EXHIBIT 10.12
-------------
XXXXXX X. XXXX
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 4, 1998, among COASTAL SAVINGS BANK
(the "Bank"), FIRST COASTAL CORPORATION (the "Company") and XXXXXX X. XXXX (the
"Employee").
WHEREAS, the respective Boards of Directors of the Company and the
Bank have approved and authorized the entry into this Agreement with the
Employee;
WHEREAS, the Employee is currently serving as Treasurer of both the
Company and the Bank;
WHEREAS, the parties have entered into an Employment Agreement dated
as of July 31, 1996 (the "Prior Agreement");
WHEREAS, the parties desire to enter into this Agreement to set forth
the terms and conditions for the employment relationships of the Employee with
the Company and the Bank and to replace and supersede the Prior Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. EMPLOYMENT. The Prior Agreement is hereby replaced and superseded
----------
and the Prior Agreement shall be of no further force or effect after the date of
this Agreement. The Employee is employed as Treasurer of both the Company and
the Bank from the date hereof through the term of this Agreement. As an
executive of the Company and of the Bank, the Employee shall render executive,
policy, and other management services to the Company and the Bank of the type
customarily performed by persons serving in similar executive officer
capacities. The Employee shall also perform such duties as the Chief Executive
Officer and the Boards of Directors of the Company and of the Bank may from time
to time reasonably direct. During the term of this Agreement, there shall be no
material increase or decrease in the duties and responsibilities of the Employee
otherwise than as provided herein, unless the parties otherwise agree in
writing.
2. SALARY. The Bank agrees to pay the Employee during the term of
------
this Agreement a base salary as follows: from the date hereof through December
31, 1998, a salary at an annual rate equal to $96,533, which may be increased in
January of each year during the term of this Agreement as determined by the
Boards of Directors of the Company and the Bank. In determining salary
increases, the Board of Directors may compensate the Employee for increases in
the cost of living and may also provide for performance or merit increases. The
salary of the Employee shall not be decreased at any time during the term of
this Agreement from the amount then in effect, unless the Employee otherwise
agrees in writing. The salary under this Section 2 shall be payable by the Bank
to the Employee not less frequently than monthly. The Company shall
reimburse the Bank for a portion of the salary paid to the Employee hereunder,
which portion shall represent an appropriate allocation for the services
rendered to the Company hereunder. The Employee shall not be entitled to receive
fees for serving as a director of the Company or of the Bank or for serving as a
member of any committee of the Board of Directors of the Company or of the Bank.
3. DISCRETIONARY BONUSES. In addition to his salary under Section 2
---------------------
hereof, the Employee shall be eligible to receive such discretionary bonuses as
may be authorized, declared, and paid by the Board of Directors of the Company
or of the Bank. No other compensation provided for in this Agreement shall be
deemed a substitute for such bonuses when and as declared by the Board of
Directors of the Company or the Bank.
4. PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS; FRINGE
--------------------------------------------------------------
BENEFITS. The Employee shall be eligible to participate in any plan of the
--------
Company or of the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education, or other retirement or employee
benefits that the Bank or the Company has adopted or may adopt for the benefit
of its executive employees and shall also be eligible to participate in any
other fringe benefits which are now or may be or become applicable to the
Company's or the Bank's executive employees. In addition, the Employee shall be
reimbursed for reasonable business expenses, subject to substantiation and other
requirements as provided in the Bank's written policies concerning reimbursement
of business expenses. Participation in these plans and fringe benefits shall
not reduce the salary payable to the Employee under Section 2 hereof.
5. TERM. The initial term of employment under this Agreement shall
----
be for a period commencing on the date hereof and ending on December 31, 1999.
This Agreement shall be automatically renewed for an additional consecutive 12-
month period as of December 31, 1998 and every anniversary of December 31
thereafter, unless contrary written notice to each of the other parties has been
given either by the Employee or by the Company and the Bank not later than the
October 31 immediately preceding any such renewal date. Such initial term and
all such renewed terms are collectively referred to herein as the term of this
Agreement.
6. STANDARDS. The Employee shall perform the Employee's duties and
---------
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Boards of Directors of
the Company and the Bank. The reasonableness of such standards shall be
measured against standards for executive performance generally prevailing in the
savings institutions industry.
7. VOLUNTARY ABSENCES; VACATIONS. The Employee shall be entitled,
-----------------------------
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Boards
of Directors of the Company and the Bank otherwise approves. The Employee shall
be entitled to an annual paid vacation of four weeks per year or such longer
period as the Boards of Directors of the Company and the Bank may approve. The
timing of paid vacations shall be scheduled in a reasonable manner by the
Employee. The Employee shall not be entitled (i) to receive
-2-
any additional compensation from the Bank on account of failure to take a paid
vacation or (ii) to accumulate more than two weeks of unused paid vacation time
from one fiscal year to the next.
8. TERMINATION OF EMPLOYMENT.
-------------------------
(a) (i) The Boards of Directors of the Company and the Bank may
terminate the Employee's employment at any time, but any termination by such
Boards of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of 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. In
determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; provided,
that it shall be the Company's and the Bank's burden to prove the alleged acts
and omissions and the prevailing nature of the standards the Company and the
Bank shall have alleged are violated by such acts and/or omissions.
(ii) The parties acknowledge and agree that damages which
will result to Employee for termination by the Company and the Bank without
cause, or termination by the Employee with "Good Reason" (as defined below),
shall be extremely difficult or impossible to establish or prove, and agree
that, unless the termination is for cause or voluntarily without Good Reason,
the Bank shall be obligated, concurrently with such termination, to make a lump
sum cash payment to the Employee as liquidated damages of an amount equal to (A)
if such termination occurs in anticipation of, in connection with or within two
years after a "Change in Control" (as defined below), three times the sum of (I)
the Employee's annual base salary (at the greater of the rate in effect at the
time of termination or the highest rate in effect at any time within 12 months
before such Change in Control) plus (II) the bonus earned by the Employee during
the fiscal year preceding the fiscal year in which (a) such termination occurs
or (b) the Change in Control occurs, whichever is greater (including the amount
of any such bonus that accrues in such year, but is payable in a subsequent
year) or (B) otherwise, the amount that would be payable over a period equal to
the remaining term of this Agreement under Section 5 hereof (but not in excess
of 24 months), if the Employee's compensation for such period were at an annual
rate equal to the Employee's base salary under Section 2 hereof, determined as
of the time of termination, and bonuses paid during the fiscal year preceding
the fiscal year in which such termination occurs. To establish that a voluntary
termination was with Good Reason, the Employee shall state in his notice of
resignation the reasons why he believes that Good Reason exists for his
resignation. For purposes of this Agreement, "Good Reason" shall include a
material reduction in the position, authority, duties or responsibilities of the
Employee or a failure by the Company and the Bank to renew the term of this
Agreement (including a notice of nonrenewal pursuant to Section 5 hereof).
Unless the Company and the Bank, within 30 days of the date of such notice of
resignation, shall reject the Employee's statement that Good Reason exists, the
-3-
Employee shall be conclusively deemed to have voluntarily resigned with Good
Reason. If the Company and the Bank reject the Employee's statement that Good
Reason exists, the dispute shall be resolved by arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, and
the Bank shall have the burden of proving that such rejection of the Employee's
statement was proper. The Employee agrees that, except for such other payments
and benefits to which the Employee may be entitled as expressly provided by the
terms of this Agreement, such liquidated damages shall be in lieu of all other
claims which Employee may make by reason of such termination. Payment to the
Employee hereunder shall be made on or before the Employee's last day of
employment with the Company and the Bank. The liquidated damages amount shall
not be reduced by any compensation which the Employee may receive for other
employment with another employer after termination of his employment with the
Company and the Bank.
(iii) In addition to the liquidated damages above described
that are payable to the Employee for termination without cause or termination
with Good Reason, the following shall apply in the event of any termination by
the Company and the Bank without cause or termination by the Employee with Good
Reason: (1) the Employee shall continue to participate in, and accrue benefits
under, all retirement, pension, profit-sharing, employee stock ownership, and
other deferred compensation plans of the Company and the Bank (A) if such
termination occurs in anticipation of, in connection with or within two years
after a "Change in Control" (as defined below), for 36 months after such
termination or (B) otherwise, for the remaining term of this Agreement (but not
in excess of 24 months), in either case as if the termination of employment of
the Employee had not occurred (with the Employee being deemed to receive
annually for the purposes of such plans the Employee's annual base salary at the
same rate used for purposes of Subsection 8(a)(ii) hereof), except to the extent
that such continued participation and accrual is expressly prohibited by law, or
to the extent such plan constitutes a "qualified plan" under Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code"); (2) the Employee shall
be entitled to continue to receive all other employee benefits referred to in
Section 4 hereof (A) if such termination occurs in anticipation of, in
connection with or within two years after a "Change in Control" (as defined
below), for 36 months after such termination or (B) otherwise, for the remaining
term of this Agreement (but not in excess of 24 months), in either case as if
the termination of employment had not occurred; and (3) all insurance or other
provisions for indemnification, defense or hold-harmless of officers or
directors of the Company or the Bank which are in effect on the date the notice
of termination is sent to the Employee shall continue for the benefit of the
Employee with respect to all of his acts and omissions while an officer or
director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions.
(iv) For purposes of this Agreement, a "Change in Control"
shall mean a "change in control" of the Company or the Bank. A "change in
control" of the Company, for purposes of this Agreement, shall be deemed to have
taken place if: (A) any person becomes the beneficial owner of 25 percent or
more of the total number of voting shares of the Company; (B) any person has
received all applicable regulatory approvals to acquire control of the Company;
(C) any person (other than the persons named as
-4-
proxies solicited on behalf of the Board of Directors of the Company) holds
revocable or irrevocable proxies, as to the election or removal of two or more
directors of the Company, for 25 percent or more of the total number of voting
shares of the Company; (D) any person has commenced a tender or exchange offer,
or entered into an agreement or received an option, to acquire beneficial
ownership of 25 percent or more of the total number of voting shares of the
Company, whether or not the requisite regulatory approval for such acquisition
has been received, provided that a change in control will not be deemed to have
occurred under this clause (D) unless the Board of Directors of the Company has
made a determination that such action constitutes or will constitute a change in
control; or (E) as the result of, or in connection with, any cash tender or
exchange offer, merger, or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Company before such transaction shall cease to
constitute at least two-thirds of the Board of Directors of the Company or any
successor institution. For purposes of this Section 8(a), a "person" includes an
individual, corporation, partnership, trust, association, joint venture, pool,
syndicate, unincorporated organization, joint-stock company or similar
organization or group acting in concert. A person for these purposes shall be
deemed to be a beneficial owner as that term is used in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended.
A "change in control" of the Bank, for purposes of this Agreement,
shall be deemed to have taken place if the Company's beneficial ownership of the
total number of voting shares of the Bank is reduced to less than 50 percent.
(b) The Employee shall have no right to terminate employment under
this Agreement prior to the end of the term of this Agreement, unless such
termination is approved by the Boards of Directors of the Company and the Bank
or is for Good Reason. In the event that the Employee violates this provision,
the Company and the Bank shall be entitled, in addition to its other legal
remedies, to enjoin the employment of the Employee with any significant
competitor of the Bank for a period of six months or the remaining term of this
Agreement, whichever is less. The term "significant competitor" shall mean any
commercial bank, savings bank, savings and loan association, or mortgage banking
company, or a holding company affiliate of any of the foregoing, which at the
date of its employment of the Employee has an office out of which the Employee
would be primarily based within 35 miles of the Bank's home office.
(c) In the event the employment of the Employee is terminated by the
Company and the Bank without cause or by the Employee with Good Reason and the
Bank fails to make timely payment of the amounts then owed to the Employee under
this Agreement, the Employee shall be entitled to reimbursement for all
reasonable costs, including attorneys' fees, incurred by the Employee in taking
action to collect such amounts or otherwise to enforce this Agreement, plus
interest on such amounts at the rate of one percent above the prime rate
(defined as the base rate on corporate loans at large U.S. money center
commercial banks as published by The Wall Street Journal), compounded monthly,
for the period from the date the payment is due to be paid to the Employee until
payment is made. Such reimbursement and interest shall be in addition to all
rights which the Employee is otherwise entitled to under this Agreement.
-5-
(d) The Employee agrees to maintain the confidentiality of, and not to
use for the benefit of anyone other than the Company and the Bank, any
information that the Employee possesses concerning the Company or the Bank, or
any customer or borrower of the Bank, including any business plans and
strategies, financial information, marketing plans and information, customer
information, business or personnel data and practices and information respecting
existing and proposed acquisitions and investments, except such information that
is generally publicly available (other than because of the wrongful disclosure
of such information by the Employee) or that is in the Employee's possession
free of any restrictions on its use or disclosure and from a source other than
the Company or the Bank. The Employee agrees, for a period of one year after
the date of termination of his employment with the Company and the Bank, that he
will not (i) offer employment (or a consulting, agency, independent contractor
or other similar paid position) to any employee of the Company, the Bank or any
of their respective subsidiaries, or (ii) induce, encourage or solicit any such
employee to accept employment (or any such other position) with any company or
entity with which the Employee may then be employed or otherwise affiliated.
(e) Notwithstanding any other provision of this Agreement, the Company
and the Bank may terminate or suspend this Agreement and the employment of the
Employee hereunder as if such termination were for cause under Section 8(a)(i)
hereof to the extent required by the laws of the State of Maine related to
banking, by applicable federal law relating to deposit insurance or bank holding
companies or by regulations or orders issued by the Banking Commissioner of the
State of Maine (the "Commissioner") or the Federal Deposit Insurance Corporation
(the "FDIC") and no payment shall be required to be made to the Employee under
this Agreement to the extent such payment is prohibited by applicable law,
regulation or order issued by a banking agency or a court of competent
jurisdiction; provided, that it shall be the burden of the Company and the Bank
to prove that any such action was so required. Without limiting the generality
of the foregoing, no payment shall be required to be made hereunder to the
Employee that would constitute a "golden parachute payment" within the meaning
of 12 CFR (S) 359.1(f)(1) for which no applicable exception exists at the time
of such payment pursuant to 12 CFR (S) 359.1(f)(2) or, in each case, the
corresponding provisions of any subsequent regulations. To the extent that the
Company or the Bank (or both of them) shall need the consent or approval of the
Commissioner, the FDIC or other applicable regulator to make payments to or for
the benefit of the Employee under this Agreement the Company and the Bank shall
use their reasonable best efforts to apply for and obtain any such consent or
approval and, upon receiving such consent or approval, to take such other
actions as are reasonably necessary and appropriate to enable them to make such
payments.
(f) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by the Employee with the Company or the Bank, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this Section 8(f) (the "Other Agreements"), and notwithstanding
any formal or informal plan or other arrangement heretofore or hereafter adopted
by the Company or the Bank for the direct or indirect provision of compensation
to the Employee (including groups or classes of participants or beneficiaries of
which the Employee is a member), whether or not such compensation is deferred,
is in cash, or is in the form of a benefit to or for the
-6-
Employee (a "Benefit Plan"), the Employee shall not have any right to receive
any payment or other benefit under this Agreement, any Other Agreement, or any
Benefit Plan if such payment or benefit, taking into account all other payments
or benefits to or for the Employee under this Agreement, all Other Agreements,
and all Benefit Plans, would cause any payment to the Employee under this
Agreement to be considered a "parachute payment" within the meaning of Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code") (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause the Employee to be considered to have received a Parachute Payment under
this Agreement, then the Employee shall have the right, in the Employee's sole
discretion, to designate those payments or benefits under this Agreement, any
Other Agreements, and/or any Benefit Plans, which should be reduced or
eliminated so as to avoid having the payment to the Employee under this
Agreement be deemed to be a Parachute Payment.
9. DISABILITY. If the Employee shall become disabled or
----------
incapacitated to the extent that the Employee is unable to perform the
Employee's duties and responsibilities hereunder, the Employee shall be entitled
to receive disability benefits of the type provided for other executive
employees of the Company and the Bank and the obligations of the Company and the
Bank hereunder shall be limited to providing such benefits for the period of
such disability.
10. NO ASSIGNMENTS. This Agreement is personal to each of the parties
--------------
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto. However,
in the event of the death of the Employee all rights to receive payments
hereunder shall become rights of the Employee's estate.
11. OTHER CONTRACTS. The Employee shall not, during the term of this
---------------
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
12. AMENDMENTS OR ADDITIONS. No amendments or additions to this
-----------------------
Agreement shall be binding unless in writing and signed by all parties hereto.
13. SECTION HEADINGS. The section headings used in this Agreement are
----------------
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
14. 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.
15. GOVERNING LAW. This Agreement shall be governed by the laws of
-------------
the United States to the extent applicable and otherwise by the laws of the
State of Maine, excluding the choice of law rules thereof.
-7-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, or caused this Agreement to be duly executed on their behalf, as of
the day and year first above written.
Attest: FIRST COASTAL CORPORATION
/s/ Xxxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxxx
---------------------- -----------------------
(Secretary) President and Chief Executive Officer
Attest: COASTAL SAVINGS BANK
/s/ Xxxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxxx
---------------------- -----------------------
(Secretary) President and Chief Executive Officer
EMPLOYEE
/s/ Xxxxxx X. Xxxx
------------------
Xxxxxx X. Xxxx
-8-
