Exhibit 10.2
XXXX FEDERAL BANK
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
October 4, 1996 by and between XXXX FEDERAL BANK, a mutual savings bank
organized and operating under the federal laws of the United States and having
an office at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
("Bank") and XXXXXXX X. PAISLEY, an individual residing at 0000X XX Xxxxxxx 000,
Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 ("Executive").
W I T N E S S E T H :
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WHEREAS, the Executive currently serves the Bank in the capacity of Chief
Financial Officer, Secretary/Treasurer; and
WHEREAS, the Bank has decided to reorganize from a mutual savings bank to a
stock form savings bank which is majority owned by a mutual holding company
("Mutual Holding Company") formed pursuant to the Plan of Reorganization from
Mutual Bank to Mutual Holding Company (the "Plan of Reorganization"); and
WHEREAS, the Bank desires to assure for itself the continued availability
of the Executive's services and the ability of the Executive to perform such
services with a minimum of personal distraction in the event of a pending or
threatened Change in Control (as hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth; and
WHEREAS, the Bank has agreed to provide the Executive with additional
salary as added consideration for the Executive agreeing to the restrictive
covenants hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Bank and the Executive hereby agree as
follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
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SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of
three years beginning on the date of this Agreement. Prior to the first
anniversary of the date of this Agreement and each anniversary date thereafter
(each, an "Anniversary Date"), the Board of Directors of the Bank ("Board")
shall review the terms of this Agreement and the Executive's performance of
services hereunder and may, in the absence of objection from the Executive and
subject to section 2(d), approve an extension of the Employment Period. In such
event, the Employment Period shall be extended to the third anniversary of the
relevant Anniversary Date.
(b) For all purposes of this Agreement, the term "Remaining Unexpired
Employment Period" as of any date shall mean the period beginning on such date
and ending on the Anniversary Date on which the Employment Period (as extended
pursuant to section 2(a) of this Agreement) is then scheduled to expire.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank from
terminating the Executive's employment at any time during the Employment Period
with or without notice for any reason; PROVIDED, HOWEVER, that the relative
rights and obligations of the Bank and the Executive in the event of any such
termination shall be determined under this Agreement.
(d) In no event shall an extension of the Employment Period be made during
any time period during which the Executive may tender voluntary resignation and
collect severance benefits pursuant to either section 9(a) or section 11 of this
Agreement.
SECTION 3. DUTIES.
The Executive shall serve as the Chief Financial Officer,
Secretary/Treasurer of the Bank, having such power, authority and responsibility
and performing such duties as are prescribed by or under the By-Laws of the Bank
and as are customarily associated with such position or as assigned by the Board
acting in good faith. The Chief Financial Officer is responsible for assuring
that the books and records of the bank reflect the actual financial condition of
the bank at any time. In addition, the chief financial officer is responsible
for the following duties:
o Assisting the CEO in developing investment strategies.
o Measuring the daily cash position and recording liquidity levels.
o Assuring that all transactions are recorded and reconciled on a daily
basis.
o Maintaining an accurate record of the bank's assets.
o Recording minutes of actions of the board of directors.
o Preparing reports for the regulatory authorities, management, and the
board of directors.
o Assuring that all transactions of the bank are within guidelines.
o Coordinating the annual audit with the outside auditors.
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o Coordinating the regulatory examination of the bank.
o Approves transfers of monetary assets from and to the Federal Reserve
Bank and the Federal Home Loan Bank to meet the bank's cash transfer
and reserve requirements.
o Administering personnel policies including maintaining personnel
records.
The Executive shall devote her full business time and attention (other than
during weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence) to the business and affairs of the Bank and shall
use her best efforts to advance the interests of the Bank.
SECTION 4. CASH COMPENSATION.
(a) In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to her a salary at an initial annual rate of
THIRTY-TWO THOUSAND DOLLARS ($32,000.00), payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. Prior to each Anniversary Date occurring during the Employment
Period, the Board shall review the Executive's annual rate of salary and may, in
its discretion, approve an increase therein. In addition to salary, the
Executive may receive other cash compensation from the Bank for services
hereunder at such times, in such amounts and on such terms and conditions as the
Board may determine from time to time.
(b) If elected to the Board, and if Executive chooses to serve on such
Board, Executive will be compensated for such service in the same manner as
other members of the Board.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an employee
of the Bank and shall be eligible to participate in and receive benefits under
any and all qualified or non-qualified retirement, pension, savings,
profit-sharing or stock bonus plans, any and all group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans, and any other employee benefit and compensation
plans (including, but not limited to, any incentive compensation plans or
programs, stock option and appreciation rights plans and restricted stock plans)
as may from time to time be maintained by, or cover executive employees of, the
Bank, in accordance with the terms and conditions of such employee benefit plans
and programs and compensation plans and programs and consistent with the Bank's
customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six (6) years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or
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contract of insurance obtained by it to insure its directors and officers
against personal liability for acts or omissions in connection with service as
an officer or director of the Bank or service in other capacities at the request
of the Bank. The coverage provided to the Executive pursuant to this section 6
shall be of the same scope and on the same terms and conditions as the coverage
(if any) provided to other officers or directors of the Bank.
(b) To the maximum extent permitted under 12 C.F.R. ss.545.121, during the
Employment Period and for a period six (6) years thereafter, the Bank shall
indemnify, and shall cause its subsidiaries and affiliates to indemnify the
Executive against and hold her harmless from any costs, liabilities, losses and
exposures to the fullest extent and on the most favorable terms and conditions
that similar indemnification is offered to any director or officer of the Bank
or any subsidiary or affiliate thereof. This section 6(b) shall not be
applicable where section 18 is applicable.
SECTION 7. OUTSIDE ACTIVITIES.
The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as she may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); PROVIDED, HOWEVER, that such service shall not materially interfere
with the performance of her duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of her duties hereunder; PROVIDED, HOWEVER, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Bank and generally applicable to
all similarly situated executives (including, without limitation, any applicable
conflict of interest policy adopted by the Board of Directors as contemplated by
12 C.F.R. ss.571.7 and ss.571.9). The Executive may also serve as an officer or
director of the Mutual Holding Company on such terms and conditions as the Bank
and the Mutual Holding Company may mutually agree upon, and such service shall
not be deemed to materially interfere with the Executive's performance of her
duties hereunder or otherwise to result in a material breach of this Agreement.
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other location
within Xxxx County at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank shall provide the Executive at her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. The Bank shall reimburse the Executive for her ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as the Executive and the Bank shall mutually agree are
necessary and appropriate for business purposes, and her travel and
entertainment expenses incurred in connection with the performance of her duties
under this Agreement, in each case upon present
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ation to the Bank of an itemized account of such expenses in such form as the
Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH SEVERANCE BENEFITS.
(a) The Executive shall be entitled to the severance benefits described
herein in the event that her employment with the Bank terminates during the
Employment Period under any of the following circumstances:
(i) the Executive's voluntary resignation from employment with the
Bank within forty-five (45) days following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect the Executive to the office stated in section 3 of this
Agreement (or a more senior office) of the Bank;
(B) if the Executive is or becomes a member of the Board, the
failure of the stockholders of the Bank to elect or re-elect the
Executive to the Board or the failure of the Board (or the nominating
committee thereof) to nominate the Executive for such election or
re-election; PROVIDED, HOWEVER, that such failure is not the result of
a vote cast by the Executive;
(C) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Bank of its
material failure, whether by amendment of the Bank's Organization
Certificate or By-laws, action of the Board or the Bank's stockholders
or otherwise, to vest in the Executive the functions, duties, or
responsibilities prescribed in section 3 of this Agreement as of the
date hereof, unless, during such thirty (30) day period, the Bank
fully cures such failure;
(D) the expiration of a thirty (30) day period following the date
on which the Executive gives written notice to the Bank of its
material breach of any term, condition or covenant contained in this
Agreement (including, without limitation any reduction of the
Executive's rate of base salary in effect from time to time and any
change in the terms and conditions of any compensation or benefit
program in which the Executive participates which, either individually
or together with other changes, has a material adverse effect on the
aggregate value of her total compensation package), unless, during
such thirty (30) day period, the Bank fully cures such failure; or
(ii) the termination of the Executive's employment with the Bank for
any other reason not described in section 10(a).
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In such event, subject to section 25, the Bank shall provide the benefits and
pay to the Executive the amounts described in section 9(b).
(b) Upon the termination of the Executive's employment with the Bank under
circumstances described in section 9(a) of this Agreement, the Bank shall pay
and provide to the Executive (or, in the event of her death, to her estate):
(i) his earned but unpaid compensation, including bonuses awarded and
not yet received, as of the date of the termination of her employment with
the Bank, such payment to be made at the time and in the manner prescribed
by law applicable to the payment of wages but in no event later than thirty
(30) days after termination of employment;
(ii) the benefits, if any, to which she is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and pro- grams maintained for the benefit of the Bank's officers and
employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and
after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for the Executive, for the
Remaining Unexpired Employment Period, coverage equivalent to the coverage
to which she would have been entitled under such plans (as in effect on the
date of her termination of employment, or, if her termination of employment
occurs after a Change in Control, on the date of such Change in Control,
whichever benefits are greater) if she had continued working for the Bank
during the Remaining Unexpired Employment Period at the highest annual rate
of compensation achieved during that portion of the Employment Period which
is prior to the Executive's termination of employment with the Bank; and
(iv) within thirty (30) days following her termination of employment
with the Bank, a lump sum payment, in an amount equal to the present value
of the salary that the Executive would have earned if she had continued
working for the Bank during the Remaining Unexpired Employment Period at
the highest annual rate of salary achieved during that portion of the
Employment Period which is prior to the Executive's termination of
employment with the Bank, where such present value is to be determined
using a discount rate equal to the applicable short-term federal rate
prescribed under section 1274(d) of the Internal Revenue Code of 1986
("Code"), compounded using the compounding period corresponding to the
Bank's regular payroll periods for its officers, such lump sum to be paid
in lieu of all other payments of salary provided for under this Agreement
in respect of the period following any such termination.
The Bank and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section
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9(b) constitute reasonable damages under the circumstances and shall be payable
without any requirement of proof of actual damage and without regard to the
Executive's efforts, if any, to mitigate damages. The Bank and the Executive
further agree that the Bank may condition the payments and benefits (if any) due
under sections 9(b)(iii) and (iv) on the receipt of the Executive's resignation
from any and all positions which she holds as an officer, director or committee
member with respect to the Bank or the Mutual Holding Company or any subsidiary
or affiliate of either of them.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
(a) In the event that Executive's employment with the Company shall
terminate during the Employment Period on account of:
(i) the discharge of the Executive for "cause," which, for purposes of
this Agreement shall mean 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 any material breach of this Agreement, in each
case as measured against standards generally prevailing at the relevant
time in the savings and community banking industry; PROVIDED, HOWEVER, that
the Executive shall not be deemed to have been discharged for cause unless
and until the following procedures shall have been followed:
(A) the Board shall adopt a resolution duly approved by
affirmative vote of a majority of the entire Board at a meeting called
and held for such purpose calling for the Executive's termination for
cause and setting forth the purported grounds for such termination
("Proposed Termination Resolution");
(B) as soon as practicable, and in any event within five (5)
days, after adoption of such resolution, the Board shall furnish to
the Executive a written notice of termination which shall be
accompanied by a certified copy of the Proposed Termination Resolution
("Notice of Proposed Termination");
(C) the Executive shall be afforded a reasonable opportunity to
to make oral and written presentations to the members of the Board, on
his own behalf, or through a representative, who may be his legal
counsel, to refute the grounds set forth in the Proposed Termination
Resolution at one or more meetings of the Board to be held no sooner
than fifteen (15) days and no later than thirty (30) after the
Executive's receipt of the Proposed Termination Notice ("Termination
Hearings"); and
(D) within ten (10) days following the end of the Termination
Hearings, the Board shall adopt a resolution duly approved by
affirmative vote of a majority of the entire Board at a meeting called
and held for such
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purpose (A) finding that in the good faith opinion of the Board the
grounds for termination set forth in the Proposed Termination
Resolution exist and (B) terminating the Executive's employment
("Termination Resolution"); and
(E) as promptly as practicable, and in any event within one (1)
business day after adoption of the Termination Resolution, the Board
shall furnish to the Exective written notice of termination, which
notice shall include a copy of the Termination Resolution and specify
an effective date of termination that is not later than the date on
which such notice is given;
(ii) Executive's voluntary resignation from employment with the
Company for reasons other than those specified in section 9(a);
(iii) Executive's death; or
(iv) a determination that Executive is eligible for long-term
disability benefits under the Company's long-term disability insurance
program or, if there is no such program, under the federal Social Security
Act;
then the Company shall have no further obligations under this Agreement, other
than the payment to Executive (or, in the event of his death, to his estate) of
his earned but unpaid salary as of the date of the termination of his
employment, and the provision of such other benefits, if any, to which she is
entitled as a former employee under the employee benefit plans and pro- grams
and compensation plans and programs maintained by, or covering employees of, the
Company.
(b) For purposes of section 10(a)(i)(A) or (B), no act or failure to act,
on the part of Executive, shall be considered "willful" unless it is done, or
omitted to be done, by Executive in bad faith or without reasonable belief that
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the written advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company. The cessation of
employment of Executive shall not be deemed to be for "cause" within the meaning
of section 10(a)(i) unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of
three-fourths of the non-employee members of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of the conduct described in section 10(a)(i) above, and
specifying the particulars thereof in detail.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
(a) A Change in Control of the Bank ("Change in Control") shall be deemed
to have occurred upon the happening of any of the following events:
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(i) approval by the stockholders of the Bank of a transaction that
would result in the reorganization, merger or consolidation of the Bank,
respectively, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934 ("Exchange Act")) in substantially the same relative proportions
by persons who, immediately prior to such transaction, beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) at least 51% of the outstanding equity ownership interests in the
Bank; and
(B) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Bank;
(ii) the acquisition of all or substantially all of the assets of the
Bank or beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 25% or more of the outstanding securities of the
Bank entitled to vote generally in the election of directors by any person
or by any persons acting in concert, or approval by the stockholders of the
Bank of any transaction which would result in such an acquisition; or
(iii) a complete liquidation or dissolution of the Bank, or approval
by the stockholders of the Bank of a plan for such liquidation or
dissolution; or
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the board of directors of the Bank do not
belong to any of the following groups:
(A) individuals who were members of the Board of the Bank on the
date of this Agreement; or
(B) individuals who first became members of the Board of the Bank
after the date of this Agreement either:
(I) upon election to serve as a member of the Board of
directors of the Bank by affirmative vote of three-quarters of
the members of such board, or of a nominating committee thereof,
in office at the time of such first election; or
(II) upon election by the stockholders of the Board to serve
as a member of the board of directors of the Board, but only
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if nominated for election by affirmative vote of three-quarters
of the members of the board of directors of the Board, or of a
nominating committee thereof, in office at the time of such first
nomination;
PROVIDED, HOWEVER, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the
Board of the Bank;
In no event, however, shall a Change in Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Bank by any employee
benefit plan maintained by the Bank. For purposes of this section 11, the term
"person" shall have the meaning assigned to it under sections 13(d)(3) or
14(d)(2) of the Exchange Act.
(b) In the event of a Change in Control, the Executive shall be entitled to
the payments and benefits contemplated by section 9(b) in the event of her
termination of employment with the Bank under any of the circumstances described
in section 9(a) of this Agreement or under any of the following circumstances:
(i) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following her
demotion, loss of title, office or significant authority or responsibility,
or following any reduction in any element of her package of compensation
and benefits;
(ii) resignation, voluntary or otherwise, by the Executive at any time
during the Employment Period and within ninety (90) days following any
relocation of her principal place of employment or any change in working
conditions at such principal place of employment which is embarrassing,
derogatory or otherwise materially adverse to the Executive;
(iii) resignation, voluntary or otherwise, by the Executive at any
time during the Employment Period following the failure of any successor to
the Bank in the Change in Control to include the Executive in any
compensation or benefit program maintained by it or covering any of its
executive officers, unless the Executive is already covered by a
substantially similar plan of the Bank which is at least as favorable to
his; or
(iv) resignation, voluntary or otherwise, for any reason whatsoever
following the expiration of a transition period of thirty days beginning on
the effective date of the Change in Control (or such longer period, not to
exceed ninety (90) days beginning on the effective date of the Change in
Control, as the Bank or its successor may reasonably request) to facilitate
a transfer of management responsibilities.
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SECTION 12. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of her
termination of employment with the Bank prior to the expiration of the
Employment Period, for a period of one (1) year following the date of her
termination of employment with the Bank (or, if less, for the Remaining
Unexpired Employment Period), she shall not, without the written consent of the
Bank, become an officer, employee, consultant, director or trustee with
executory, managerial, supervisory or strategic authority or influence at any
savings bank, savings and loan association, savings and loan holding company,
bank or bank holding company, or any direct or indirect subsidiary or affiliate
of any such entity, that entails working within one hundred (100) miles of the
headquarters of the Bank on the date of the Executive's termination of
employment; PROVIDED, HOWEVER, that this section 12 shall not apply if the
Executive's employment is ter- minated for the reasons set forth in section
9(a); and PROVIDED, further, that if the Executive's employment shall be
terminated on account of disability as provided in section 10(d) of this
Agreement, this section 12 shall not prevent the Executive from accepting any
position or performing any services if (a) she first offers, by written notice,
to accept a similar position with, or perform similar services for, the Bank on
substantially the same terms and conditions and (b) the Bank declines to accept
such offer within ten (10) days after such notice is given.
SECTION 13. CONFIDENTIALITY.
Unless she obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, or from its parent or subsidiaries, in the
course of her employment with any of them concerning their properties,
operations or business (unless such document or information is readily
ascertainable from public or published information or trade sources or has
otherwise been made available to the public through no fault of her own) until
the same ceases to be material (or becomes so ascertainable or available);
PROVIDED, HOWEVER, that nothing in this section 13 shall prevent the Executive,
with or without the Bank's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation or
disclosure is required under applicable law.
SECTION 14. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of one (1)
year following her termination of employment with the Bank, she shall not,
without the written consent of the Bank, either directly or indirectly:
(a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to
have the effect of causing any officer or employee of the Bank or any
affiliate, as of the date of this Agreement, of either of them to terminate
her or her employment and accept employment or become affiliated with, or
provide services for compensation in any
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capacity whatsoever to, any savings bank, savings and loan association,
bank, bank holding company, savings and loan holding company, or other
institution engaged in the business of accepting deposits and making loans,
doing business within one hundred (100) miles of the headquarters of the
Bank or any affiliate, as of the date of this Agreement, of either of them;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding company,
or other institution engaged in the business of accepting deposits and
making loans, doing business within one hundred (100) miles of the
headquarters of the Bank or any affiliate, as of the date of this
Agreement, of either of them that is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of causing
any officer or employee of the Bank or any affiliate, as of the date of
this Agreement, of either of them to terminate her or her employment and
accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any savings bank, savings and
loan association, bank, bank holding company, savings and loan holding
company, or other institution engaged in the business of accepting deposits
and making loans, doing business within one hundred (100) miles of the
headquarters of the Bank or any affiliate, as of the date of this
Agreement, of either of them;
(c) solicit, provide any information, advice or recommendation or take
any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of
the Bank to terminate an existing business or commercial relationship with
the Bank.
SECTION 15. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Executive's employment during the term of this
Agreement or thereafter, whether by the Bank or by the Executive, shall have no
effect on the rights and obligations of the parties thereto under the Bank's
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing
or stock bonus plans, group life, health (including hospitalization, medical and
major medical), dental, accident and long term disability insurance plans or
such other employee benefit plans or programs, or compensation plans or
programs, as may be maintained by, or cover employees of, the Bank from time to
time.
SECTION 16. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon the
Executive, her legal representatives and testate or intestate distributees, and
the Bank and its successors and assigns, including any successor by merger or
consolidation or any other person or firm or corporation to which all or
substantially all of the assets and business of the Bank may be sold or
otherwise transferred. Failure of the Bank to obtain from any successor its
express written assumption of the Bank's obligations hereunder at least sixty
(60) days in advance of the scheduled
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effective date of any such succession shall be deemed a material breach of this
Agreement unless cured within ten (10) days after notice thereof by the
Executive to the Bank.
SECTION 17. NOTICES.
Any communication required or permitted to be given under this Agreement,
including any notice, direction, designation, consent, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally, or five (5) days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below or at such other address as one such
party may by written notice specify to the other party:
If to the Executive:
Xxxxxxx X. Paisley
0000X XX Xxxxxxx 000
Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
If to the Bank:
Xxxx Federal Bank
X.X. Xxx 00
Xxxx Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chairman Of The Board
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with a copy to:
Xxxxxxx Xxxxxxxx & Xxxx
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
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SECTION 18. INDEMNIFICATION FOR ATTORNEYS' FEES.
The Bank shall indemnify, hold harmless and defend the Executive against
rea- sonable costs, including legal fees, incurred by the Executive in
connection with or arising out of any action, suit or proceeding in which she
may be involved, as a result of her efforts, in good faith, to defend or enforce
the terms of this Agreement; PROVIDED, HOWEVER, that the Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding and such court or arbitrator shall have approved such
indemnification, or in a settlement. In the case of a settlement, such
indemnification provided for in this section shall require an approval from a
majority of the disinterested directors of the Board of Directors of the Bank
that the Executive acted in good faith and that such indemnification is in the
best interests of the institution. For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in settlement
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of the Bank's obligations hereunder shall be conclusive evidence of the
Executive's entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.
SECTION 19. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 20. WAIVER.
Failure to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of such term, covenant, or
condition. A waiver of any provision of this Agreement must be made in writing,
designated as a waiver, and signed by the party against whom its enforcement is
sought. Any waiver or relinquishment of any right or power hereunder at any one
or more times shall not be deemed a waiver or relinquishment of such right or
power at any other time or times.
SECTION 21. COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
SECTION 22. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of North
Carolina applicable to contracts entered into and to be performed entirely
within the State of North Carolina.
SECTION 23. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience of reference
only and are not intended to qualify the meaning of any section. Any reference
to a section number shall refer to a section of this Agreement, unless otherwise
stated.
SECTION 24. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties relating to
the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in writing
and signed by the parties hereto.
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SECTION 25. REQUIRED REGULATORY PROVISIONS.
The following provisions are included for the purposes of complying with
various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the Executive
under section 9(b) hereof (exclusive of amounts described in section
9(b)(i)) exceed the three times the Executive's average annual compensation
for the last five consecutive calendar years to end prior to her
termination of employment with the Bank (or for her entire period of
employment with the Bank if less than five calendar years). The
compensation payable to the Executive hereunder shall be further reduced
(but not below zero) if such reduction would avoid the assessment of excise
taxes on excess parachute payments (within the meaning of section 280G of
the Code).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Bank, whether pursuant to this Agreement
or otherwise, are subject to and conditioned upon their compliance with
section 18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if the
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a
notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C.
ss.1818(e)(3) or 1818(g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service of such notice, unless stayed
by appropriate proceedings. If the charges in such notice are dismissed,
the Bank, in its discretion, may (i) pay to the Executive all or part of
the compensation withheld while the Bank's obligations hereunder were
suspended and (ii) reinstate, in whole or in part, any of the obligations
which were suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
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 FDI Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all
prospective obligations of the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights and obligations of
the Bank and the Executive shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI Act,
12 U.S.C. ss.1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive shall not be affected.
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(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except
to the extent that a continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of the Office of
Thrift Supervision ("OTS") or her designee or the Federal Deposit Insurance
Corporation ("FDIC"), 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 FDI Act, 12 U.S.C. ss.1823(c); (ii) by
the Director of the OTS or her designee at the time such Director or
designee approves a supervisory merger to resolve problems related to the
operation of the Bank or when the Bank is determined by such Director to be
in an unsafe or unsound condition. The vested rights and obligations of the
parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
the Executive has hereunto set her hand, all as of the day and year first above
written.
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XXXXXXX X. PAISLEY
Senior Vice President,
Secretary, Treasurer and Chief
Financial Officer
ATTEST: XXXX FEDERAL BANK
By _____________________________ By ____________________________________
XXXXXX X. XXXXXX XXXXX X. XXXX
Senior Vice President and President and Chief Executive Officer
Retail Banking Officer
[Seal]
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STATE OF NORTH CAROLINA )
: ss.:
COUNTY OF XXXX )
On this ________ day of ____________________, 1996, before me personally
came Xxxxxxx X. Paisley, to me known, and known to me to be the individual
described in the foregoing instrument, who, being by me duly sworn, did depose
and say that she resides at the address set forth in said instrument, and that
she signed her name to the foregoing instrument.
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Notary Public
STATE OF NORTH CAROLINA )
: ss.:
COUNTY OF XXXX )
On this ________ day of ____________________, 1996, before me personally
came __________________, to me known, who, being by me duly sworn, did depose
and say that he resides at ____________________________________________________,
that he is a member of the Board of Directors of XXXX FEDERAL BANK, the savings
bank described in and which executed the foregoing instrument; that he knows the
seal of said mutual savings bank; that the seal affixed to said instrument is
such seal; that it was so affixed by order of the Board of Directors of said
savings bank; and that he signed his name thereto by like order.
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Notary Public
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