Document:

Exhibit 10.11

 

Sterling Bank & Trust, Fsb

Executive Incentive Retirement Plan

 

STERLING BANK & TRUST, FSB 
 EXECUTIVE INCENTIVE RETIREMENT PLAN

 

THIS EXECUTIVE INCENTIVE RETIREMENT PLAN (the “Agreement”) is adopted this 8th day of May, 2007, by and between Sterling Bank & Trust, Fsb, headquartered in Southfield, Michigan, (the “Company”) and Steve Huber (the “Executive”), and is effective as of the 1st day of January, 2007.

 

The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development and future business success of the Company.  This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act (“ERISA”).

 

Article 1
 Definitions

 

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

 

1.1                               “Annual Crediting Rate” means eight percent (8%).

 

1.2                               “Beneficiary” means each designated person (in conformity with the Beneficiary Designation Form process detailed at Section 1.3 below), or the estate of a deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 5.

 

1.3                               “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more beneficiaries.  See for example, Exhibit A attached to this Agreement.

 

1.4                               “Board” means the Board of Directors of the Company as from time to time constituted.

 

1.5                               “Change of Control Event” shall have occurred upon (a) a Change of Ownership of the Company, (b) a Change in Effective Control of the Company, or (c) a Change in Ownership of a Substantial Portion of the Company; provided that, to constitute a Change of Control Event as to the Executive, the Change of Control Event must relate to: (i) the Company, (ii) the corporation(s) liable for the payment of deferred compensation to the participant, or (iii) a corporation that is a Majority Shareholder of a corporation identified in (i) or (ii), or any corporation in a chain of corporations in which each corporation is a Majority Shareholder of another corporation in the chain, ending in a corporation identified in (i) or (ii).  A transfer from an existing shareholder of the Company to a Disregarded Member as described in (d) below shall not constitute a Change in Control Event.

 

 

(a)                                 “Change in Effective Control” of the Company shall have occurred on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 35 percent or more of the total voting power of the stock of the Company.  However, if any one person, or more than one person acting as a group, is considered to effectively control the Company, the acquisition of additional control of the Company by the same person or group is not considered to cause a change in the effective control of the Company.

 

(b)                                 “Change in Ownership” of the Company shall have occurred on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of stock of the Company.  However, if any one person or more than one person acting as a group is considered to own more than 50 percent of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or group is not considered to cause a change in ownership of the Company.  For purposes of this definition, persons will not be considered to be acting as a group solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering; however, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.  If a person, including an entity, owns stock in both a corporation and the Company which enter into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, such shareholder is considered to be acting as a group with other shareholders in the Company and not with respect to the ownership interest in the other corporation.  An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as acquisition of stock for purposes of this definition.  However, if any one person, or more than one person acting as a group, is considered to effectively control the Company, the acquisition of additional control of the Company by the same person or group is not considered to cause a change in the ownership of the Company.

 

(c)                                  “Change in Ownership of a Substantial Portion” of the Company shall have occurred on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.  For purposes of this definition, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.  However, there is no Change in Ownership of a Substantial

 

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Portion of the Company when there is a transfer to an entity that is controlled by shareholders of the Company immediately after the transfer.  Moreover, a transfer of assets by the Company is not treated as a Change in Ownership of a Substantial Portion of the Company if the assets are transferred to: i) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock; ii) an entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the Company; iii) a person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the Company; or iv) an entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly by a person described in iii).

 

(d)                                 A Disregarded Member for purposes of a Change in Control Event shall be: (i) any parent, child spouse, or lineal descendant of a current shareholder of the Company; (ii) any affiliated entity created by a current shareholder of the Company in anticipation of their death, e.g., revocable or irrevocable trusts of which such shareholder is the grantor, and (iii) any person described in (d)(i) or (d)(ii) above that becomes a shareholder of the Company as a result of a transfer from a person described in (d)(i) or (d)(ii) above.  For purposes of the Definition of Disregarded Member, parent shall include step parent and child or grandchild shall include step child or grandchildren.

 

1.6                               “Code” means the Internal Revenue Code of 1986, as amended.

 

1.7                               “Compensation Committee” means the Board or such committee or persons as the Board shall appoint.

 

1.8                               “Contributions” means the amounts credited to the Incentive Award Account as set forth in Section 3.1.

 

1.9                               “Distribution Election Form” means the foul” established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate the time and form of distribution.  See for example, Exhibit B attached to this Agreement.

 

1.10                        “Effective Date” means January 1, 2007.

 

1.11                        “Early Termination” means Separation from Service before the Vesting Date except when such Separation from Service occurs: (i) following a Change in Control Event; or (ii) due to death, Permanent Disability, or Termination for Cause.

 

1.12                        “Incentive Award Account” means the Company’s accounting of the Contributions, plus accrued interest.

 

1.13                        “Majority Shareholder” means a shareholder of the Company owning greater than 50% of the total fair market value of the Company and/or greater than 50% of the total voting power of the Company.

 

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1.14                        “Monthly Crediting Rate” means the Annual Crediting Rate adjusted to take into account monthly compounding.

 

1.15                        “Normal Retirement Age” means the Executive attaining age sixty-five (65).

 

1.16                        “Permanent Disability” or “Disabled” means “Totally Disabled” within the meaning of such term as set forth in the Long-Term Disability Plan of the Company (the provisions of which are incorporated herein by reference).

 

1.17                        “Plan Administrator” means the plan administrator described in Article 8.

 

1.18                        “Plan Year” means each twelve-month period commencing on January 1 and ending on December 31 of each year.

 

1.19                        “Separation from Service” means the Executive’s ceasing to be an employee of the Company subject to the following qualification below:

 

Where the Executive continues to provide services to the Company in a capacity other than as an employee (for example, as a member of the Board), a Separation from Service will not be deemed to have occurred if the Executive is providing services at an annual rate that is 50 percent or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is 50 percent or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).  For this purpose, the annual rate of providing services is determined based upon the measurement used to determine the Executive’s base compensation (for example, amounts of time required to earn salary, hourly wages, or payments for specific projects).

 

1.20                        “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an established securities market or otherwise.

 

1.21                        “Termination for Cause” means a Separation from Service for:

 

(a)                                 Gross negligence or gross neglect of duties to the Company; or

 

(b)                                 Conviction of a felony; or, of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Company; or

 

(c)                                  Fraud, dishonesty or willful violation of any law or significant Company policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Company.

 

1.22                        “Vesting” means the process by which the Executive becomes entitled to distribution of the Incentive Award Account by virtue of the Executive having performed services for the Company during Plan Years, or upon the occurrence of a Change in Control Event of the Company each as appropriate.

 

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Article 2
 Company Contributions

 

For each Plan Year prior to Normal Retirement Age, the Company, upon recommendation of the Compensation Committee, shall determine the Incentive Award, if any, payable to the Executive during the following Plan Year.  The Incentive Award shall be based on the terms and conditions of the Incentive Compensation Plan.  For each month of the Plan Year, the Incentive Award Account shall be credited with a prorated portion of the Incentive Award declared during the prior Plan Year.

 

Article 3
 Incentive Award Account

 

3.1                               Establishing and Crediting.  The Company shall establish an Incentive Award Account on its books for the Executive and shall credit to the Incentive Award Account the following amounts:

 

(a)                                 Any Contributions hereunder; and

(b)                                 Prior to Normal Retirement Age, interest as follows:

 

(i)            Each month and immediately prior to the distribution of any benefits, but only until commencement of benefit distributions under this Agreement, interest shall be credited on the Incentive Award Account at a rate equal to the Monthly Crediting Rate; and

 

(ii)           Each month during any applicable installment period, interest shall be credited on the unpaid Incentive Award Account balance at the Monthly Crediting Rate.  Prior to the commencement of any distributions hereunder, the Board, in its sole discretion, may change the rate used to calculate interest in this Section 3.1(b)(ii).

 

3.2                               Accounting Device Only.  The Incentive Award Account is solely a device for measuring amounts to be paid under this Agreement.  The Incentive Award Account is not a trust fund of any kind.  The Executive is a general unsecured creditor of the Company for the distribution of benefits.  The benefits represent the mere Company promise to distribute such benefits.  The Executive’s rights are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive’s creditors.

 

3.3                               Vesting in Incentive Award Account.  The Executive shall become Vested in his or her Incentive Award Account in accordance with the vesting schedule described in Section 4.2.1.

 

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Article 4
 Distributions During Lifetime

 

4.1                               Benefit Upon Vesting.  Upon Separation from Service after having attained five (5) Plan Years of service, the Company shall distribute to the Executive the benefit described in this Section 4.1 in lieu of any other benefit under this Article.

 

4.1.1                     Amount of Benefit.  The benefit under this Section 4.1 is the Incentive Award Account balance at Separation from Service adjusted in accordance with Section 3.1(b)(i) as appropriate.

 

4.1.2                     Distribution of Benefit.  The Company shall distribute the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following Separation from Service.

 

4.2                               Early Termination Benefit.  Upon Separation from Service prior to having attained five (5) Plan Years of service, the Company shall distribute to the Executive the benefit described in this Section 4.2 in lieu of any other benefit under this Article.

 

4.2.1                     Amount of Benefit.  The benefit under this Section 4.2 is determined by vesting the Executive in twenty percent (20%) of the Incentive Award Account balance adjusted in accordance with Section 3.1(b)(i) as appropriate for the first Plan Year of service attained by the Executive, and an additional twenty percent (20%) of Incentive Award Account balance adjusted in accordance with Section 3.1(b)(i) as appropriate for each succeeding full Plan Year of service attained thereafter.

 

4.2.2                     Distribution of Benefit.  The Company shall distribute the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following Separation from Service.

 

4.3                               Change in Control Event Benefit.  Upon a Change in Control Event, the Company shall distribute to the Executive the benefit described in this Section 4.3 in lieu of any other benefit under this Article.

 

4.3.1                     Amount of Benefit.  The benefit under this Section 4.3 is the Incentive Award Account balance as of the date of the Change in Control Event adjusted in accordance with Section 3.1(b)(i) as appropriate.

 

4.3.2                     Distribution of Benefit.  The Company shall distribute the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following the occurrence of the Change in Control Event.

 

4.4                               Restriction on Timing of Distribution.  Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Company in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service.  Therefore, in the event this Section 4.4 is applicable to the Executive, any distribution

 

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which would otherwise be paid to the Executive within the first six months following the Separation from Service shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following the Separation from Service.  All subsequent distributions shall be paid in the manner specified.

 

4.5                               Distributions Upon Income Inclusion Under Section 409A of the Code.  Upon the inclusion of any portion of the Incentive Award Account balance into the Executive’s income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Incentive Award Account balance, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure.

 

4.6                               Change in Form or Timing of Distributions.  For distribution of benefits under this Article 4, the Executive may elect to delay the timing or change the form of distributions by submitting a Distribution Election Font.’ to the Plan Administrator.  Any such elections:

 

(a)                                 may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder;

(b)                                 must, for benefits distributable under Sections 4.1, 4.2, and 4.3, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made;

(c)                                  must take effect not less than twelve (12) months after the election is made; and

(d)                                 must be made twelve (12) months prior to the date the distributions are scheduled to be paid.

 

Article 5
 Distributions at Death

 

5.1                               Death During Active Service.  If the Executive dies while in active service to the Company, the Company shall distribute to the Beneficiary the benefit described in this Section 5.1.  This benefit shall be distributed in lieu of the benefits under Article 4.

 

5.1.1                     Amount of Benefit.  The benefit under this Section 5.1 is Five Hundred Ninety Nine Thousand One Hundred Fifty Three ($599,153.00).

 

5.1.2                     Distribution of Benefit.  The Company shall distribute the benefit to the Executive as elected by the Executive on the Distribution Election Form commencing within thirty (30) days following receipt by the Company of the Executive’s death certificate.

 

5.2                               Death During Distribution of a Benefit.  If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Company shall distribute to the Beneficiary the remaining benefits at

 

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the same time and in the same amounts that would have been distributed to the Executive had the Executive survived.

 

5.3                               Death After Separation from Service But Before Benefit Distributions Commence.  If the Executive is entitled to benefit distributions under this Agreement, but dies prior to the commencement of said benefit distributions, the Company shall distribute to the Beneficiary the same benefits and in the same manner that the Executive was entitled to prior to death except that the benefit distributions shall commence within ninety (90) days following the date of the Executive’s death.  Evidence of the Executive’s death shall be demonstrated by the receipt by the Company of the Executive’s death certificate.

 

Article 6
 Beneficiaries

 

6.1                               Beneficiary.  The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefits distributable under the Agreement to a Beneficiary upon the death of the Executive.  The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Company in which the Executive participates.

 

6.2                               Beneficiary Designation Change.  The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent.  The Executive’s beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.  The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time.  Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled.  The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

 

6.3                               Acknowledgment.  No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged by the Plan Administrator or its designated agent.

 

6.4                               No Beneficiary Designation.  If the Executive dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary.  If the Executive has no surviving spouse, the benefits shall be paid to the personal representative of the Executive’s estate.

 

6.5                               Facility of Distribution.  If the Plan Administrator determines in its discretion that a benefit is to be paid to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person.  The

 

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Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit.  Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement for such distribution amount.

 

Article 7
 General Limitations

 

7.1                               Termination for Cause.  Notwithstanding any provision of this Agreement to the contrary, the Company shall not distribute any benefit under this Agreement if the Executive’s employment with the Company is terminated due to a Termination for Cause.

 

7.2                               Misstatement.  Notwithstanding any provision of this Agreement to the contrary, the Company shall not distribute any benefit under this Agreement if an insurance company which issued a life insurance policy covering the Executive and owned by the Company denies coverage (i) for material misstatements of fact made by the Executive on an application for such life insurance, or (ii) for any other reason.

 

7.3                               Removal.  Notwithstanding any provision of this Agreement to the contrary, the Company shall not distribute any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

 

Article 8
 Administration of Agreement

 

8.1                               Plan Administrator Duties.  This Agreement shall be administered by a Plan Administrator which shall consist of the Board, or such committee or persons as the Board shall appoint.  The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority does not conflict with Section 409A of the Code and regulations thereunder.

 

8.2                               Agents.  In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Company.

 

8.3                               Binding Effect of Decisions.  The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.

 

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8.4                               Indemnity of Plan Administrator.  The Company shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.

 

8.5                               Company Information.  To enable the Plan Administrator to perform its functions, the Company shall supply full and timely information to the Plan Administrator on all matters relating to the compensation of the Executive, the date and circumstances of the Permanent Disability, death or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require:

 

8.6                               Statement of Accounts.  The Plan Administrator shall provide to the Executive, within one-hundred twenty (120) days after the end of each Plan Year, a statement setting forth the Incentive Award Account balance.

 

Article 9
 Claims and Review Procedures

 

9.1                               Claims Procedure.  The Executive or Beneficiary (“claimant”) who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows:

 

9.1.1                     Initiation — Written Claim.  The claimant initiates a claim by submitting to the Company a written claim for the benefits.  If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant.  All other claims must be made within one-hundred eighty (180) days of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the determination desired by the claimant.

 

9.1.2                     Timing of Company Response.  The Company shall respond to such claimant within ninety (90) days after receiving the claim.  If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.

 

9.1.3                     Notice of Decision.  Upon reaching a decision with respect to a claim, the Company shall notify the claimant in writing of such decision.  The Company shall write the notification in a manner calculated to be understood by the claimant.  The notification shall set forth:

 

(a)                                 The specific reasons for the denial or approval,

(b)                                 A reference to the specific provisions of this Agreement, on which the denial is based,

 

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(c)                                  A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

(d)                                 An explanation of the Agreement’s review procedures and the time limits applicable to such procedures, and

(e)                                  A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

 

9.2                               Review Procedure.  If the Company denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Company of the denial, as follows:

 

9.2.1                     Initiation — Written Request.  To initiate the review, the claimant, within sixty (60) days after receiving the Company’s notice of denial, must file with the Company a written request for review.

 

9.2.2                     Additional Submissions — Information Access.  The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim.  The Company shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

 

9.2.3                     Considerations on Review.  In considering the review, the Company shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

9.2.4                     Timing of Company Response.  The Company shall respond in writing to such claimant within sixty (60) days after receiving the request for review.  If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision.

 

9.2.5                     Notice of Decision.  The Company shall notify the claimant in writing of its decision on review.  The Company shall write the notification in a manner calculated to be understood by the claimant.  The notification shall set forth:

 

(a)                                 The specific reasons for the denial,

(b)                                 A reference to the specific provisions of this Agreement, on which the denial is based,

(c)                                  A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits, and

 

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(d)                                 A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

 

Article 10
 Amendments and Termination

 

10.1                        Amendments.  The Company may amend this Agreement unilaterally.  However, no amendment to the Agreement may be made by the Company after a Change in Control Event, unless approved by the Executive.

 

10.2                        Plan Termination Generally.  The Company may unilaterally terminate this Agreement at any time.  Except as provided in Section 10.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement.  Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.

 

10.3                        Plan Terminations Under Section 409A.  Notwithstanding anything to the contrary in Section 10.2, if this Agreement is terminated in the following circumstances:

 

(a)                                 Within thirty (30) days before, or twelve (12) months after the occurrence of a Change in Control Event, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Company’s arrangements which are substantially similar to the Agreement are terminated so the Executive and all participants in similar arrangements are required to receive all amounts of Compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;

(b)                                 Upon the Company’s dissolution pursuant to Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U. S. C. Section 503(b)(1)(A) provided that the amounts deferred under the Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

(c)                                  Upon the Company’s termination of this and all other account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Company does not adopt any new account balance plans for a minimum of five (5) years following the date of such termination;

 

the Company may distribute the Incentive Award Account balance, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms.

 

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Article 11
 Miscellaneous

 

11.1                        Binding Effect.  This Agreement shall bind the Executive and the Company and their beneficiaries, survivors, executors, administrators and transferees.

 

11.2                        No Guarantee of Employment.  This Agreement is not a contract for employment.  It does not give the Executive the right to remain as an employee of the Company, nor does it interfere with the Company’s right to discharge the Executive.  It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate employment at any time.

 

11.3                        Non-Transferability.  Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.

 

11.4                        Tax Withholding and Reporting.  The Company shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Section 409A of the Code and regulations thereunder, from the benefits provided under this Agreement.  Executive acknowledges that the Company’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority.  Further, the Company shall satisfy all applicable reporting requirements, including those under Section 409A of the Code and regulations thereunder.

 

11.5                        Applicable Law.  This Agreement and all rights hereunder shall be governed by the laws of the State of Michigan, except to the extent preempted by the laws of the United States of America.

 

11.6                        Unfunded Arrangement.  The Executive and the Beneficiary are general unsecured creditors of the Company for the distribution of benefits under this Agreement.  The benefits represent the mere promise by the Company to distribute such benefits.  The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive’s creditors.  Insurance on the Executive’s life which is used to pay benefits to the Executive in accordance with the teens of this Agreement (as for example, the benefit referred to in Section 5.1 above) or other informal funding asset is a general asset of the Company to which the Executive and the Beneficiary have no preferred or secured claim.

 

11.7                        Reorganization.  The Company shall not merge or consolidate into or with another Company, or reorganize, or sell substantially all of its assets to another bank, firm, or person unless such succeeding or continuing bank, firm, or person agrees to assume and discharge the obligations of the Company under this Agreement.  Upon the occurrence of such event, for purposes of payments due pursuant to this Agreement the term “Company” as used in this Agreement shall be deemed to refer to the successor or survivor Company.

 

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11.8                        Entire Agreement.  This Agreement constitutes the entire agreement between the Company and the Executive as to the subject matter hereof.  No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein.

 

11.9                        Interpretation.  Wherever the fulfillment of the intent and purpose of this Agreement requires, and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural

 

11.10                 Alternative Action.  In the event it shall become impossible for the Company or the Plan Administrator to perform any act required by this Agreement, the Company or Plan Administrator may in its discretion pertain’ such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Company, provided that such alternative acts do not violate Section 409A of the Code.

 

11.11                 Headings.  Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions.

 

11.12                 Validity.  In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.

 

11.13                 Notice.  Any notice or filing required or permitted to be given to the Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

 

STERLING BANK & TRUST

ONE TOWNE SQUARE

17TH FLOOR

SOUTHFIELD, MI 48076

 

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration or certification.  Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Executive.

 

11.14                 Compliance with Section 409A.  This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be promulgated after the Effective Date of this Agreement.

 

11.15                 Arbitration.  Executive agrees that if Executive has any dispute arising out of or in connection with any aspect of this Agreement, such dispute shall be exclusively subject to final and binding arbitration, pursuant to The Federal Arbitration Act, 9 U.S.C. § 1 et seq., and applicable state statutes relating to arbitration, under the national rules for resolution of employment disputes of the American Arbitration Association (“AAA”) or

 

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Judicial Arbitration and Mediation Inc., (“JAMS”), provided that all substantive rights and remedies (including any applicable damages provided under any pertinent statute(s) relating to such claims), the right to representation by counsel, a neutral arbitrator, a reasonable opportunity for discovery, a fair arbitral hearing, a written arbitral award containing findings of fact and conclusions of law, and any other provision required by law, shall be available in the AAA or JAMS forum.  Any decision of the neutral arbitrator shall be final and binding as to both parties and enforceable by any court of competent jurisdiction, including the circuit courts of the State of Michigan.  Executive agrees that submission of any such dispute to arbitration is a condition precedent to invoking the jurisdiction of any court over the subject matter of Executive’s dispute, except for any suit Executive may file in aid of arbitration.  Nothing contained in this arbitration provision shall prohibit Executive from filing any claims or charges with an appropriate governmental agency.  Executive understands that this Agreement constitutes a waiver of Executive’s right, if any, to adjudicate claims against the Company in a judicial forum.

 

IN WITNESS WHEREOF, the Executive and an authorized representative of the Company have signed this Agreement as of May 8, 2007.

 

	
EXECUTIVE:
    	
 
    	
COMPANY:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Sterling   Bank & Trust, Fsb
    
	
 
    	
 
    	
 
    	
 
    
	
/s/   Steve Huber
    	
 
    	
By:
    	
/s/   Tom Lopp
    
	
Steve   Huber
    	
 
    	
Title:
    	
COO
    

 

15Exhibit 10.12

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of  April 1, 2017 , between STERLING BANK AND TRUST, F.S.B., (the “Bank”), and its affiliated entities (collectively, the “Employer”) with their principal offices located at One Towne Square, 19th Floor, Southfield, MI 48076 and Peter Sinatra, who resides at                    (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Employer and the Executive desire to enter into an employment arrangement whereby the Executive will act as the Chief Executive Officer for Quantum Capital Management, LLC, (“Quantum”), a subsidiary of the Bank,

 

WHEREAS, the Employer has determined that it is in its best interests, and in the best interests of its shareholders to enter into this Agreement setting forth the obligations and duties of both the Employer and the Executive; and

 

WHEREAS, the Employer wishes to avail itself of the services of the Executive for the period hereinafter provided, and the Executive is willing to be employed by the Employer for said period, upon the terms and conditions provided in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Employer and the Executive (individually, a “Party” and together, the “Parties”) agree as follows:

 

1.                                      Employment.  The Employer hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Employer, on the terms and conditions set forth herein.

 

2.                                      Term.  Subject to the provisions for earlier termination as hereinafter provided, the term of this Agreement will begin on the date hereof and will continue until such time as either Party gives notice of its intent to terminate said Employment as provided under Paragraph 8 herein. Except as provided in paragraph 14 of this Agreement, which is mandated by Federal statute, this Agreement may be terminated as hereinafter provided. The Initial Term of Employment together with any renewal periods will hereinafter be referred to as the “Term of Employment.” The nonrenewal of the term of this Agreement by the Employer will not be a termination without Cause (as defined in Section 8(d)).

 

3.                                      Position and Duties; Place of Performance.

 

(a)                                 The Executive will serve as the Chief Executive Officer of Quantum Capital Management, LLC during the Term of Employment. He may serve the Employer under additional titles. The Executive will perform all duties customarily attendant to the position of Chief Executive Officer of Quantum and such other duties as may reasonably

 

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be assigned from time-to-time by the Company and Bank Board of Directors (the “Board”).

 

(b)                                 If the Employer fails, without the Executive’s consent, to cause the Executive to be elected to take a position with the Employer, the result of which is that the Executive will no longer remain in the position of Chief Executive Officer of Quantum in addition to such other position, then the Executive shall have the right to terminate his services to the Employer by giving written notice within thirty (30) days of such event; provided the Employer has not cured such event within such thirty (30) day period.

 

(c)                                  The Executive will use his best efforts to perform diligently such duties as are consistent with his capacity as Chief Executive Officer of Quantum or such other duties as the Board reasonably determines. The Executive will devote his fulltime to the performance of his responsibilities hereunder. The Executive may make personal investments or engage in other activities for any charitable or other non-profit institution, provided that such activities do not interfere with the performance of the Executive’s duties hereunder.

 

(d)                                 The objective of the Parties, in connection with the Executive’s employment, is for the Executive to utilize his professional time and efforts, to advance the goals set forth in Quantum’s business plan as approved by the Board and as may be amended by the Board from time to time.

 

4.                                      Base Salary.  The Executive will receive from Quantum an annual salary of Five Hundred Thousand Dollars ($500,000) (the “Base Salary”), payable in accordance with the standard practice of the Employer in the payment of salaries of its employees. The Board will review the Base Salary annually, and may, in its discretion, adjust the Base Salary.

 

5.                                      Annual Bonus.  The Executive may be paid a bonus of Two Hundred and Fifty Thousand Dollars ($250,000) annually based upon the attainment of mutually agreed upon objectives, to be determined by the Board. The Board will review the bonus annually, and may, in its discretion, increase the bonus amount.

 

6.                                      Other Benefits.  During the Term of Employment, the Executive will be eligible to participate in Employer provided plans, if any, such as medical, hospitalization, insurance, pension plan, profit sharing, stock ownership, the Quantum Equity Interest Plan, and employee benefits and such other similar employment privileges and benefits, including vacation benefits (“Benefits”) as are afforded generally from time to time to other executive employees of the Employer.

 

7.                                      Expense Reimbursement.  During the Term of Employment, the Executive will be entitled to prompt reimbursement by Quantum for all reasonable out-of-pocket expenses incurred by him in performing services under this Agreement, upon submission of such accounts and records as may be required under Employer policy. Executive shall also be reimbursed for dues related to membership in the Meadow Club, 101 Bolinas Road, Fairfax, CA 94930, and for the

 

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lease expense of an automobile similar in type to the automobile under lease at the time of this Agreement.

 

8.                                      Termination of Employment. The Executive’s employment may be terminated under the following circumstances:

 

(a)                                 This Agreement shall be reviewed annually by the Board of Directors of the Bank for approval to extend said Agreement for an additional year.

 

(b)                                 Death.  The Executive’s employment is terminated upon his death.

 

(c)                                  Disability.  The Executive’s employment may be terminated by the Employer due to illness or other physical or mental disability of the Executive, resulting in his inability to perform substantially his duties under this Agreement for a period of ninety (90) or more consecutive days or for one hundred eighty (180) days in the aggregate during any consecutive twelve (12) month period (“Disability”).

 

(d)                                 Mutual Agreement.  The Executive’s employment may be terminated at any time by the mutual agreement of the Parties.

 

(e)                                  Cause.  The Executive’s employment may be terminated for Cause. For purposes of this Agreement, the Employer shall have “Cause” to terminate the Executive’s employment upon:

 

(i)                                     the Executive’s commission of any crime involving monies or other property or any felony, crime or any offense of moral turpitude, or his fraud, embezzlement, theft, dishonesty, willful misconduct or deliberate injury to the Employer in the performance of his duties hereunder.

 

(ii)                                  the Executive’s intentional or grossly negligent refusal or failure to perform his duties or carry out reasonable directions of the Chief Executive Officer and/or the Board of Employer;

 

(iii)                               the Executive’s breach of any of his fiduciary duties or making of a willful misrepresentation or omission, which breach or misrepresentation or omission might reasonably be expected to have a material adverse effect on the Employer’s businesses;

 

(iv)                              the Executive’s breach of any material provision of this Agreement;

 

(v)                                 any misappropriation by the Executive of funds or property of the Employer; or

 

(vi)                              the Executive’s failure to perform his duties adequately as determined by the Chief Executive Officer and/or the Board of Employer.

 

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Any termination for “Cause” will not be in limitation of any other right or remedy the Employer may have under this Agreement or otherwise. In the event that the Executive’s employment is terminated for Cause, no amount shall be due to the Executive under this Agreement.

 

9.                                      Compensation Upon Termination Not For Cause.

 

(a)                                 If the Executive’s employment is terminated as a result of the Executive’s death, disability, or by mutual agreement, he, or his estate, will be entitled to:

 

(i)                                     any base salary earned but not yet paid;

 

(ii)                                  any bonus awarded pursuant to Section 5 of this Agreement but not yet paid;

 

(iii)                               reimbursement in accordance with this Agreement of any business expense incurred by the Executive but not yet paid; and

 

(iv)                              other benefits accrued and earned by the Executive through the date of his death or Disability in accordance with applicable plans and programs of the Employer.

 

(b)                                 If the Executive’s employment is terminated for Cause or expiration of the Term of Employment resulting from any of the Parties providing written notice of termination as provided in Section 2 hereof, he will remain subject to the covenants set forth in Section 10 hereof and he will be entitled to:

 

(i)                                     any base salary earned but not yet paid;

 

(ii)                                  any bonus awarded pursuant to Section 5 of this Agreement but not yet paid;

 

(iii)                               reimbursement in accordance with this Agreement of any business expense incurred by the Executive but not yet paid; and

 

(iv)                              other benefits accrued and earned by the Executive through the date of his termination in accordance with applicable plans and programs of the Bank.

 

(c)                                  If the Executive’s employment is terminated without Cause, he will remain subject to the covenants set forth in Section 10 hereof through the expiration of the Severance Period and he will be entitled to:

 

(i)                                     any base salary earned but not yet paid;

 

(ii)                                  continuation of his Base Salary, at the rate in effect on the date of his termination of employment for a period of one (1) year from the date of such termination (the “Severance Period”);

 

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(iii)                               any bonus awarded pursuant to Section 5 of this Agreement but not yet paid;

 

(iv)                              continued participation in all employee benefit plans or programs in which he was participating on the date of his termination of employment, until the expiration of the Severance Period;

 

(v)                                 reimbursement in accordance with this Agreement of any business expenses incurred by the Executive but not yet paid to him on the date of his termination of employment; and

 

(vi)                              other benefits that are made available to employees of the Employer in general in accordance with applicable plans and programs of the Employer until the expiration of the Severance Period.

 

In the event that, under the terms of any employee benefit plan referred to in subsection 9(c)(iv) above, the Executive may not continue his participation in any plan, said participation shall terminate at the effective date of Executive’s termination of employment.

 

(d)                                 Involuntary Termination Relating to a Change in Control.

 

(i)                                     In the event Executive’s employment is terminated on account of an involuntary termination following a Change in Control as defined in subsection (e) below within a ninety (90) day period following the date of a Change in Control, then Executive shall be entitled to the benefits provided in subsection (ii) of this Section 9(d).

 

(ii)                                  In the event an involuntary termination resulting from a Change of Control occurs, the Employer shall, provided that the Executive does not revoke any mutually executed release, cause for the Executive to be paid an amount that is 1.0 (one) times the sum of Executive’s Annual Base Salary in effect at the time of Executive’s termination paid in a single lump sum cash payment on the sixtieth (60th) day following Executive’s Termination Date

 

(e)                                  “Change in Control” means the Employer has undergone a change in ownership or effective control within the meaning of Section 409A(a)(2)(A)(v) of the Code and the applicable Treasury Regulations thereunder, in the form of one of the following events: (i) sale of all or substantially all of the assets of the Employer to a person or entity not affiliated with the Employer, (ii) sale of membership units (or stock) possessing fifty percent (50%) or more of the Employer’s voting power to a person or entity (or more than one person or entity acting as a group) not affiliated with the Employer; or (iii) merger or consolidation of the Employer with another entity not affiliated with the Employer where the Employer is not the surviving entity following the merger. For purposes of this Agreement, the Employer is “affiliated with” another person if such person is a member or officer of the Employer or a shareholder, officer or director in the Employer or any entity related to Employer. The Employer is “affiliated with” another entity if the majority of the then-issued stock or equity interests of such entity is held by persons or entities who are members of the Employer. Notwithstanding the

 

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foregoing provisions, a Change in Control shall not be deemed to occur in the event of any sale or other transaction between Employer’s shareholders and one or more affiliates of Mr. Scott Seligman or one or more members of Mr. Scott Seligman’s immediate family or any trust related to Scott Seligman or his immediate family members.

 

(f)                                   Any amounts due under this Section 9 are in the nature of severance payments or liquidated damages or both, and will fully compensate the Executive and his dependents or beneficiaries, as the case may be, for any and all direct damages and consequential damages that any of them may suffer as a result of termination of the Executive’s employment, and they are not in the nature of a penalty.

 

10.                               Confidentiality and Non-Competition.

 

(a)                                 The Executive acknowledges that he has had or will have unlimited access to the confidential information and business methods relating to the business and operations of the Employer and that those entities would be irreparably injured and their goodwill would be irreparably damaged if the Executive were to breach the covenants set forth in this Section 10. The Executive further acknowledges that the covenants set forth in this Section 10 are reasonable in scope and duration and do not unreasonably restrict the Executive’s association with other entities, either as an Executive or otherwise as set forth herein.

 

(b)                                 During the Term of Employment and thereafter, except as may be required by law or necessary in connection with any dealings with any public agency or authority, the Executive must not disclose, disseminate, divulge, discuss, copy or otherwise use or suffer to be used, in competition with, or in a manner harmful to the interests of, the Employer, any confidential information (written or oral) respecting any material aspect of Employer’s business, excepting only use of such data or information as is (i) at the time disclosed, through no act or failure to act on the part of the Executive, generally known or available; (ii) furnished to the Executive by a third party as a matter of right and without restriction on disclosure; or (iii) required to be disclosed by court order. Upon termination of the Term of Employment, the Executive shall return to the Employer any and all materials in tangible or electronic form containing confidential information belonging to the Employer.

 

(c)                                  During the Term of Employment and for one (1) year thereafter, the Executive must not in the states in which the Employer then regularly conducts business, directly or indirectly, whether as an individual on the Executive’s own account, or as a shareholder, partner, member, joint venturer, director, officer, employee, consultant, creditor and/or agent, of any person, firm or organization or otherwise:

 

(i)                                     employ, assist in employing or otherwise associate in business with any employee or officer of the Employer that is, or was during the twelve-month period immediately prior to the termination of the Executive’s employment, employed by the Employer, other than an employee or an officer who is a relative of the Executive by blood or marriage;

 

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(ii)                                  solicit or encourage any individual or entity that is, or was during the twelve-month period immediately prior to the termination of Executive’s employment with the Employer for any reason, a customer or vendor of the Employer to terminate or otherwise alter his, her or its relationship with the Employer; provided, however, that notwithstanding anything to the contrary, the parties agree that this Section 10 does not prohibit the Executive from pursuing or establishing a business relationship with any current or former customer or vendor of the Employer where such customer or vendor presents himself, herself or itself to Executive unsolicited by him;

 

(iii)                               induce any person who is a present or future employee, officer, agent, affiliate or customer of the Employer to terminate the relationship; or

 

(iv)                              engage in disparagement (which will not include the providing of accurate information without invidious intent) of the Employer by any means to any person.

 

11.                               Rights and Remedies Upon Breach.

 

(a)                                 The Executive expressly agrees and understands that the remedy at law for any breach by the Executive of Section 10 will be inadequate and that the damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, it is acknowledged that upon adequate proof of the Executive’s violation of Section 10, the Employer will be entitled, among other remedies, to injunctive relief and may obtain a temporary restraining order restraining any threatened or further breach. Nothing in this Section 11(a) will be deemed to limit the Employer’s remedies at law or in equity for any breach by the Executive of any of the provisions of this Agreement which may be pursued or availed of by the Employer.

 

(b)                                 In the event any arbitrator or court of competent jurisdiction determines that the specified time period or geographical area set forth in Section 10 is unreasonable, arbitrary or against public policy, then a lesser time period or geographical area that is determined by the court to be reasonable, non-arbitrary and not against public policy may be enforced.

 

(c)                                  In the event the Employer has asserted in a formal legal action, including arbitration, that the Executive is violating any legally enforceable provision of Section 10 as to which there is a specific time period during which the Executive is prohibited from taking certain actions or engaging in certain activities, then, in such event the violation will toll the running of the time period from the date of the assertion until the violation ceases.

 

12.                               Withholding Taxes.  All payments to the Executive or his beneficiary will be subject to withholding on account of federal, state and local taxes as required by law. If any payment hereunder is insufficient to provide the amount of such taxes required to be withheld, the Employer may withhold such taxes from any other payment due the Executive or his beneficiary.

 

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13.                               Assignability; Binding Nature.  This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Employer under this Agreement may be assigned or transferred except that such rights or obligations may be assigned or transferred pursuant to (i) a merger or consolidation in which the Employer is not the continuing entity or (ii) a sale or liquidation of all or substantially all of the assets of the Employer, provided that the assignee or transferee is the successor to all or substantially all of the assets of the Employer and such assignee or transferee assumes the liabilities, obligations and duties of the Employer, as contained in this Agreement, either contractually or as a matter of law. The Employer further agrees that, in the event of a sale of assets or liquidation as described in the preceding sentence, it will use its best efforts to cause such assignee or transferee to expressly assume the liabilities, obligations and duties of the Employer hereunder. No obligations of the Executive under this Agreement may be assigned or transferred by the Executive.

 

14.                               Bank Regulatory Requirements Compliance Terms.  Due to federal regulatory requirements binding upon the Employer, Parties hereby acknowledge and agree to the following statutorily mandated terms:

 

(a)                                 The Bank’s board of directors may terminate this Agreement at any time, but any termination by the Bank’s Board of Directors other than termination for cause, shall not prejudice the Executive’s right to compensation or other benefits under the agreement. The Executive shall have no right to receive compensation or other benefits for any period after termination for cause. Termination for cause shall include termination because of the officer or 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 the contract.

 

(b)                                 If the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served under section 8 (e) (3) or (g) (1) of Federal Deposit Insurance Act (12 U.S.C. 1818 (e) (3) and (g) (1)) the Bank’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may in its discretion (i) pay the Executive all or part of the compensation withheld while its Agreement obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

 

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

 

(d)                                 If the Employer is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under this Agreement shall terminate as of the

 

8

 

date of default, but this paragraph (b)(4) shall not affect any vested rights of the contracting parties.

 

(e)                                  All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Employer:

 

(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 association under the authority contained in 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 operation of the association or when the association 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.

 

15.                               Governing Law, Arbitration and Waiver of Jury Trial.  The Parties agree, to the extent permitted by law, that they EACH HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY, and agrees not to bring any claim, proceeding or action arising out of or related to this Agreement in any tribunal or court, except as necessary to enforce the provisions of Section 10 of this Agreement, mandate arbitration as provided in this section, or enforce an arbitration award rendered pursuant to this Agreement. Any and all disputes related to this Agreement or to the parties’ performance hereunder, including but not limited to any dispute alleging that this Agreement was obtained by misrepresentation or mistake, will be submitted for resolution into Arbitration with the American Arbitration Association (“AAA”), in San Francisco, California, to be conducted under then applicable commercial rules promulgated by the AAA. Notwithstanding the above, the Employer may seek injunctive relief in a California court of competent jurisdiction, to enjoin any breach or anticipatory breach of the Executive’s obligations as set forth in paragraphs 8 and 9 of this Agreement, pending the outcome of an Arbitration of their dispute. The parties further agree and acknowledge that the Executive is a resident of the State of California and that the Company is a resident of the State of Michigan for traditional jurisdiction and venue purposes, but they are nevertheless voluntarily agreeing to an arbitration venue and personal jurisdiction in the State of California for their mutual convenience. California law will be applied to the resolution of any dispute related to this Agreement.

 

16.                               Entire Agreement.  Except to the extent otherwise provided herein, this Agreement contains the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes any prior agreements, whether written or oral, between the Parties concerning the subject matter hereof.

 

17.                               Amendment or Waiver.  No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by both the Executive and an authorized officer of the Employer other than the Executive. No waiver by either Party of any breach by the

 

9

 

other Party of any condition or provision contained in this Agreement to be performed by such other Party will be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Employer, as the case may be.

 

18.                               Severability.  In the event that any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement will be unaffected thereby and will remain in full force and effect to the fullest extent permitted by law.

 

19.                               Survivorship.  The respective rights and obligations of the Parties hereunder will survive any termination of the Executive’s employment with the Employer to the extent necessary to the intended preservation of such rights and obligations as described in this Agreement.

 

20.                               Governing Law. This Agreement will be governed by and construed and interpreted in accordance with the laws of California, without reference to principles of conflict of laws.

 

21.                               Notices.  Any notice given to either Party must be in writing and will be deemed to have been given when delivered personally or one (1) day after having been sent by overnight courier service or five (5) days after having been sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned at the address indicated below or to such changed address as such Party may subsequently give such notice of:

 

	
If to the Employer:
    	
Sterling Bank & Trust, F.S.B.
    
	
 
    	
One Towne Square — 19th Floor
    
	
 
    	
Southfield, MI 48076
    
	
 
    	
Attn: General Counsel
    
	
 
    	
 
    
	
If to the Executive:
    	
Mr. Peter Sinatra
    

 

22.                               Headings.  The headings of the sections contained in this Agreement are for convenience only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement.

 

23.                               Counterparts.  This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date and year first above written.

 

	
 
    	
STERLING BANK & TRUST,   F.S.B.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ Gary S. Judd
    
	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
Gary S. Judd
    
	
 
    	
 
    	
 
    
	
 
    	
Its: 
    	
Chairman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE:
    
	
 
    	
 
    
	
 
    	
/s/ Peter Sinatra
    
	
 
    	
Peter Sinatra
    

 

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