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EXHIBIT 10.3(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this ______ day of __________, 1997, by
and between HCB Bancshares, Inc. (the "Company") and Xxxx X. Xxxxxxx (the
"Employee"), effective on the date (the "Effective Date") this agreement is
executed.
WHEREAS, the Employee has heretofore been employed by Heartland
Community Bank (the "Bank") as its President, is experienced in all phases of
the business of the Bank, and has become the President of the Company; and
WHEREAS, the Board of Directors (the "Board") of the Company believes
it is in the best interests of the Company to enter into this Agreement with
the Employee in order to assure continuity of management of the Bank and the
Company, and to reinforce and encourage the continued attention and dedication
of the Employee to her assigned duties; and
WHEREAS, the parties desire by this writing to set forth the
continuing employment relationship between the Company and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
When used anywhere in this Agreement, the following terms shall have
the meaning set forth herein.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Bank, as the terms are defined in Section 424(e) and (f),
respectively, of the Code.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any initial public
offering, tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, any combination of
the foregoing transactions, or any similar transaction, the persons
who were non-employee directors of the Company or the Bank before such
transaction cease to constitute a majority of the Board of Directors
of the Company or the Bank or any successor to the Company or the
Bank;
(ii) the Company or the Bank transfers substantially all of
its assets to another corporation which is not an Affiliate of the
Company;
(iii) the Company sells substantially all of the assets an
Affiliate which accounted for 50% or more of the controlled group's
assets immediately prior to such sale;
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(iv) any "person" including a "group" is or becomes the
"beneficial owner", directly or indirectly, of securities of the
Company or the Bank representing twenty-five percent (25%) or more of
the combined voting power of the Company or the Bank's outstanding
securities (with the terms in quotation marks having the meaning set
forth under the federal securities laws); or
(v) the Company or the Bank is merged or consolidated with
another corporation and, as a result of the merger or consolidation,
less than seventy percent (70%) of the outstanding voting securities
of the surviving or resulting corporation is owned in the aggregate by
the former stockholders of the Company or the Bank.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to occur solely by reason of a transaction in which the Bank converts to
the stock form of organization, or creates an independent holding company in
connection therewith.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move her personal residence, or perform her
principal executive functions, more than 30 miles from her primary office as of
the later of the Effective Date and the most recent voluntary relocation by the
Employee; (ii) a material reduction in the Employee's base compensation under
this Agreement as the same may be increased from time to time; (iii) the
failure by the Bank or the Company to continue to provide the Employee with
compensation and benefits provided under this Agreement as the same may be
increased from time to time, or with benefits substantially similar to those
provided to her under any of the employee benefit plans in which the Employee
now or hereafter becomes a participant, or the taking of any action by the Bank
or the Company which would directly or indirectly reduce any of such benefits
or deprive the Employee of any material fringe benefit enjoyed by her under
this Agreement; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with her
position; (v) a failure to reelect the Employee to the Board of Directors of
the Bank or the Company, if the Employee has served on such Board at any time
during the term of the Agreement; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with her employment with the Bank or the
Company; or (vii) a material reduction in the secretarial or other
administrative support of the Employee. In addition, "Good Reason" shall mean
an impairment of the Employee's health to the extent that it makes continued
performance of her duties hereunder hazardous to her physical or mental health.
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(f) "Just Cause" shall mean, in the good faith determination of
the Company's Board of Directors, the 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 this
Agreement. The Employee shall have no right to receive compensation or other
benefits for any period after termination for Just Cause. No act, or failure
to act, on the Employee's part shall be considered "willful" unless she has
acted, or failed to act, with an absence of good faith and without a reasonable
belief that her action or failure to act was in the best interest of the Bank
and the Company.
(g) "Protected Period" shall mean the period that begins on the
date of the Change in Control and ends on the first annual anniversary of the
Change in Control.
(h) "Trust" shall mean a grantor trust that is designed in
accordance with Revenue Procedure 92-64 and has a trustee independent of the
Bank and the Company.
2. Employment. The Employee is employed as the President of the
Company. The Employee shall render such administrative and management services
for the Company as are currently rendered and as are customarily performed by
persons situated in a similar executive capacity. The Employee shall also
promote, by entertainment or otherwise, as and to the extent permitted by law,
the business of the Company. The Employee's other duties shall be such as the
Board may from time to time reasonably direct, including normal duties as an
officer of the Company.
3. Consideration from Company: Joint and Several Liability. In
lieu of paying the Employee a base salary during the term of this Agreement,
the Company hereby agrees that to the extent permitted by law, it shall be
jointly and severally liable with the Bank for the payment of all amounts due
under the employment agreement between the Bank and the Employee. Nevertheless,
the Board may in its discretion at any time during the term of this Agreement
agree to pay the Employee a base salary for the remaining term of this
Agreement. If the Board agrees to pay such salary, the Board shall thereafter
review, not less often than annually, the rate of the Employee's salary, and in
its sole discretion may decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an
equitable manner with all other senior management employees of the Company in
discretionary bonuses that the Board may award from time to time to the
Company's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses. Notwithstanding the foregoing,
following a Change in Control, the Employee shall receive discretionary bonuses
that are made no less frequently than, and in amounts not less than, the
average annual discretionary bonuses paid to the Employee during each of the
three calendar years immediately preceding the year in which such Change in
Control occurs.
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5. Participation in Retirement, Medical and Other Plans
(a) During the term of this Agreement, the Employee shall be
eligible to participate in the following benefit plans: group hospitalization,
disability, health, dental, sick leave, life insurance, travel and/or accident
insurance, auto allowance/auto lease, retirement, pension, and/or other present
or future qualified plans provided by the Company, generally which benefits,
taken as a whole, must be at least as favorable as those in effect on the
Effective Date.
(b) The Employee shall be eligible to participate in any fringe
benefits which are or may become available to the Company's senior management
employees, including for example: any stock option or incentive compensation
plans, and any other benefits which are commensurate with the responsibilities
and functions to be performed by the Employee under this Agreement. The
Employee shall be reimbursed for all reasonable out-of-pocket business expenses
which she shall incur in connection with her services under this Agreement upon
substantiation of such expenses in accordance with the policies of the Company.
6. Term. The Company hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 36 months thereafter (or such
earlier date as is determined in accordance with Section 9). Additionally, on
each annual anniversary date from the Effective Date, the Employee's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided the Board determines in a duly adopted
resolution that the performance of the Employee has met the Board's
requirements and standards, and that this Agreement shall be extended. Only
those members of the Board of Directors who have no personal interest in this
Employment Agreement shall discuss and vote on the approval and subsequent
review of this Agreement.
7. Loyalty; Noncompetition.
(a) During the period of her employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all her full business time, attention, skill, and efforts
to the faithful performance of her duties hereunder; provided, however, from
time to time, the Employee may serve on the boards of directors of, and hold
any other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Company or any of its subsidiaries or
affiliates, or unfavorably affect the performance of the Employee's duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of her employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or
interests of the Company, or be gainfully employed in any other position or job
other than as provided above.
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(b) Nothing contained in this Paragraph 7 shall be deemed to
prevent or limit the Employee's right to invest in the capital stock or other
securities of any business dissimilar from that of the Company, or, solely as a
passive or minority investor, in any business.
8. Standards. The Employee shall perform her duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Company will provide Employee with the
working facilities and staff customary for similar executives and necessary for
her to perform her duties.
9. Vacation and Sick Leave. At such reasonable times as the
Board shall in its discretion permit, the Employee shall be entitled, without
loss of pay, to absent herself voluntarily from the performance of her
employment under this Agreement, all such voluntary absences to count as
vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Company.
(b) The Employee shall not receive any additional compensation
from the Company on account of her failure to take a vacation or sick leave,
and the Employee shall not accumulate unused vacation from one fiscal year to
the next, except in either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled, without loss of pay, to absent herself voluntarily from the
performance of her employment with the Company for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12
hereof, the Employee's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon her death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which her death
occurred.
(b) Disability. (1) The Company may terminate the Employee's
employment after having established the Employee's Disability. For purposes of
this Agreement, "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially
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perform her duties under this Agreement and which results in the Employee
becoming eligible for long-term disability benefits under the Company's
long-term disability plan (or, if the Company has no such plan in effect, which
impairs the Employee's ability to substantially perform her duties under this
Agreement for a period of 180 consecutive days). The Employee shall be
entitled to the compensation and benefits provided for under this Agreement for
(i) any period during the term of this Agreement and prior to the establishment
of the Employee's Disability during which the Employee is unable to work due to
the physical or mental infirmity, or (ii) any period of Disability which is
prior to the Employee's termination of employment pursuant to this Section
10(b); provided that any benefits paid pursuant to the Company's long-term
disability plan will continue as provided in such plan.
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically and
mentally able to do so, she shall furnish such information, assistance and
documents so as to assist in the continued ongoing business of the Company and,
if able, shall make herself available to the Company to undertake reasonable
assignments consistent with her prior position and her physical and mental
health. The Company shall pay all reasonable expenses incident to the
performance of any assignment given to the Employee during the disability
period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate her employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may, by
written notice to the Employee, immediately terminate her employment at any
time for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits (unless such
termination occurs during the Protected Period, in which event the benefits and
compensation provided for in Section 12 shall apply):
(i) the salary provided pursuant to Section 3 hereof, up
to the expiration date of this Agreement including any renewal term (the
"Expiration Date"), plus said salary for an additional 12-month period,
(ii) a put option meeting the requirements set forth in
subsection (f) hereof, provided that the Employee shall not be entitled to such
put option if, on the date the Employee terminates employment, either the
Employee does not own any common stock of the Bank or an affiliated company, or
such common stock is "readily tradeable" within the meaning of Code Section
401(a)(28)(C); and
(iii) at the Employee's election either (A) cash in an amount
equal to the cost to the Employee of obtaining all health, life, disability and
other benefits which the Employee would have been eligible to participate in
through the Expiration Date, based upon the benefit levels substantially equal
to those that the Company provided for the Employee at the date of termination
of employment or (B) continued participation under such Company benefit plans
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through the Expiration Date, but only to the extent the Employee continues to
qualify for participation therein. All amounts payable to the Employee shall
be paid, at the option of the Employee, either (I) in periodic payments through
the Expiration Date, or (II) in one lump sum within ten days of such
termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an event
that constitutes Good Reason, (unless such voluntary termination occurs during
the Protected Period, in which event the benefits and compensation provided for
in Section 12 shall apply).
(f) A put option deliverable to the Employee pursuant to this
Section 10(d) shall, at a minimum, obligate the Company and any successor to
purchase any shares of its common stock and the common stock of any affiliated
company that the Employee owns on the date of terminating employment. The
terms of such purchase shall be set forth in a written instrument prepared and
executed by the Company, and shall require that (i) the purchase price be no
less than the appraised value of such stock, determined in accordance with Code
Section 401(a)(28)(C) by an appraiser mutually agreed upon by the Employee and
the Company, as of the last day of the fiscal year in which the Employee's
employment terminates, and (ii) the Company make such payment as soon as
practicable after the Company receives said appraisal.
(g) Termination or Suspension Under Federal Law. Any payments
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.
(h) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the Company
during the term of this Agreement, upon at least 90 days' prior written notice
to the Board of Directors, in which case the Employee shall receive only her
compensation, vested rights and employee benefits up to the date of her
termination (unless such termination occurs pursuant to Section 10(d) hereof or
within the Protected Period, in Section 12(a) hereof, in which event the
benefits and compensation provided for in Sections 10(d) or 12, as applicable,
shall apply).
11. No Mitigation. The Employee shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Employee in any
subsequent employment.
12. Change in Control.
(a) Trigger Events. The Employee shall be entitled to
collect the severance benefits set forth in Subsection (b) hereof in lieu of
any benefits under Section 10 hereof in the event that (i) a Change in Control
occurs, or (ii) the Company or its successor(s) in interest
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terminate the Employee's employment without her written consent and for any
reason other than Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes
entitled to collect severance benefits pursuant to Section 12(a) hereof, the
Association shall:
(i) pay the Employee a severance benefit equal to the
difference between the Code Section 280G Maximum and the sum of any
other "parachute payments" as defined under Code Section 280G(b)(2)
that the Employee receives on account of the Change in Control.
(ii) provide such long-term disability insurance and medical
insurance benefits as are available to the Employee under the
provisions of COBRA, for 18 months (or such longer period, as may be
required thereunder).
Said sum shall be paid in one lump sum within ten days of the later of
the date of the Change in Control and the Employee's last day of employment
with the Bank or the Company, provided that the Employee may elect at any time
on or before becoming entitled to collect benefits hereunder, to have such
benefits paid in substantially equal installments over a period of up to 10
years. In the event that the Employee, the Bank, and the Company jointly agree
that the Employee has collected an amount exceeding the Code Section 280G
Maximum, the parties may agree in writing that such excess shall be treated as
a loan ab initio which the Employee shall repay to the Company, on terms and
conditions mutually agreeable to the parties, together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.
13. Indemnification. The Company agrees that its Bylaws shall
continue to provide for indemnification of directors, officers, employees and
agents of the Company, including the Employee, during the full term of this
Agreement, and to at all times provide adequate insurance for such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the
event that any dispute arises between the Employee and the Company as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to
defend against any action taken by the Company, the Employee shall be
reimbursed for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
obtains either a written settlement or a final judgement by a court of
competent jurisdiction substantially in his favor. Such reimbursement shall be
paid within ten days of Employee's furnishing to the Company written evidence,
which may be in the form, among other things, of a cancelled check or receipt,
of any costs or expenses incurred by the Employee.
15. Federal Income Tax Withholding. The Company may withhold all
federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or
ruling.
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16. Successors and Assigns.
(a) Company. This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.
(b) Employee. Since the Company is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating her rights or duties hereunder without first obtaining the
written consent of the Company; provided, however, that nothing in this
paragraph shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder upon her death, or (ii) the executors,
administrators, or other legal representatives of the Employee or her estate
from assigning any rights hereunder to the person or persons entitled
thereunto.
(c) Attachment. 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 exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement
shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal
law, the laws of the State of Arkansas shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.
19. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.
ATTEST: HCB BANCSHARES, INC.
By:
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Secretary Its Executive Vice President
WITNESS:
-------------------------- ---------------------------------------
Xxxx X. Xxxxxxx
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EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this ______ day of __________, 1997, by
and between HCB Bancshares, Inc. (the "Company") and Xxxxxxx X. XxXxxx (the
"Employee"), effective on the date (the "Effective Date") this agreement is
executed.
WHEREAS, the Employee has heretofore been employed by Heartland
Community Bank (the "Bank") as its Executive Vice President, is experienced in
all phases of the business of the Bank, and has become the Executive Vice
President of the Company; and
WHEREAS, the Board of Directors (the "Board") of the Company believes
it is in the best interests of the Company to enter into this Agreement with
the Employee in order to assure continuity of management of the Bank and the
Company, and to reinforce and encourage the continued attention and dedication
of the Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the
continuing employment relationship between the Company and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms
When used anywhere in this Agreement, the following terms shall have
the meaning set forth herein.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Bank, as the terms are defined in Section 424(e) and (f),
respectively, of the Code.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any initial public
offering, tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, any combination of
the foregoing transactions, or any similar transaction, the persons
who were non-employee directors of the Company or the Bank before such
transaction cease to constitute a majority of the Board of Directors
of the Company or the Bank or any successor to the Company or the
Bank;
(ii) the Company or the Bank transfers substantially all of
its assets to another corporation which is not an Affiliate of the
Company;
(iii) the Company sells substantially all of the assets an
Affiliate which accounted for 50% or more of the controlled group's
assets immediately prior to such sale;
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(iv) any "person" including a "group" is or becomes the
"beneficial owner", directly or indirectly, of securities of the
Company or the Bank representing twenty-five percent (25%) or more of
the combined voting power of the Company or the Bank's outstanding
securities (with the terms in quotation marks having the meaning set
forth under the federal securities laws); or
(v) the Company or the Bank is merged or consolidated with
another corporation and, as a result of the merger or consolidation,
less than seventy percent (70%) of the outstanding voting securities
of the surviving or resulting corporation is owned in the aggregate by
the former stockholders of the Company or the Bank.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to occur solely by reason of a transaction in which the Bank converts to
the stock form of organization, or creates an independent holding company in
connection therewith.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean product of 2.99 and
the Employee's "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than 30 miles from his primary office as of
the later of the Effective Date and the most recent voluntary relocation by the
Employee; (ii) a material reduction in the Employee's base compensation under
this Agreement as the same may be increased from time to time; (iii) the
failure by the Bank or the Company to continue to provide the Employee with
compensation and benefits provided under this Agreement as the same may be
increased from time to time, or with benefits substantially similar to those
provided to him under any of the employee benefit plans in which the Employee
now or hereafter becomes a participant, or the taking of any action by the Bank
or the Company which would directly or indirectly reduce any of such benefits
or deprive the Employee of any material fringe benefit enjoyed by him under
this Agreement; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position; (v) a failure to reelect the Employee to the Board of Directors of
the Bank or the Company, if the Employee has served on such Board at any time
during the term of the Agreement; (vi) a material diminution or reduction in
the Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Bank or the
Company; or (vii) a material reduction in the secretarial or other
administrative support of the Employee. In addition, "Good Reason" shall mean
an impairment of the Employee's health to the extent that it makes continued
performance of his duties hereunder hazardous to his physical or mental health.
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(f) "Just Cause" shall mean, in the good faith determination of
the Company's Board of Directors, the 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 this
Agreement. The Employee shall have no right to receive compensation or other
benefits for any period after termination for Just Cause. No act, or failure
to act, on the Employee's part shall be considered "willful" unless he has
acted, or failed to act, with an absence of good faith and without a reasonable
belief that his action or failure to act was in the best interest of the Bank
and the Company.
(h) "Protected Period" shall mean the period that begins on the
date one year before the Change in Control and ends on the closing date of the
Change in Control.
(h) "Trust" shall mean a grantor trust that is designed in
accordance with Revenue Procedure 92-64 and has a trustee independent of the
Bank and the Company.
2. Employment. The Employee is employed as the Executive Vice
President of the Company. The Employee shall render such administrative and
management services for the Company as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Employee shall also promote, by entertainment or otherwise, as and to the
extent permitted by law, the business of the Company. The Employee's other
duties shall be such as the Board may from time to time reasonably direct,
including normal duties as an officer of the Company.
3. Consideration from Company: Joint and Several Liability. In
lieu of paying the Employee a base salary during the term of this Agreement,
the Company hereby agrees that to the extent permitted by law, it shall be
jointly and severally liable with the Bank for the payment of all amounts due
under the employment agreement between the Bank and the Employee. Nevertheless,
the Board may in its discretion at any time during the term of this Agreement
agree to pay the Employee a base salary for the remaining term of this
Agreement. If the Board agrees to pay such salary, the Board shall thereafter
review, not less often than annually, the rate of the Employee's salary, and in
its sole discretion may decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an
equitable manner with all other senior management employees of the Company in
discretionary bonuses that the Board may award from time to time to the
Company's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses. Notwithstanding the foregoing,
following a Change in Control, the Employee shall receive discretionary bonuses
that are made no less frequently than, and in amounts not less than, the
average annual discretionary bonuses paid to the Employee during each of the
three calendar years immediately preceding the year in which such Change in
Control occurs.
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5. Participation in Retirement, Medical and Other Plans
(a) During the term of this Agreement, the Employee shall be
eligible to participate in the following benefit plans: group hospitalization,
disability, health, dental, sick leave, life insurance, travel and/or accident
insurance, auto allowance/auto lease, retirement, pension, and/or other present
or future qualified plans provided by the Company, generally which benefits,
taken as a whole, must be at least as favorable as those in effect on the
Effective Date.
(b) The Employee shall be eligible to participate in any fringe
benefits which are or may become available to the Company's senior management
employees, including for example: any stock option or incentive compensation
plans, and any other benefits which are commensurate with the responsibilities
and functions to be performed by the Employee under this Agreement. The
Employee shall be reimbursed for all reasonable out-of-pocket business expenses
which he shall incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with the policies of the Company.
6. Term. The Company hereby employs the Employee, and the
Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending 36 months thereafter (or such
earlier date as is determined in accordance with Section 9). Additionally, on
each annual anniversary date from the Effective Date, the Employee's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided the Board determines in a duly adopted
resolution that the performance of the Employee has met the Board's
requirements and standards, and that this Agreement shall be extended. Only
those members of the Board of Directors who have no personal interest in this
Employment Agreement shall discuss and vote on the approval and subsequent
review of this Agreement.
7. Loyalty; Noncompetition.
(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder; provided, however, from
time to time, the Employee may serve on the boards of directors of, and hold
any other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Company or any of its subsidiaries or
affiliates, or unfavorably affect the performance of the Employee's duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. "Full business time" is hereby defined as that amount of time
usually devoted to like companies by similarly situated executive officers.
During the term of his employment under this Agreement, the Employee shall not
engage in any business or activity contrary to the business affairs or
interests of the Company, or be gainfully employed in any other position or job
other than as provided above.
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(b) Nothing contained in this Paragraph 7 shall be deemed to
prevent or limit the Employee's right to invest in the capital stock or other
securities of any business dissimilar from that of the Company, or, solely as a
passive or minority investor, in any business.
8. Standards. The Employee shall perform his duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Company will provide Employee with the
working facilities and staff customary for similar executives and necessary for
him to perform his duties.
9. Vacation and Sick Leave. At such reasonable times as the
Board shall in its discretion permit, the Employee shall be entitled, without
loss of pay, to absent himself voluntarily from the performance of his
employment under this Agreement, all such voluntary absences to count as
vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Company.
(b) The Employee shall not receive any additional compensation
from the Company on account of his failure to take a vacation or sick leave,
and the Employee shall not accumulate unused vacation from one fiscal year to
the next, except in either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment with the Company for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave or
leaves of absence, with or without pay, at such time or times and upon such
terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board.
10. Termination and Termination Pay. Subject to Section 12
hereof, the Employee's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the
Employee through the last day of the calendar month in which his death
occurred.
(b) Disability. (1) The Company may terminate the Employee's
employment after having established the Employee's Disability. For purposes of
this Agreement, "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially
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perform his duties under this Agreement and which results in the Employee
becoming eligible for long-term disability benefits under the Company's
long-term disability plan (or, if the Company has no such plan in effect, which
impairs the Employee's ability to substantially perform his duties under this
Agreement for a period of 180 consecutive days). The Employee shall be
entitled to the compensation and benefits provided for under this Agreement for
(i) any period during the term of this Agreement and prior to the establishment
of the Employee's Disability during which the Employee is unable to work due to
the physical or mental infirmity, or (ii) any period of Disability which is
prior to the Employee's termination of employment pursuant to this Section
10(b); provided that any benefits paid pursuant to the Company's long-term
disability plan will continue as provided in such plan.
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be physically and
mentally able to do so, he shall furnish such information, assistance and
documents so as to assist in the continued ongoing business of the Company and,
if able, shall make himself available to the Company to undertake reasonable
assignments consistent with his prior position and his physical and mental
health. The Company shall pay all reasonable expenses incident to the
performance of any assignment given to the Employee during the disability
period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may, by
written notice to the Employee, immediately terminate his employment at any
time for a reason other than Just Cause, in which event the Employee shall be
entitled to receive the following compensation and benefits (unless such
termination occurs during the Protected Period, in which event the benefits and
compensation provided for in Section 12 shall apply):
(i) the salary provided pursuant to Section 3 hereof, up to
the expiration date of this Agreement including any renewal term (the
"Expiration Date"), plus said salary for an additional 12-month
period,
(ii) a put option meeting the requirements set forth in
subsection (f) hereof, provided that the Employee shall not be
entitled to such put option if, on the date the Employee terminates
employment, either the Employee does not own any common stock of the
Bank or an affiliated company, or such common stock is "readily
tradeable" within the meaning of Code Section 401(a)(28)(C); and
(iii) at the Employee's election either (A) cash in an amount
equal to the cost to the Employee of obtaining all health, life,
disability and other benefits which the Employee would have been
eligible to participate in through the Expiration Date, based upon the
benefit levels substantially equal to those that the Company provided
for the Employee at the date of termination of employment or (B)
continued participation under
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such Company benefit plans through the Expiration Date, but only to
the extent the Employee continues to qualify for participation
therein. All amounts payable to the Employee shall be paid, at the
option of the Employee, either (I) in periodic payments through the
Expiration Date, or (II) in one lump sum within ten days of such
termination.
(e) Good Reason. The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d) hereof in the event
that the Employee voluntarily terminates employment within 90 days of an event
that constitutes Good Reason, (unless such voluntary termination occurs during
the Protected Period, in which event the benefits and compensation provided for
in Section 12 shall apply).
(f) A put option deliverable to the Employee pursuant to this
Section 10(d) shall, at a minimum, obligate the Company and any successor to
purchase any shares of its common stock and the common stock of any affiliated
company that the Employee owns on the date of terminating employment. The
terms of such purchase shall be set forth in a written instrument prepared and
executed by the Company, and shall require that (i) the purchase price be no
less than the appraised value of such stock, determined in accordance with Code
Section 401(a)(28)(C) by an appraiser mutually agreed upon by the Employee and
the Company, as of the last day of the fiscal year in which the Employee's
employment terminates, and (ii) the Company make such payment as soon as
practicable after the Company receives said appraisal.
(g) Termination or Suspension Under Federal Law. Any payments
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.
(h) Voluntary Termination by Employee. Subject to Section 12
hereof, the Employee may voluntarily terminate employment with the Company
during the term of this Agreement, upon at least 90 days' prior written notice
to the Board of Directors, in which case the Employee shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination (unless such termination occurs pursuant to Section 10(d) hereof or
within the Protected Period, in Section 12(a) hereof, in which event the
benefits and compensation provided for in Sections 10(d) or 12, as applicable,
shall apply).
11. No Mitigation. The Employee shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise and no such payment shall be offset or reduced by the
amount of any compensation or benefits provided to the Employee in any
subsequent employment.
12. Change in Control.
(a) Trigger Events. The Employee shall be entitled to collect the
severance benefits set forth in Subsection (b) hereof in lieu of any benefits
under Section 10 hereof in the event that (i) a Change in Control occurs, or
(ii) the Company or its successor(s) in interest terminate the
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Employee's employment without her written consent and for any reason other than
Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled
to collect severance benefits pursuant to Section 12(a) hereof, the Company
shall (if not paid by the Bank pursuant to the employment agreement between the
Employee and the Bank):
(i) pay the Employee a severance benefit equal to the
difference between the Code Section 280G Maximum and the sum of any
other "parachute payments" as defined under Code Section 280G(b)(2)
that the Employee receives on account of the Change in Control.
(ii) provide such long-term disability insurance and medical
insurance benefits as are available to the Employee under the
provisions of COBRA, for 18 months (or such longer period, as may be
required thereunder).
Said sum shall be paid in one lump sum within ten days of the later of
the date of the Change in Control and the Employee's last day of employment
with the Bank or the Company, provided that the Employee may elect at any time
on or before becoming entitled to collect benefits hereunder, to have such
benefits paid in substantially equal installments over a period of up to 10
years. In the event that the Employee, the Bank, and the Company jointly agree
that the Employee has collected an amount exceeding the Code Section 280G
Maximum, the parties may agree in writing that such excess shall be treated as
a loan ab initio which the Employee shall repay to the Company, on terms and
conditions mutually agreeable to the parties, together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.
13. Indemnification. The Company agrees that its Bylaws shall
continue to provide for indemnification of directors, officers, employees and
agents of the Company, including the Employee, during the full term of this
Agreement, and to at all times provide adequate insurance for such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the
event that any dispute arises between the Employee and the Company as to the
terms or interpretation of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes to
defend against any action taken by the Company, the Employee shall be
reimbursed for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
obtains either a written settlement or a final judgement by a court of
competent jurisdiction substantially in his favor. Such reimbursement shall be
paid within ten days of Employee's furnishing to the Company written evidence,
which may be in the form, among other things, of a cancelled check or receipt,
of any costs or expenses incurred by the Employee.
15. Federal Income Tax Withholding. The Company may withhold all
federal and state income or other taxes from any benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or
ruling.
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16. Successors and Assigns.
(a) Company. This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.
(b) Employee. Since the Company is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the
written consent of the Company; provided, however, that nothing in this
paragraph shall preclude (i) the Employee from designating a beneficiary to
receive any benefit payable hereunder upon his death, or (ii) the executors,
administrators, or other legal representatives of the Employee or his estate
from assigning any rights hereunder to the person or persons entitled
thereunto.
(c) Attachment. 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 exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
17. Amendments. No amendments or additions to this Agreement
shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal
law, the laws of the State of Arkansas shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.
19. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.
ATTEST: HCB BANCSHARES, INC.
By:
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Secretary Its Chairman of the Board
WITNESS:
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Xxxxxxx X. XxXxxx
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