AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.5
AMENDED
AND RESTATED EMPLOYMENT
AGREEMENT
THIS
AMENDED AND RESTATED AGREEMENT (“Agreement”) is made effective as of January 1,
2008 (the “Effective Date”), by and between Flatbush Federal Savings & Loan
Association, a federally chartered savings association with its principal office
in Brooklyn, New York (the “Association”), and Xxxx X. Xxxxxxx
(“Executive”). References to the “Company” mean Flatbush Federal
Bancorp, Inc., the federal mid-tier stock holding company of the
Association. The Company shall be a signatory to this Agreement for
the sole purpose of guaranteeing the Association’s performance
hereunder.
WHEREAS, the Executive is
currently employed as Chief Financial Officer of the Association pursuant to an
employment agreement between the Association and the Executive originally
entered into as of January 1, 2004 (the “Employment Agreement”);
WHEREAS, the Association
desires to amend and restate the Employment Agreement in order to make changes
to comply with Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and the final regulations issued thereunder in April
2007;
WHEREAS, the Association
desires to ensure that the Association is assured of the continued availability
of the Executive’s services as provided in this Agreement; and
WHEREAS, the Executive is
willing to serve the Association on the terms and conditions hereinafter set
forth and has agreed to such changes.
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. POSITION
AND RESPONSIBILITIES.
During
the period of his employment hereunder, Executive agrees to serve as Chief
Financial Officer of the Association (the “Executive
Position”). During said period, Executive also agrees to serve, if
elected, as an officer and director of any subsidiary or affiliate of the
Association. Failure to reelect Executive to the Executive Position
without the consent of Executive during the term of this Agreement (except for
any termination for Cause, as defined herein) shall constitute a breach of this
Agreement.
2. TERM
AND DUTIES.
(a) The
period of Executive’s employment under this Agreement shall begin as of the date
first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter. Commencing on the first anniversary date
of this Agreement, and continuing at each anniversary date thereafter, the
Agreement shall renew for an additional year such that the remaining term shall
be thirty-six (36) full calendar months; provided, however, if written notice of
nonrenewal is provided to Executive at least ten (10) days and not more than
thirty (30) days prior to any anniversary date, the employment of Executive
hereunder shall cease at the end of thirty-six (36) months following such
anniversary date.
(b)
During the period of his employment hereunder, except for periods of absence
occasioned by illness, reasonable vacation periods, and reasonable leaves of
absence approved by the board of directors of the Association (“Board”),
Executive shall devote substantially all his business time, attention, skill,
and efforts to the faithful performance of his duties hereunder including
activities and services related to the organization, operation and management of
the Association; provided, however, that, with the approval of the Board of the
Association, as evidenced by a resolution of such Board, from time to time,
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, business companies or business
organizations, which, in such Board’s judgment, will not present any conflict of
interest with the Association, or materially affect the performance of
Executive’s duties pursuant to this Agreement (it being understood that
membership in and service on boards or committees of social, religious,
charitable or similar organizations does not require Board approval pursuant to
this Section 2(b)). For purposes of this Section 2(b), Board approval shall be
deemed provided as to service with any such business companies or organizations
that Executive was serving as of the date of this Agreement as set forth in
Exhibit A hereto.
3. COMPENSATION,
BENEFITS AND REIMBURSEMENT.
(a) The
compensation specified under this Agreement shall constitute the salary and
benefits paid for the duties described in Section 2(b). The
Association shall pay Executive as compensation a salary of not less than
$118,451.00 per year (“Base Salary”). Such Base Salary shall be
payable biweekly, or with such other frequency as officers and employees are
generally paid. During the period of this Agreement, Executive’s Base Salary
shall be reviewed at least annually. Such review may be conducted by a Committee
designated by the Board, and the Board may increase, but not decrease (except a
decrease that is generally applicable to all employees), Executive’s Base Salary
(any increase in Base Salary shall become the “Base Salary” for purposes of this
Agreement). In addition to the Base Salary provided in this
Section 3(a), the Association shall provide Executive at no cost to
Executive with all such other benefits as are provided uniformly to permanent
full-time employees of the Association. Base Salary shall include any
amounts of compensation deferred by Executive under qualified and nonqualified
plans maintained by the Association.
(b) The
Association will provide Executive with employee benefit plans, arrangements and
perquisites substantially equivalent to those in which Executive was
participating or otherwise deriving benefit from immediately prior to the
beginning of the term of this Agreement, and the Association will not, without
Executive’s prior written consent, make any changes in such plans, arrangements
or perquisites which would adversely affect Executive’s rights or benefits
thereunder, except as to any changes that are applicable to all participating
employees or as reasonably or customarily available. Without limiting
the generality of the foregoing provisions of this Subsection (b), Executive
will be entitled to participate in or receive benefits under any employee
benefit plans including, but not limited to, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, health-and-accident
insurance plans, family medical coverage or any other employee benefit plan or
arrangement made available by the Association or the Company in the future to
its senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive
compensation and bonuses as provided in any plan of the Association or the
Company in which
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Executive
is eligible to participate. Nothing paid to Executive under any such
plan or arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.
(c) In
addition to the Base Salary provided for by paragraph (a) of this Section 3, the
Association or the Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred by Executive performing his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time
determine. The Association shall reimburse Executive for his ordinary
and necessary business expenses, including, without limitation, fees for
memberships in such clubs and organizations as Executive and the Board shall
mutually agree are necessary and appropriate for business purposes, and travel
and entertainment expenses, incurred in connection with the performance of his
duties under this Agreement, upon presentation to the Association of an itemized
account of such expenses in such form as the Association may reasonably
require. All reimbursements pursuant to this Section 3(c) shall be
paid promptly by the Association and in any event no later than March 15 of the
year immediately following the year in which the expense was
incurred.
4. PAYMENTS
TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon
the occurrence of an Event of Termination (as herein defined) during Executive’s
term of employment under this Agreement, the provisions of this section shall
apply. As used in this Agreement, an “Event of Termination” shall mean and
include any one or more of the following: (i) the termination by the Association
of Executive’s full-time employment hereunder for any reason other than a
termination following a Change in Control, as defined in Section 5(a) hereof, or
a termination for Cause, as defined in Section 8 hereof, or a termination upon
Retirement as defined in Section 7 hereof, or a termination for disability as
set forth in Section 6 hereof; and (ii) Executive’s resignation from the
Association’s employ for “Good Reason.” Good Reason shall include any
of the following: (A) failure to elect or reelect or to appoint or reappoint
Executive to Executive Position, unless consented to by Executive, (B) a
material change in Executive’s function, duties, or responsibilities, which
change would cause Executive’s position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in
Sections 1 and 2 above, to which Executive has not agreed in writing (and
any such material change shall be deemed a continuing breach of this Agreement),
(C) a relocation of Executive’s principal place of employment to a location that
is more than 25 miles from the location of the Association’s principal executive
offices as of the date of this Agreement, or a material reduction in the
benefits and perquisites, including Base Salary, to Executive from those being
provided as of the effective date of this Agreement (except for any reduction
that is part of an employee-wide reduction in pay or benefits), (D) a
liquidation or dissolution of the Association, or (E) material breach of this
Agreement by the Association. Upon the occurrence of any event described in
clauses (ii) (A), (B), (C), (D) or (E) above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than thirty (30) days prior written notice given within a reasonable period
of time (not to exceed, except in case of a continuing breach, ) after the event
giving rise to said right to elect, which termination by Executive shall be an
Event of Termination. No payments or benefits shall be due to
Executive under this Agreement upon the termination of Executive’s employment
except as provided in Section 4 or 5 hereof.
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(b) Upon
the occurrence of an Event of Termination, the Association shall pay Executive,
or, in the event of his subsequent death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay or liquidated damages, or both,
a cash amount equal to three (3) times the sum of the highest annual rate of
Base Salary paid to Executive at any time under this Agreement and the highest
rate of cash bonus awarded to Executive during the prior three
years. Such amounts shall be paid to Executive in a single cash
lump sum distribution within thirty (30) days following Executive’s Event of
Termination.
(c) Upon
the occurrence of an Event of Termination, the Association will provide at the
Association’s expense, life insurance and non-taxable family medical and dental
coverage substantially comparable, as reasonably or customarily available, to
the coverage maintained by the Association for Executive prior to his
termination, except to the extent such coverage may be changed in its
application to all Association employees. Such coverage shall
continue for the remaining unexpired term of the Agreement.
(d) For
purposes of this Section 4, “Event of Termination” shall mean “Separation from
Service” as defined in Code Section 409A and the Treasury Regulations
promulgated thereunder, provided, however, that the Association and Executive
reasonably anticipate that the level of bona fide services Executive would
perform after termination would permanently decrease to a level that is less
than 50% of the average level of bona fide services performed (whether as an
employee or independent contractor) over the immediately preceding 36-month
period.
5. CHANGE
IN CONTROL.
(a)
“Change in Control” shall mean a change in control of a nature that: (i) would
be required to be reported in response to Item 1(a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a
Change in Control of the Association or the Company within the meaning of the
Home Owners’ Loan Act, as amended (“HOLA”), and applicable rules and regulations
promulgated thereunder, as in effect at the time of the Change in Control; or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (a) any “person” (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of Company’s
outstanding securities except for any securities purchased by the Association’s
employee stock ownership plan or trust; or (b) individuals who constitute the
Board on the date hereof (the “Incumbent Board”) cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company’s stockholders was approved by the
same Nominating Committee serving under an Incumbent Board, shall be, for
purposes of this clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Company or similar
transaction in which the Association or Company is not the surviving institution
occurs; or (d) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Company or similar transaction with one
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or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the Plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror. Notwithstanding anything in this sub-section to the
contrary, a Change in Control shall not be deemed to have occurred upon the
conversion of the Company’s mutual holding company parent to stock form, or in
connection with any reorganization used to effect such a
conversion.
(b) If
any of the events described in Section 5(a) hereof constituting a Change in
Control shall have occurred or the Board has determined that a Change in Control
has occurred, Executive shall be entitled to the benefits provided in paragraphs
(c) and (d) of this Section 5 upon his subsequent termination of employment
at any time during the term of this Agreement (regardless of whether such
termination results from his resignation or his dismissal), unless such
termination is (A) because of his death or Retirement, or, (B) for Disability.
Upon a Change in Control, and for a period of one year thereafter, Executive
shall have the right to elect to terminate his employment with the Association,
for any reason, and receive the benefits provided for in this Section
5.
(c) Upon
the occurrence of a Change in Control followed by the termination of Executive’s
employment by the Association for any reason other than Cause (including a
termination referred to in the last sentence of Section 5(b) above) Executive,
or, in the event of his subsequent death (subsequent to such termination), his
beneficiary or beneficiaries, or his estate, as the case may be, shall receive
as severance pay or liquidated damages, or both, an amount equal to three times
the sum of the highest annual rate of Base Salary and the highest rate of cash
bonus awarded to Executive during the prior three years. All amounts
payable to the Executive shall be paid in a single cash lump sum distribution
within thirty (30) days following such termination of Executive’s
employment.
(d) Upon
the occurrence of a Change in Control followed by the termination of Executive’s
employment, the Association will continue to provide, at the Association’s
expense, life insurance and non-taxable family medical and dental insurance
coverage substantially comparable, as reasonably or customarily available, to
the coverage maintained by the Association for Executive prior to his
severance. Such coverage shall cease thirty-six (36) months from the
date of Executive’s termination of employment (and shall be maintained by the
Association for said thirty-six months notwithstanding Executive’s death during
said period). In lieu of the benefits to be provided in this Section
5(d), the Association may elect to pay to the Executive, in a lump sum within
thirty (30) days following termination of employment subsequent to a Change in
Control, a cash amount equal to the cost to the Association of providing
benefits provided in this Section 5(d) and adjusted for any federal or state
income taxes Executive has to pay on the cash amount.
(e) For
purposes of this Section 5, “termination of Executive’s employment” as used
herein shall mean “Separation from Service” as defined in Code Section 409A and
the Treasury Regulations promulgated thereunder, provided, however, that the
Association and Executive reasonably anticipate that the level of bona fide
services Executive would perform after
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termination
would permanently decrease to a level that is less than 50% of the average level
of a bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period.
(f)
Notwithstanding anything in this Agreement to the contrary, in no event shall
the aggregate payments or benefits to be made or afforded to Executive under
this Section 5 constitute an “excess parachute payment” under Code Section 280G
or any successor thereto, and in order to avoid such a result, Executive’s
benefits hereunder shall be reduced, if necessary, to an amount, the value of
which is one dollar ($1.00) less than an amount equal to three (3) times
Executive’s “base amount,” as determined in accordance with Code Section
280G. The allocation of the reduction required hereby shall be
determined by Executive, provided, however, that if it is determined that such
election by Executive shall be in violation of Code Section 409A, the cash
severance payable pursuant to Section 5 hereof shall be reduced by the minimum
amount necessary to result in no portion of the payments and benefits payable by
the Association under Section 5 being non-deductible by the Association pursuant
to Code Section 280G and subject to an excise tax imposed under Code Section
4999.
6. TERMINATION FOR DISABILITY OR
DEATH.
(a)
“Disability” or “Disabled” shall be construed to comply with Code Section 409A
and shall be deemed to have occurred if: (i) Executive is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death, or last
for a continuous period of not less than 12 months; (ii) by reason of any
medically determinable physical or mental impairment that can be expected to
result in death, or last for a continuous period of not less than 12 months,
Executive is receiving income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Association or the Company; or (iii) Executive is determined to be totally
disabled by the Social Security Administration. The provisions of
paragraph 6(b) and (c) shall apply upon the termination Executive’s
employment for Disability.
(b) In
the event of Executive’s Disability, Executive shall receive a Disability
benefit equal to sixty percent (60%) of the Executive’s rate of Base Salary,
payable no less frequently than monthly, on the effective date the Executive is
determined to be Disabled under any plan of the Association or Company providing
Disability benefits to the Executive. If the Executive’s Disability
benefit is less than sixty percent (60%) of Executive’s rate of Base Salary on
the effective date the Executive is determined to be Disabled, the Association
will pay Executive the difference between sixty percent (60%) of the Executive’s
rate of Base Salary on the effective date the Executive is determined to be
Disabled and the amount actually paid under said Disability
plan. Notwithstanding anything to the contrary herein, no payments
shall be made hereunder which would violate Code Section
409A. Accordingly, any payments required hereunder shall commence
within thirty (30) days from the date of determination of Executive’s Disability
and shall be paid no less frequently than monthly during the period that
Executive is Disabled.
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(c) Executive
will be entitled to elect continued health care coverage during Disability, in
accordance with the requirements of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”).
(d) In
the event of Executive’s death during the term of this Agreement, the
Association will continue to provide non-taxable family medical, dental and
other non-taxable insurance benefits normally provided for Executive’s family
for one (1) year after Executive’s death.
7. TERMINATION
UPON RETIREMENT.
Termination
of Executive’s employment based on “Retirement” shall mean termination of
Executive’s employment at age 65 or in accordance with any retirement policy
established by the Board with Executive’s consent with respect to
him. Upon termination of Executive based on Retirement, no amounts or
benefits shall be due Executive under this Agreement, and Executive shall be
entitled to all benefits under any retirement plan of the Association and other
plans to which Executive is a party.
8. TERMINATION
FOR CAUSE.
The term
“Termination for Cause” shall mean termination because of Executive’s personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. Executive’s employment shall not be
terminated in accordance with this paragraph for any act or action or failure to
act which is undertaken or omitted in accordance with a resolution of the Board
or upon advice of the Association’s counsel. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the members of the Board at
a meeting of the Board called and held for that purpose (after reasonable notice
to Executive and an opportunity for him, together with counsel, to be heard
before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying Termination for Cause and specifying
the particulars thereof in detail. Executive shall not have the right
to receive compensation or other benefits for any period after Termination for
Cause. Any non-vested stock options granted to Executive under any
stock option plan of the Association, the Company or any subsidiary or affiliate
thereof, shall become null and void effective upon Executive’s receipt of Notice
of Termination for Cause pursuant to Section 9 hereof, and shall not be
exercisable by Executive at any time subsequent to such Termination for Cause
(unless it is determined in arbitration that grounds for Termination for Cause
did not exist, in which event all terms of the options as of the date of
termination shall apply, and any time periods for exercising such options shall
commence from the date of resolution in arbitration).
9. NOTICE.
(a) Any
purported termination by the Association for Cause shall be communicated by
Notice of Termination to Executive. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this
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Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive’s employment under the
provision so indicated. If, within thirty (30) days after any Notice
of Termination for Cause is given, Executive notifies the Association that a
dispute exists concerning the termination, the parties shall promptly proceed to
arbitration. Notwithstanding the pendency of any such dispute, the
Association may discontinue to pay Executive compensation until the dispute is
finally resolved in accordance with this Agreement. If it is
determined that Executive is entitled to compensation and benefits under Section
4 or 5 of this Agreement, the payment of such compensation and benefits by the
Association shall commence immediately following the date of resolution by
arbitration, with interest due Executive on the cash amount that would have been
paid pending arbitration (at the prime rate as published in The Wall Street Journal from
time to time).
(b) Any
other purported termination by the Association or by Executive shall be
communicated by a Notice of Termination to the other party. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in detail the facts and circumstances claimed to provide a basis
for termination of employment under the provision so indicated. “Date of
Termination” shall mean the date of the Notice of Termination. If,
within thirty (30) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the parties shall promptly proceed to
arbitration as provided in Section 19 of this
Agreement. Notwithstanding the pendency of any such dispute, the
Association shall continue to pay Executive his Base Salary, and other
compensation and benefits in effect when the notice giving rise to the dispute
was given (except as to termination of Executive for Cause). In the
event of the voluntary termination by Executive of his employment, which is
disputed by the Association, and if it is determined in arbitration that
Executive is not entitled to termination benefits pursuant to this Agreement, he
shall return all cash payments made to him pending resolution by arbitration,
with interest thereon at the prime rate as published in The Wall Street Journal from
time to time if it is determined in arbitration that Executive’s voluntary
termination of employment was not taken in good faith and not in the reasonable
belief that grounds existed for his voluntary termination.
10. NON-COMPETITION
AND POST-TERMINATION OBLIGATIONS.
(a) All
payments and benefits to Executive under this Agreement shall be subject to
Executive’s compliance with paragraph (b), (c) and (d) of this Section
10.
(b) For a
period for five (5) years after termination of this Agreement, Executive shall,
upon reasonable notice, furnish such information and assistance to the
Association as may reasonably be required by the Association in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
(c)
Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Association and affiliates
thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever (except for such
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disclosure
as may be required to be provided to the Office of Thrift Supervision (“OTS”),
the Federal Deposit Insurance Corporation (“FDIC”), or other bank regulatory
agency with jurisdiction over the Association or
Executive). 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 Association, and Executive may disclose any information
regarding the Association which is otherwise publicly available or which
Executive is otherwise legally required to disclose. In the event of
a breach or threatened breach by Executive of the provisions of this Section 10,
the Association will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Association or affiliates thereof, or from
rendering any services to any person, firm, corporation, other entity to whom
such knowledge, in whole or in part, has been disclosed or is threatened to be
disclosed. Nothing herein will be construed as prohibiting the
Association from pursuing any other remedies available to the Association for
such breach or threatened breach, including the recovery of damages from
Executive.
(d) Upon
any termination of Executive’s employment hereunder pursuant to Section 4
of this Agreement, Executive agrees not to compete with the Association for a
period of one (1) year following such termination in any city, town or
county in which the Association 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. 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 activities of
the Association. The parties hereto, recognizing that irreparable
injury will result to the Association, its business and property in the event of
Executive’s breach of this Section 10(d) agree that in the event of any such
breach by Executive, the Association 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, employers,
employees and all persons acting for or with Executive. Executive
represents and admits that 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 Association, 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
Association from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of damages from
Executive.
11. SOURCE
OF PAYMENTS.
All
payments provided in this Agreement shall be timely paid in cash or check from
the general funds of the Association. The Company, however,
guarantees payment and provision of all amounts and benefits due hereunder to
Executive, and if such amounts and benefits due from the Association are not
timely paid or provided by the Association, such amounts and benefits shall be
paid or provided by the Company.
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12. EFFECT
ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This
Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO
ATTACHMENT; BINDING ON SUCCESSORS.
(a)
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.
(b) This
Agreement shall be binding upon, and inure to the benefit of, Executive and the
Association and their respective successors and assigns.
14. MODIFICATION
AND WAIVER.
(a) This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b) No
term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future as to any act other than that
specifically waived.
15. REQUIRED
PROVISIONS.
(a) The
Association may terminate Executive’s employment at any time, but any
termination by the Association’s Board, other than Termination for Cause, as
defined in Section 8 hereof shall not prejudice Executive’s right to
compensation or other benefits under this Agreement. Executive shall
have no right to receive compensation or other benefits for any period after
Termination for Cause.
(b) If
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Association’s affairs by a notice served
under Section 8(e)(3) (12 U.S.C. §1818(e)(3)) or 8(g)(1) (12 U.S.C. §1818(g)(1))
of the Federal Deposit Insurance Act, the Association’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 Association 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.
10
(c) If
Executive is removed and/or permanently prohibited from participating in the
conduct of the Association’s affairs by an order issued under Section 8(e)(4)
(12 U.S.C. §1818(e)(4)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of the Federal
Deposit Insurance Act, all obligations of the Association 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 Association is in default as defined in Section 3(x)(1) (12 U.S.C.
§1813(x)(1)) of the Federal Deposit Insurance Act, all obligations of the
Association under this Agreement shall terminate as of the date of default, but
this paragraph 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 Association, (i) by the director of the OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Association under the authority contained in Section 13(c)
(12 USC §1823(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.
(f)
Notwithstanding anything herein contained to the contrary, any payments to
Executive by the Company, whether pursuant to this Agreement or otherwise, are
subject to and conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the
regulations promulgated thereunder in 12 C.F.R. Part 359.
(g)
Notwithstanding the foregoing, in the event Executive is a Specified Employee
(as defined herein), then, solely, to the extent required to avoid penalties
under Code Section 409A, Executive’s payments shall be delayed until the first
day of the seventh month following Executive’s “Separation from Service” as
defined in Code Section 409A and the Treasury Regulations promulgated
thereunder. A “Specified Employee” shall be interpreted to comply
with Code Section 409A and shall mean a key employee within the meaning of Code
Section 416(i) (without regard to paragraph 5 thereof), but an individual shall
be a “Specified Employee” only if the Association or the Company is or becomes a
publicly traded company.
16. SEVERABILITY.
If, for
any reason, any provision of this Agreement, or any part of any provision, is
held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such other
provision and part thereof shall to the full extent consistent with law continue
in full force and effect.
17. HEADINGS
FOR REFERENCE ONLY.
The
headings of sections and paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
11
18. GOVERNING
LAW.
This
Agreement shall be governed by the laws of the State of New York but only to the
extent not superseded by federal law.
19. ARBITRATION.
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 the employee within twenty-five
miles of Brooklyn, New York, 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.
20. PAYMENT
OF LEGAL FEES.
All
reasonable legal fees paid or incurred by Executive pursuant to any dispute or
question of interpretation relating to this Agreement shall be paid or
reimbursed by the Association, provided that the dispute or interpretation has
been settled by Executive and the Association or resolved in Executive’s
favor. Such reimbursement shall occur no later than two and one-half
(2 ½) months after the dispute is settled or resolved in Executive’s
favor.
21. INDEMNIFICATION.
(a) The
Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors’ and officers’
liability insurance policy at its expense, and shall indemnify Executive (and
his heirs, executors and administrators) to the fullest extent permitted under
Delaware law 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 a director or officer of the
Association or the Company (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys’ fees and the cost of reasonable settlements (such settlements must be
approved by the Board or the board of directors of the Company, as appropriate),
provided, however, neither the Association nor Company shall be required to
indemnify or reimburse Executive for legal expenses or liabilities incurred in
connection with an action, suit or proceeding arising from any illegal or
fraudulent act committed by Executive. Any such indemnification shall
be made consistent with Section 545.121 of the OTS Regulations.
(b) Notwithstanding
the above, no indemnification shall be made unless the Association gives the OTS
at least 60 days notice of its intention to make such
indemnification. Such notice shall state the facts on which the
action arose, the terms of any settlement, and any disposition of the action by
a court. Such notice, a copy thereof, and a certified copy
of the resolution containing the required determination by the Board shall be
sent to the Regional Director of the OTS. The notice period shall run
from the date of such receipt. No such indemnification
shall
12
be made
if the OTS advises the Association in writing within such notice period of its
objection thereto.
22. NOTICE.
For the
purposes of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below:
|
To
the Company:
|
Flatbush
Federal Bancorp, Inc.
0000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
|
|
To
the Association:
|
Flatbush
Federal Savings & Loan Association
0000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
|
|
To
Executive:
|
Xx.
Xxxx X. Xxxxxxx
0000
Xxxxxxxx Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000
|
13
SIGNATURES
IN WITNESS WHEREOF, the
Company and the Association have caused this Agreement to be executed by their
duly authorized officers, and Executive has signed this Agreement, on the day
and date first above written. The Company has become a party to this
Agreement for the sole purpose of binding itself to the duties and obligations
set forth in Sections 11 and 21 hereof.
|
ATTEST:
|
FLATBUSH
FEDERAL BANCORP, INC.
|
||
|
/s/
Xxxxxxxx X. XxXxxxxx
|
By:
|
/s/
Xxxxx X. Xxxx
|
|
|
Secretary
|
|||
|
ATTEST:
|
FLATBUSH
FEDERAL SAVINGS & LOAN ASSOCIATION
|
||
|
/s/
Xxxxxxxx X. XxXxxxxx
|
By:
|
/s/
Xxxxx X. Xxxx
|
|
|
Secretary
|
|||
|
WITNESS:
|
EXECUTIVE:
|
||
|
/s/
Xxxxxxxx X. XxXxxxxx
|
/s/
Xxxx Xxxxxxx
|
||
|
Secretary
|
Xxxx
Xxxxxxx
|
||
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