) his employment by another
employer other than one of which he is the majority owner or
(iii) the remaining term of the Agreement.

	 	(iii)	 	For purposes of this Agreement, “Good Reason”
shall be limited to the occurrence of any of the following
events which have not been consented to in advance by
Executive in writing: (i) if Executive would be required to
move his personal residence or perform his principal executive
functions more than thirty-five (35) miles from Executive’s
primary office as of the Commencement Date; (ii) if, in the
organizational structure of the Bank, Executive would be
required to report to a person or persons other than the Chief
Executive Officer or the Board of Directors; (iii) if the Bank
should fail to maintain Executive’s base compensation in
effect pursuant to Section 2 of this Agreement, or fail to
maintain employee benefit plans or arrangements generally
comparable to those in place at the Commencement Date, except
to the extent that such reduction in compensation or benefit
programs is part of an overall adjustment in compensation and
benefits for all employees of the Bank; (iv) if Executive
would be assigned duties and responsibilities other than those
normally associated with his position as referenced in Section
1 of this Agreement; or (v) if, subsequent to a Change in
Control (as defined in Section 8 of this Agreement), Executive
elects to voluntarily terminate his employment with the Bank.
The preceding events shall only provide the basis for “Good
Reason” if Executive provides notice of them within one
hundred twenty (120) days of the occurrence.

	 	(iv)	 	If Executive terminates this Agreement, other than for
Good Reason, with the delivery of no less than 60 days
written notice to the Chief Executive Officer, such voluntary
termination entitles Executive to receive only the

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        base salary, vested rights, and all employee benefits
up to Executive’s termination date.

8. Change in Control.

     (a) For purposes of this Agreement, a Change in Control of the Bank shall
be deemed to have occurred if and when:

	 	(i)	 	there occurs a change in control of the Bank or
the Company within the meaning of the Home Owners Loan Act of
1933 or 12 C.F.R. Part 574 as applied to the Company as if it
were a federally chartered institution;

	 	(ii)	 	as a result of, or in connection with, any merger
or other business combination, sale of assets or contested
election, wherein the persons who were non-employee directors
of the Bank or the Company before such transaction or event
cease to constitute a majority of the Board of Directors of
the Bank or the Company or any successor to the Bank or the
Company;

	 	(iii)	 	the Bank or the Company transfers substantially
all of its assets to another corporation or entity which is
not an affiliate of the Bank or the Company; or

	 	(iv)	 	the Bank or the Company is merged or consolidated
with another corporation or entity and, as a result of such
merger or consolidation, less than sixty percent (60%) of the
equity interest in the surviving or resulting corporation is
owned by the former shareholders of the Bank or the Company.

     (b) Notwithstanding anything in this Agreement to the contrary, in the
event that the aggregate payments or benefits to be made or afforded to
Executive following his termination in connection with a Change in Control (as
set forth in Section 7(e) of this Agreement), together with any other payments
or benefits received or to be received by Executive in connection with a Change
in Control, would be deemed to include an “excess parachute payment” under
§280G of the Code, then, at the election of Executive, the payments or benefits
to be provided shall be reduced to the extent necessary to avoid treatment as
an excess parachute payment with the allocation of the reduction among such
payments and benefits to be determined by Executive; such that the total amount
of parachute payments do not exceed one dollar ($1.00) less than three (3)
times Executive’s “base amount” under §280G(b)(3) of the Code.

9. Successors and Assigns.

     (a) 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 of the Bank.

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     (b) Since the Bank is contracting for the unique and personal skills of
Executive, Executive shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written consent of the Bank.

10. Amendments. No amendments or additions to this Agreement shall be
binding upon the parties hereto unless made in writing and signed by both
parties, except as herein otherwise specifically provided.

11. Applicable Law. This Agreement shall be governed by all respects whether
as to validity, construction, capacity, performance or otherwise, by the laws
of the State of Michigan, except to the extent that Federal law shall be deemed
to apply.

12. 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.

13. Notices. Any notices, requests, demands and other communications provided
for or deemed necessary by this Agreement shall be sufficient if set forth in
writing and delivered in person or sent by registered or certified mail,
postage prepaid, to, in the case of Executive, the last address filed in
writing by Executive with the Bank, or, in the case of the Bank, to the Bank at
its main office to the attention of the Chief Executive Officer of the Bank.

14. Indemnification. The Bank shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors’ and
officers’ liability insurance policy at its expense, or in lieu thereof, shall
indemnify Executive (and his heirs, executors and administrators) to the
fullest extent permitted under law and applicable regulation against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been an officer of the Bank (whether or not he continues
to be an officer at the time of incurring such expenses or liabilities). Such
expenses and liabilities may include, but are not limited to, judgment, court
costs and attorneys’ fees and the cost of reasonable settlements. The Bank
shall pay such expenses and liabilities in advance of a final judicial decision
(hereinafter an “advancement of expenses”); provided, however, that an
advancement of expenses incurred by Executive in his capacity as an executive
officer of the Bank (and not in any other capacity in which service was or is
rendered by Executive including, without limitation, services to an employee
benefit plan) shall be made only upon delivery to the Bank of an undertaking,
by or on behalf of Executive, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal that Executive is not entitled to be indemnified for
such expenses under this Section 14 or otherwise.

15. Entire Agreement. This Agreement together with any understanding or
modifications thereof as may be agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.

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16. Required Regulatory Provisions.

     (a) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
§1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion:
(i) pay Executive 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.

     (b) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank’s affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
§1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.

     (c) All obligations under this contract shall be terminated, except to the
extent determined that continuation of the contract is necessary for the
continued operation of the Bank: (i) by the Director or his or her designee,
at the time the Federal Deposit Insurance Corporation enters into an agreement
to provide assistance to or on behalf of the Bank under the authority contained
in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director
or his or her designee at the time the Director or his or her designee approves
a supervisory merger to resolve problems related to the operation of the Bank
or when the Bank is determined by the Director 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.

     (d) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
Section 1828(k), 12 C.F.R. Part 359 and 12 C.F.R. Section 545.121 and any rules
and regulations promulgated thereunder.

17. Arbitration.

     (a) Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction; provided, however,
that Executive shall be entitled to seek specific performance of his right to
be paid until the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.

     (b) In the event any dispute or controversy arising under or in connection
with Executive’s termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay and benefits due Executive under this Agreement.

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     IN WITNESS WHEREOF, the parties have executed this Agreement, effective as
of the date first written above.

	 	 	 
	ATTEST:	 	
MONARCH COMMUNITY BANK

	 	 	 	 	 
	 	 	 	 	 
	 
	/s/ Andrew
J. Van Doren	 	
By:	 	/s/ John R. Schroll
	

Secretary	 	 	 	

For the Board of Directors

	 	 	 
	 	 	 
	 	 	 
	WITNESS:	 	
EXECUTIVE
	 	 	 
	 	 	 
	/s/ Alice A. Paulson	 	/s/ Charles B. Cook
	
	 	

	 	 	
Charles B. Cook

9exv10w6

 

Exhibit 10.6

September 2, 2003

Charles B. Cook

President and Chief Executive Officer

MSB Financial, Inc.

107 North Park Street

Marshall, Michigan 49068

Dear Mr. Cook:

     The purpose of this letter is to set forth our mutual understanding
regarding the termination of your existing employment with Marshall Savings
Bank, F.S.B. (“Marshall Savings”) and MSB Financial, Inc. (“MSB”) upon the
consummation of the merger of MSB and Monarch Community Bancorp, Inc. (“MCBF”).

     Immediately prior to the closing of the merger, your employment as
President and Chief Executive Officer of Marshall Savings and MSB will
terminate. In connection with the termination of your employment, you shall
receive a lump sum payment from Marshall Savings of $454,461 on the closing
date of the merger. If your employment is involuntarily terminated prior to the
closing of the merger, or if your employment terminates as a result of your
death or disability, and at such time the merger is still pending, you or your
estate or beneficiaries will receive such payment promptly after your
employment is terminated. Except for the foregoing payment and any payments to
which you are entitled under any qualified plan sponsored by MSB or Marshall
Savings, there shall be no other benefits or remuneration payable or owing to
you as a result of the termination of your employment.

     Notwithstanding the preceding paragraph, in the event that the payment to
be made to you under this letter agreement, together with any other payments or
benefits received or to be received by you in connection with the merger or
otherwise, would be deemed to include an “excess parachute payment” under
§ 280G of the Internal Revenue Code of 1986, as amended (the “Code”) as
determined by our independent auditors, then such payments shall be reduced
such that the present value of such payments is one dollar ($1.00) less than
three (3) times your “base amount” under § 280G(b)(3) of the Code. The
allocation of the reduction among all excess parachute payments shall be
determined in your discretion.

 

 

Mr. Charles B. Cook

September 2, 2003

Page 2

     By your acceptance and acknowledgment of this letter agreement, you
acknowledge and agree that, other than this letter agreement, you have no other
severance agreement, written or unwritten, with Marshall Savings or MSB or any
other written or unwritten agreement with Marshall Savings or MSB providing
similar payments or benefits.

     This letter agreement shall be binding upon MSB, Marshall Savings and
their successors and assigns and upon you and your heirs, executors,
administrators, successors, assigns and legal representatives.

	 	 	 
	 	 	
Sincerely,
	 	 	 
	 	 	 
	 	 	/s/ Karl F. Loomis

Name: Karl F. Loomis
	 	 	
Title: Director
	 	 	
MSB Financial, Inc.
	 	 	 
	 	 	 
	 	 	 
	 	 	/s/ Karl F. Loomis

Name: Karl F. Loomis
	 	 	
Title: Director
	 	 	
Marshall Savings Bank, F.S.B.

	 
	Accepted and Agreed:
	 
	 
	 
	/s/ Charles B. Cook

Charles B. Cook
	 
	 
	Monarch Community Bancorp, Inc.
	 
	 
	 
	/s/ John R. Schroll

John R. Schroll

President and Chief Executive Officer

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