FIRST FEDERAL BANK
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement"), is entered into and made effective as of
September 27, 2000 by and between First Federal Bank (the "Bank"), a federally
chartered savings institution, with its principal administrative offices at 000
Xxxx Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, First Federal Bancshares, Inc., a
corporation organized under the laws of the state of Delaware, the holding
company of the Bank (the "Holding Company") and Xxxxx X. Xxxxxx ("Executive").
WHEREAS, the Bank wishes to assure itself of the services of Executive
for the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Bank and
its subsidiaries on a full-time basis for the term of this Agreement.
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 Executive's employment hereunder, Executive agrees
to serve as President of the Bank. Executive shall render administrative and
management services to the Bank such as are customarily performed by persons in
a similar executive capacity. During the term of this Agreement, Executive also
agrees to serve as a director of the Bank.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first written above and shall continue
for a period of thirty-six (36) full calendar months from that date. Commencing
on the first anniversary date of this Agreement, and continuing on each
anniversary thereafter, the disinterested members of the board of directors of
the Bank ("Board") may extend the Agreement an additional year such that the
remaining term of the Agreement shall be three (3) years, unless Executive
elects not to extend the term of this Agreement by giving written notice to the
Bank. The Board will review the Agreement and Executive's performance annually
for purposes of determining whether to extend the Agreement and the rationale
and results thereof shall be included in the minutes of the Board's meeting. The
Board shall give notice to Executive as soon as possible after such review as to
whether the Agreement is to be extended.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, vacation periods, and other reasonable
leaves of absence, Executive shall devote substantially all of 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 Bank and participation in industry, community
and civic organizations; provided, however, that, with the approval of the
Board, as evidenced by a resolution of the 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, companies or organizations,
which, in the Board's judgment, will not present any conflict of interest with
the Bank, or materially affect the performance of Executive's duties pursuant to
this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, either
Executive or the Bank may terminate Executive's employment with the Bank at any
time during the term of this Agreement, subject to the terms and conditions of
this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Bank in exchange for the duties described in Section 1
of this Agreement. The Bank shall pay Executive, as compensation, a salary of
not less than $110,000 ("Base Salary"). Base Salary shall include any amounts of
compensation deferred by Executive under any tax-qualified retirement or welfare
benefit plan or any other deferred compensation arrangement maintained by the
Bank. Base Salary shall be payable in accordance with the normal payroll
practices of the Bank. During the period of this Agreement, Executive's Base
Salary shall be reviewed at least annually. Such review shall be conducted by
the Board or by a committee of the Board delegated such responsibility by the
Board. The committee or the Board may increase Executive's Base Salary at any
time. Any increase in Base Salary shall thereafter become the new "Base Salary"
for purposes of this Agreement.
(b) Executive shall be entitled to participate in any 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 Bank will not, without
Executive's prior written consent, make any changes in such plans, arrangements
or perquisites (or any plans, arrangements or perquisites with respect to which
Executive begins to participate at any time during the term of this Agreement)
which would adversely affect Executive's rights or benefits thereunder, without
separately providing for an arrangement that ensures Executive receives or will
receive the economic value that Executive would otherwise lose as a result of
such adverse effect, unless such change is general in nature and applies in a
nondiscriminatory manner to all employees covered by the plan, arrangement or
perquisite. Without limiting the generality of the foregoing provisions of this
Subsection 3(b), Executive shall be entitled to participate in and receive
benefits under any employee benefit plans including, but not limited to,
retirement plans (such as pension, profit sharing and employee stock ownership
plans), supplemental retirement plans, incentive plans, health and welfare plans
and any other employee benefit plan or arrangement made available by the Bank
now or in the future to full-time employees of the Bank and/or senior executives
and key management employees of the Bank, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Nothing paid to Executive under any such plans or arrangements
will be deemed to be in lieu of other compensation and benefits to which
Executive is entitled under this Agreement.
(c) The Bank shall pay or reimburse Executive for all reasonable
expenses incurred by Executive in performing his obligations under this
Agreement.
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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 4 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 Bank or the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Subsection 5(a) of this
Agreement, or Termination for Cause, as defined in Section 7 of this Agreement,
or Retirement or Disability, as defined in paragraph (e) of this Section 4 or;
(ii) Executive's resignation from the Bank's employ, upon, any (A) failure to
re-elect or re-appoint Executive as President of the Bank or failure to nominate
or re-elect Executive to the Board of Directors of the Bank, unless consented to
by Executive, (B) material change in Executive's function, duties, or
responsibilities with the Bank, which change would cause Executive's position to
become one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1 of this Agreement (and any such
material change shall be deemed as continuing breach of this Agreement), unless
consented to by Executive, (C) relocation of Executive's principal place of
employment by more than 25 miles from its location at the effective date of this
Agreement, unless consented to by Executive, (D) material reduction in the
benefits, arrangements or perquisites to Executive which is not general in
nature and applicable on a nondiscriminatory basis to all employees covered by
such benefits, arrangements, or perquisites or, pursuant to Subsection 3(b) of
this Agreement, to which Executive does not consent or for which Executive is
not or will not be provided the economic benefit, (E) liquidation or dissolution
of the Bank or the Holding Company, or (F) breach of this Agreement by the Bank.
Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E),
or (F), above, Executive shall have the right to elect to terminate employment
under this Agreement by resignation upon not less than sixty (60) days prior
written notice given within six full calendar months after the event giving rise
to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Bank shall be
obligated to pay Executive, or, in the event of Executive's subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, the amount
of the remaining payments and benefits that Executive would have earned if he
had continued his employment with the Bank during the remaining unexpired term
of this Agreement, based on Executive's Base Salary and the benefits provided to
Executive as of the date of the Event of Termination, as set forth in
Subsections 3(a) and (b) of this Agreement, as the case may be, and the amount
still due Executive under any paragraph of Section 3 for services rendered
through the Date of Termination. Except as provided for below and in paragraph
(c) of this Section 4, the determination of Executive's benefits as of the date
of the Event of Termination shall be made based on (i) the value of the
allocation attributable to employer contributions for the most recent plan year
under any defined contribution type plan; (ii) the percentage of salary of any
incentive or bonus payment for the most recently-completed fiscal year; and
(iii) the employer-provided cost of any other benefit for the most
recently-completed fiscal year. In addition, for purposes of determining his
vested accrued benefit, Executive shall be credited either under the defined
benefit pension plan maintained by the Bank (whether or not tax-qualified) or,
if not permitted under such plan, under a separate arrangement, with the
additional "years of service" that he would have earned for vesting
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and benefit accrual purposes for the remaining term of the Agreement had his
employment not terminated. At the election of Executive, which election is to be
made within thirty (30) days of the Date of Termination, such payments shall be
made in a lump sum (without discount for early payment) or paid monthly during
the remaining term of the agreement following Executive's termination. In the
event that no election is made, payment to Executive will be made in a lump sum.
Such payments shall not be reduced in the event Executive obtains other
employment following termination of employment. Notwithstanding anything to the
contrary elsewhere in this Agreement to the extent Executive is entitled to
continued coverage or benefit accrual under any retirement or welfare benefit
plan during the remaining unexpired term of this Agreement, the amount payable
under this Subsection 4(b) shall be adjusted to the extent necessary to avoid
any duplication of such benefits.
(c) To the extent that the Bank continues to offer any life, medical,
health, disability or dental insurance plan or arrangement in which Executive
participates in on the last day of his employment (each being a "Welfare Plan"),
after an Event of Termination (as herein defined), Executive and his dependents
shall continue participating in such Welfare Plans, subject to the same premium
contributions on the part of Executive as were required immediately prior to the
Event of Termination until the earlier of: (i) his death; (ii) his employment by
another employer other than one of which he is the majority owner; or (iii) the
end of the remaining term of this Agreement. If the Bank does not offer the
Welfare Plans (or if for any reason Executive's participation in said plans is
prohibited) after the Event of Termination, then the Bank shall provide
Executive with a payment equal to the employer-paid premiums for such benefit
for the period which runs until the earlier of: (i) his death; (ii) his
employment by another employer other than one of which he is the majority owner;
or (iii) the end of the remaining term of this Agreement.
(d) In the event that Executive is receiving monthly payments pursuant
to Subsection 4(b) of this Agreement, on an annual basis, thereafter, between
the dates of January 1 and January 31 of each year, Executive shall elect
whether the balance of the amount payable under the Agreement for that year
shall be paid in a lump sum or on a pro rata basis. Such election shall be
irrevocable for the year for which such election is made.
(e) Termination of Executive based on "Retirement" shall mean
termination by written notice to the Bank from Executive specifying an exact
retirement date or termination in accordance with any retirement arrangement
established with Executive's written consent with respect to him. Termination of
Executive based on Disability shall mean written notice to the Bank by Executive
specifying an exact date as of which he is unable to perform all of the duties
and responsibilities of his position. Upon termination of Executive upon
Disability, Executive shall be entitled to all benefits under any disability
plan of the Bank or any other plans in which Executive is a participant in
accordance with the terms of the plan or arrangement. Executive shall be
entitled to all compensation and benefits provided for in Section 3 of this
Agreement through the date of his termination of employment as specified in the
notice provided by him.
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5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Bank
or the Holding Company shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1 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, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Bank or the Holding Company within the
meaning of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit
Insurance Act and the Rules and Regulations promulgated by the Office of Thrift
Supervision ("OTS") (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control or presumptive
change in control or acting in concert or presumptive acting in concert as set
forth under the rules and regulations of the OTS, ownership by a person or a
group, including a presumptive group, of at least 15% of the voting stock of the
Bank or the Holding Company shall be required, and provided further that
ownership of stock by a tax-qualified employee benefit plan of the Bank or the
Holding Company shall not be subject to presumptions of control or acting in
concert); 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 voting securities of the Bank or the Holding Company representing
25% or more of the Bank's or the Holding Company's outstanding voting securities
or right to acquire such securities except for any voting securities of the Bank
purchased by the Holding Company and any voting securities purchased by any
employee benefit plan of the Bank or the Holding Company, or (B) individuals who
constitute the board of directors 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 members who were nominated by the Incumbent Board), or whose
nomination for election by the Holding Company's stockholders was approved by
the same Nominating Committee serving under an Incumbent Board (or members who
were nominated by the 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 Bank or the Holding Company or similar transaction occurs in which
the Bank or the Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required regulatory approvals not including
the lapse of any statutory waiting periods.
(b) If any of the events described in Subsection 5(a) of this Agreement
constituting a Change in Control 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), (d), (e) and (f) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs due
to (i) Executive's dismissal at any time during the term of this Agreement, (ii)
Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, reduction in the annual compensation or
benefits or relocation of Executive's principal place of employment by more than
25 miles from its location immediately prior to the Change in Control, unless
such termination is because of Executive's Termination for Cause; provided,
however,
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Executive may consent in writing to any such demotion, loss, reduction or
relocation. The effect of any written consent of Executive under this Subsection
5(b) shall be strictly limited to the terms specified in such written consent.
Under no circumstances can a termination of employment during the term of this
Agreement on or after the date a Change in Control occurs be considered a
termination on account of retirement or disability for purposes of determining
Executive's rights to the payment of benefits provided in paragraphs (c), (d),
(e) and (f) of this Section 5.
(c) Upon Executive's entitlement to payment pursuant to Subsection 5(b)
of this Agreement, the Bank shall pay Executive, or in the event of Executive's
subsequent death, Executive's beneficiary or beneficiaries, or estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to
three (3) times Executive's average annual compensation for the five most
recently completed taxable years of Executive. In the event the Bank is not in
compliance with its minimum capital requirements or if such payments would cause
the Bank's capital to be reduced below its minimum regulatory capital
requirements, such payments shall be deferred until such time as the Bank or
successor thereto is in capital compliance. For purposes of this Subsection
5(c), annual compensation shall include Base Salary and any other taxable income
paid by the Bank or its subsidiaries, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock or stock option
awards, commissions, bonuses, severance payments, retirement benefits, director
or committee fees and fringe benefits paid or to be paid to Executive or paid
for Executive's benefit during any such year, as well as profit sharing,
employee stock ownership plan and other retirement contributions or benefits,
including any tax-qualified or non-tax-qualified plan or arrangement (whether or
not taxable) made or accrued on behalf of Executive for such year. At the
election of Executive, which election is to be made prior to or within thirty
(30) days of the Date of Termination on or following a Change in Control, such
payment may be made in a lump sum (without discount for early payment) on or
immediately following the Date of Termination (which may be the date a Change in
Control occurs) or paid in equal monthly installments during the thirty- six
(36) months following Executive's termination. In the event that no election is
made, payment to Executive will be made in a lump sum. Such payments shall not
be reduced in the event Executive obtains other employment following termination
of employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Bank on his behalf pursuant to any retirement,
incentive, profit sharing, employee stock ownership, bonus, performance,
disability or other employee benefit plan or other arrangement maintained by the
Bank on Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement. In addition, for
purposes of determining his vested accrued benefit, Executive shall be credited
either under the defined benefit pension plan maintained by the Bank (whether or
not tax-qualified) or, if not permitted under such plan, under a separate
arrangement, with the additional "years of service" that he would have earned
for vesting and benefit accrual purposes for the remaining term of the Agreement
had his employment not terminated.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment pursuant to the provisions of Subsection 5(b) of this
Agreement in connection therewith, the Bank will cause to be continued any
Welfare Plan Benefit (as described in Subsection
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4(d) of this Agreement) substantially identical to the benefits coverage
maintained by the Bank for Executive and any of his dependents covered under
such plans prior to the Change in Control. Such coverage shall cease upon the
expiration of thirty-six (36) full calendar months following the Date of
Termination. In the event Executive's or Executive's dependent's participation
in any such plan or program is barred, the Bank shall arrange to provide
Executive and his dependents with benefits coverage substantially similar to
those which Executive and his dependents would otherwise have been entitled to
receive under such plans and programs by operation of this provision or provide
their economic equivalent to Executive and his dependents.
(f) In the event that Executive is receiving monthly payments pursuant
to Subsection 5(c) of this Agreement, on an annual basis, thereafter, between
the dates of January 1 and January 31 of each year, Executive shall elect
whether the balance of the amount payable under the Agreement for that year
shall be paid in a lump sum pursuant to such provision. Such election shall be
irrevocable for the year for which such election is made.
6. CHANGE IN CONTROL RELATED PROVISIONS.
Notwithstanding the provisions of Section 5 of this Agreement, in no
event shall the aggregate payments or benefits to be made or afforded to
Executive under said paragraphs or otherwise paid or provided by the Bank in
connection with a Change in Control (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and in order to avoid such a result, the Termination Benefits will be
reduced, if necessary, to an amount (the "Non-Triggering 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 said Section 280G.
The allocation of any reduction required with respect to the Termination
Benefits shall be determined by Executive.
7. 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, regulation (other than traffic
violations or similar offenses), 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 the standards for professional competence
generally prevailing for executive officers having comparable positions in the
savings institution industry. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for cause unless and until there shall have
been delivered to Executive a Notice of Termination which shall include a copy
of a resolution duly adopted by the affirmative vote of not less than
three-fourths 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 Executive, together with counsel, to be heard before the Board and which
such meeting shall be held not more than 30 days from the date of notice during
which period Executive may be suspended with pay), 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.
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Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause except for compensation and benefits
already vested. Any stock options and related limited rights granted to
Executive under any stock option plan, or any unvested awards granted to
Executive under any restricted stock benefit plan of the Bank or its
subsidiaries, shall become null and void effective upon Executive's receipt of a
Notice of Termination pursuant to Section 8 of this Agreement, and shall not be
exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause except all benefits shall be deemed to have remained in
effect if Executive is reinstated.
8. NOTICE.
(a) Any purported termination by the Bank or by Executive shall be
communicated by a Notice of Termination to the other party hereto. 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 reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) Except as otherwise provided for in this Agreement, "Date of
Termination" shall mean the date specified in the Notice of Termination (which,
in the case of a Termination for Cause, shall not be less than thirty (30) days
from the date such Notice of Termination is given).
(c) 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 reasonable dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Bank will continue to pay
Executive's Base Salary and continue to cover Executive under each Welfare
Benefit Plan in which Executive participated at the time of such notice in
effect when the notice giving rise to the dispute was given until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Subsection 8(c) are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for two (2) full years
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Bank. Executive shall, upon reasonable notice,
furnish such information and assistance to the Bank with regard to matters as to
which he has personal knowledge and as may reasonably be required by the Bank in
connection with
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any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party. The Bank shall reimburse Executive for all out-of-pocket
expenses incurred and at an hourly rate equivalent to the hourly rate (based on
an eight-hour work day) of his Base Salary in effect at the time of his
termination from employment for any time incurred in connection with services
rendered pursuant to this Section 9.
10. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant
to Section 4 of this Agreement, Executive agrees not to compete with the Bank
for a period of one (1) year following such termination in any city, town or
county in which Executive's normal business office is located and the Bank 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 Bank. The parties hereto,
recognizing that irreparable injury will result to the Bank, its business and
property in the event of Executive's breach of this Subsection 10(a) agree that
in the event of any such breach by Executive, the Bank will be entitled, in
addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 4 of this Agreement, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Bank, and
that the enforcement of a remedy by way of injunction will not prevent Executive
from earning a livelihood. Nothing herein will be construed as prohibiting the
Bank from pursuing any other remedies available to the Bank for such breach or
threatened breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank and its
affiliates as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank. Executive will not, during or after the term
of Executive's employment, disclose any knowledge of the past, present, planned
or considered business activities of the Bank and its affiliates thereof to any
person, firm, corporation, or other entity for any reason or purpose whatsoever
unless expressly authorized by the Board of Directors or required by law.
Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely and
exclusively derived from the business plans and activities of the Bank. In the
event of a breach or threatened breach by Executive of the provisions of this
Section 10, the Bank 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 Bank or its affiliates 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
Page 9
the Bank from pursuing any other remedies available to the Bank for such breach
or threatened breach, including the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided for in this Agreement shall be timely paid in
cash, check or other mutually agreed upon method from the general funds of the
Bank subject to Subsection 11(b) of this Agreement. The Holding Company,
however, unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from
the Bank are not timely paid or provided by the Bank, such amounts and benefits
shall be paid or provided by the Holding Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Holding Company, such payments and benefits paid by the Bank will be
subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement. Payments pursuant to this Agreement and the
Holding Company agreement shall be allocated in proportion to the level of
activity and the time expended on such activities by Executive as determined by
the Holding Company and the Bank on a quarterly basis; provided, however, that
except for the reduction provided by the first sentence of this Subsection
11(b), the Bank will be obligated to pay 100% of the amounts due Executive
hereunder.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank 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.
(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 Bank and their respective successors and assigns.
Page 10
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 Bank may terminate Executive's employment at any time, but any
termination by the Bank, other than Termination for Cause, shall not prejudice
Executive's right to compensation or other benefits under this Agreement.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause as defined in Section 7 hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
ss.1818(e)(3) or (g)(1); the Bank's obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion: (i)
pay Executive all or part of the compensation withheld while their contract
obligations were suspended; and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
ss.1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. ss.1813(x)(1) all obligations of the
Bank under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Bank under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution: (i) by the Director of
the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at the
time the FDIC enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1823(c); or (ii) by the Director of the OTS (or his
designee) at the time the Director (or his designee) approves a supervisory
merger to resolve problems related to the operations of the Bank
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or when the Bank is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12
U.S.C.ss.1828(k) and 12 C.F.R.ss.545.121 and any rules and regulations
promulgated thereunder.
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.
18. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois,
unless otherwise specified in this Agreement.
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 Executive within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of Executive's 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.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
Page 12
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 Bank, if Executive is successful pursuant to a legal
judgment, arbitration or settlement.
21. INDEMNIFICATION.
The Bank shall provide Executive (including Executive's heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense and shall indemnify
Executive (and Executive's heirs, executors and administrators) to the fullest
extent permitted under federal law against all expenses and liabilities
reasonably incurred by Executive in connection with or arising out of any
action, suit or proceeding in which Executive may be involved by reason of
Executive having been a director or officer of the Bank or its subsidiaries
(whether or not Executive continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not to be limited to, judgments, court costs and attorneys' fees
and the cost of reasonable settlements.
22. SUCCESSOR TO THE BANK.
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, to expressly and
unconditionally assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
Page 13
SIGNATURES
IN WITNESS WHEREOF, First Federal Bank and First Federal Bancshares,
Inc. have caused this Agreement, to be executed and their seals to be affixed
hereunto by their duly authorized officers and Executive has signed this
Agreement on November 13, 2000.
ATTEST: FIRST FEDERAL BANK
/s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx
------------------------- ---------------------------------
Xxxxxx X. Xxxx For the Entire Board of Directors
Secretary
[SEAL]
ATTEST: FIRST FEDERAL BANCSHARES, INC.
(Guarantor)
/s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx
------------------------- ---------------------------------
Xxxxxx X. Xxxx For the Entire Board of Directors
Secretary
[SEAL]
WITNESS: EXECUTIVE
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxx
------------------------- ---------------------------------
Xxxxx X. Xxxxxx
President
Page 14
