EXHIBIT 10.7
SHW Draft
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8-4-97
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EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is entered into as of this
____ day of ______________, 1997 between Xxxxxxx X. Xxxxxx ("Executive") and
Equality Bancorp, Inc., a Delaware corporation (the "Company").
WHEREAS, Executive is currently employed by Equality Savings and Loan
Association, F.A. (the "Association"), a federally-chartered capital stock
savings association, as its Vice President under the employment agreement
entered into between Executive, First Missouri Financial, M.H.C. ("First
Missouri"), the Association's mutual holding company, and the Association dated
as of March 1, 1996, (the "Prior Agreement"); and
WHEREAS, Executive is currently employed by First Missouri as its Vice
President; and
WHEREAS, First Missouri and the Association adopted a Plan of Conversion
and Reorganization on May 16, 1997, as subsequently amended, whereby, among
other things, First Missouri will be converted to the stock form of
organization, the Association will change its corporate title to "Equality
Savings Bank" (the "Bank"), the Company will acquire 100 percent of the
outstanding shares of stock of the Bank, First Missouri will cease to exist and
the Company will issue shares of its common stock in an exchange offer to the
public stockholders of the Association and in a subscription and community
offering to eligible members of First Missouri and the general public; and
WHEREAS, Executive and the Company desire to enter into this Agreement
pertaining to the terms of the employment of Executive by the Company and the
continued employment of the Executive by the Bank and the security the Company
is providing to Executive with respect to his employment in lieu of the terms
and conditions of the Prior Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT OF EXECUTIVE. The Company hereby employs Executive, and
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Executive hereby accepts employment with the Company, upon the terms and
conditions hereinafter set forth, for the term set forth in Section 2 of this
Agreement. Executive is employed by the Company to perform the duties of Vice
President of the Company and the Bank, and the Company shall cause the Bank to
appoint Executive to such positions. The services to be performed by the
Executive shall include those normally performed by the Vice President of
similar banking organizations and as directed by the Board of Directors of the
Company, which are not inconsistent with the foregoing. It is the Company's
present intention
that the services to be performed by Executive shall be substantially similar to
the services presently being performed by Executive. Executive agrees to devote
his full business time to the rendition of such services, subject to absences
for customary vacations and for temporary illnesses. The Company agrees that
during the term of this Agreement (a) it will not reduce the Executive's job
titles, status or responsibilities without the Executive's consent, (b)
Executive shall not be required, without his express written consent, to be
based anywhere other than within the St. Louis metropolitan area, except for
reasonable business travel in connection with the Company's business, (c)
Executive shall not be assigned duties materially inconsistent with his
position, duties, responsibilities, and status as Vice President of the Company
and the Bank, (d) it will not change in any significant way the nature or scope
of Executive's authority or his overall working environment, (e) it will not
terminate any incentive compensation plan or arrangement, so that when
considered in the aggregate and with any substitute plan or plans, the incentive
plan or arrangement in which Executive is participating fail to provide him with
substantially the same level of benefits, (f) it will not materially reduce the
secretarial or other administrative support of the Executive, (g) it will not
materially reduce the number or seniority of other Company personnel who report
to Executive, or materially reduce the frequency with which, or the nature of
the matters with respect to which, such personnel are to report to Executive,
other than as part of a Company-wide reduction in staff; and (h) it will not
reduce or adversely change the salary, perquisites, benefits, contingent
benefits or vacation time which had theretofore been provided to the Executive.
During the term of this Agreement, Executive also shall serve as an officer of
any subsidiaries of the Company or the Bank without any additional compensation.
Executive also may serve on boards of directors of charitable organizations and
other business corporations and may request personal time off to attend to
civic, charitable and personal investment activities, provided Executive
notifies the Board of Directors of the Company concerning such service and
activities, the Board of Directors does not disapprove them and such service and
activities do not interfere with the discharge of Executive's management duties.
2. TERM OF EMPLOYMENT. The term of this Agreement and of Executive's
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employment hereunder shall be for an initial period commencing on the date
hereof (the "Commencement Date") and ending on the third anniversary of the date
hereof, unless terminated earlier as provided in Sections 5, 6 and 7 hereof.
Beginning on the date one year after the Commencement Date, and each anniversary
of the Commencement Date thereafter but not including the expiration date of
this Agreement (each such date is hereinafter referred to as an "Anniversary
Date"), the Board of Directors of the Company may extend the term of this
Agreement for a period of one year in addition to the then-remaining term, if
any, by giving the Executive written notice of such extension. Reference herein
to the term of this Agreement shall refer to both the initial term and such
extended term.
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3. COMPENSATION. The Company agrees to compensate (to the extent the
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Bank does not so compensate) the Executive for his services hereunder during
the term of this Agreement by payment of a base salary at the annual rate of
$________ in such monthly, semi-monthly or other payments as are from time to
time applicable to other executive officers of the Bank. The Executive's salary
may be increased from time to time during the term of this Agreement in the sole
discretion of the Board of Directors of the Company, but Executive's salary
shall not be reduced below the level then in effect. In addition, Executive
shall be entitled to participate in incentive compensation plans or arrangements
as may from time to time be established by the Company or the Bank on a basis
consistent with the treatment of other executive officers of the Company or the
Bank (but recognizing differences in responsibilities among executive officers).
Executive also shall be entitled to receive any other bonus or discretionary
compensation payments as the Board of Directors of the Company may determine
from time to time.
4. ADDITIONAL BENEFITS - EXPENSES. Executive shall be provided such other
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benefits (including but not limited to medical, health, life and other insurance
coverage) and shall be entitled to participate in such retirement plans of the
Company and the Bank, as are generally made available to other executive
officers of the Company or the Bank. During his employment, Executive also
shall be entitled to customary vacations in accordance with vacation policies
and practices of the Company or the Bank prevailing from time to time, and to
reimbursement for reasonable expenses incurred on behalf of the Company or the
Bank in accordance with the then prevailing policies and practices of the
Company. All payments under this Agreement shall be subject to all federal,
state or local withholdings which may be required.
5. TERMINATION.
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(A) JUST CAUSE. The Board of Directors of the Company may
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terminate the employment of Executive with the Company and the Bank at any time
for "Just Cause." "Just Cause" shall mean personal dishonesty, incompetence,
willful misconduct or breach of a fiduciary duty involving personal profit in
the performance of his duties under this Agreement, intentional failure to
perform stated duties (provided that such nonperformance has continued for 10
days after the Company has given written notice of such nonperformance to the
Executive and its intention to terminate Executive's employment because of such
nonperformance), willful violation of any law, rule or regulation (other than
traffic violations or similar offenses), final cease-and-desist order or
material breach of any provision of this Agreement. If Executive's employment is
terminated for "Just Cause", the Executive shall be entitled to receive his
theretofore unpaid base salary for the period of employment up to the date of
termination, but shall not be entitled to any compensation or employment
benefits pursuant to this Agreement for any period after the date of
termination.
(B) TERMINATION OR SUSPENSION OF EMPLOYMENT AS REQUIRED BY LAW.
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Notwithstanding anything in this Agreement to the contrary, the following
provisions shall limit
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the obligation of the Company to continue employing Executive, but only to the
extent required by the applicable regulations of the OTS (12 C.F.R. (S) 563.39),
or similar succeeding regulations:
(i) If the Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. (S) 1818(e)(3) and (g)(1)), the Company's obligations under this
Agreement shall be suspended as of the date of service of notice, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Company may in its discretion (i) pay Executive all or part of the compensation
withheld while its contract obligations hereunder were suspended and (ii)
reinstate (in whole or in part) any of its obligations which were suspended. If
the Company does not pay Executive all of the compensation withheld while its
contract obligations hereunder were suspended or does not reinstate in whole its
obligations which were suspended, Executive may terminate his employment
hereunder pursuant to Section 5(d) and such termination shall be considered as
termination for "Good Reason."
(ii) 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 (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. (S)
1818(e)(4) or (g)(1)) all obligations of the Company under this Agreement shall
terminate as of the effective date of the order.
(iii) If the Bank is in default (as defined in Section 3(x)(1)
of the Federal Deposit Insurance Act), all obligations to Executive hereunder
shall terminate as of the date of default, but such termination shall not affect
any vested rights of Executive, the Company or the Bank.
(iv) All obligations under this Agreement may be terminated,
except to the extent determined that continuation of the contract is necessary
for the continued operation of the Bank: (i) by the Director of the Office of
Thrift Supervision (the "Director") or his or her designee at the time the
Federal Deposit Insurance Company 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 and (ii) by the Director, or his or her
designee at the time the Director or such designee approves a supervisory merger
to resolve problems related to operation of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition.
(v) Termination under this Section 5(b) shall not affect other
rights hereunder which are vested at the time of termination.
(C) VOLUNTARY TERMINATION. Executive may terminate his employment
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hereunder at any time for any reason upon giving the Company written notice, at
least ninety (90) days prior to termination of employment. Upon such
termination, Executive shall be
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entitled to receive Executive's theretofore unpaid base salary for the period of
employment up to the date of termination, but shall not be entitled to any
compensation or employment benefits pursuant to this Agreement for any period
after the date of termination.
(D) GOOD REASON. Executive may terminate his employment hereunder
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at any time for "Good Reason." "Good Reason" shall be deemed to exist if
Executive terminates his employment because, without his express written
consent, the Company breaches any of the terms of this Agreement. If Executive
terminates his employment for "Good Reason," Executive shall receive (i) his
base salary under Section 3 hereof through the then-remaining term of employment
under Section 2 (calculated as if his employment had not been terminated under
this Section 5(d)), which amount shall be paid in a lump-sum or in equal monthly
installments at the discretion of Executive, (ii) his theretofore unpaid base
salary and pro-rated incentive compensation for the period of employment up to
the date of termination, (iii) medical and other insurance through the then
remaining term of employment under Section 2 (calculated as if his employment
had not been terminated under this Section 5(d)) consistent with the terms and
conditions set forth in Section 4, (iv) any other benefits to which Executive is
entitled by law or the specific terms of the Company's policies in effect at the
time of termination of employment and (v) an amount equal to the product of the
Company's or the Bank's annual aggregate contribution, for the benefit of
Executive in the year preceding termination, to all qualified retirement plans
in which Executive participated multiplied by three (calculated as if his
employment had not been terminated under this Section 5(d)). The benefit in (v)
under this Section 5(d) shall be in addition to any benefit payable from any
qualified or non-qualified plans or programs maintained by the Company or the
Bank at the time of termination. In no event, however, shall payments made to
Executive under this Section 5(d) exceed three times Executive's average annual
compensation (including base salary, commissions, bonuses, pension and profit
sharing plan awards, retirement, director or committee fees and fringe benefits)
for the most recent five taxable years.
(E) TERMINATION WITHOUT JUST CAUSE. The Company may terminate
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Executive's employment without Just Cause, in which case the Executive shall
receive the amounts that would be paid Executive under Section 5(d) if he had
terminated his employment for Good Reason.
(F) CHANGE IN CONTROL. (i) If, at any time after the date hereof, a
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"Change in Control" (as hereinafter defined) occurs and within twelve (12)
months thereafter Executive's employment is terminated by the Company other than
for Just Cause or Executive terminates his employment for Good Reason, then
Executive shall be entitled to the benefits provided below.
(A) The Company shall promptly pay to Executive an amount
equal to the product of 2.99 times Executive's "base amount" as defined in
Section 280G(b)(3) of the Code (such "base amount" to be derived from
Executive's compensation paid by the Company and the Bank).
(B) For purposes of all employee benefit plans (including, but
not limited to, health and life insurance and incentive, pension and retirement
plans) of the Company and the Bank, Executive (and his dependents and
beneficiaries, as the case may be) shall be given service credit for all
purposes for, and shall be deemed to be an employee of the
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Company and the Bank during, the term of this Agreement set forth in Section 2
(calculated as if employment had not been terminated under this Section 5(f)),
notwithstanding the fact that he is no longer an employee of the Company or the
Bank; provided that, if the terms of any of such employee benefit plans do not
permit such credit or deemed employee treatment, the Company or the Bank will
make payments and distributions to Executive outside of the plans in amounts
substantially equivalent to the payments and distributions Executive would have
received pursuant to the terms of the plans and attributable to such credit or
deemed employee treatment, had such credit or deemed employee treatment been
permitted pursuant to the terms of the plans.
(ii) (A) Anything in this Agreement to the contrary
notwithstanding, it is the intention of the Company and Executive that no
portion of any payment under this Agreement, or payments to or for the benefit
of Executive under any other agreement or plan, be deemed an "Excess Parachute
Payment" as defined in Section 280G of the Code, or its successors. It is agreed
that the present value of and any payment to or for the benefit of Executive in
the nature of compensation, receipt of which is contingent on the occurrence of
a Change in Control, and to which Section 280G of the Code applies (in the
aggregate "Total Payments") shall not exceed an amount equal to one dollar less
than the maximum amount that the Company may pay without loss of deduction under
Section 280G(a) of the Code. Present value for purposes of this Agreement shall
be calculated in accordance with Section 280G(d)(4) of the Code. Within sixty
days (60) following the earlier of (1) the giving of notice of termination of
employment or (2) the giving of notice by the Company to Executive of its belief
that there is a payment or benefit due Executive, the Company, at the Company's
expense, shall obtain the opinion of the Company's public accounting firm (the
"Accounting Firm"), which opinion need not be unqualified, which sets forth: (a)
the amount of the Base Period Income of Executive (as defined in Code Section
280G), (b) the present value of Total Payments and (c) the amount and present
value of any excess parachute payments. In the event that such opinion
determines that there would be an Excess Parachute Payment, the payment
hereunder shall be modified, reduced or eliminated as specified by Executive in
writing delivered to the Company within thirty (30) days of his receipt of such
opinion or, if Executive fails to so notify the Company, then as the Company
shall reasonably determine, so that under the bases of calculation set forth in
such opinion there will be no Excess Parachute Payment. In the event that the
provisions of Sections 280G and 4999 of the Code are repealed without
succession, this Section shall be of no further force or effect.
(B) In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, Executive shall appoint another nationally recognized public
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm under Section
5(f)(ii)(A)). All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any determination by the Accounting Firm shall be binding upon
the Company and Executive.
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(iii) For purposes of Section 5(f) of this Agreement, a "Change
in Control" shall be deemed to have occurred if:
(A) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 (as in effect on the
date hereof), becomes the beneficial owner of shares of the Company having 25%
or more of the total number of votes that may be cast for the election of
directors of the Company, including for this purpose any shares beneficially
owned by such third person or group as of the date hereof; or
(B) 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 (a
"Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company. (In the event of any reorganization
involving the Company in a transaction initiated by the Company in which the
shareholders of the Company immediately prior to such reorganization become the
shareholders of a successor or ultimate parent company of the Company resulting
from such reorganization and the persons who were directors of the Company
immediately prior to such reorganization constitute a majority of the Board of
Directors of such successor or ultimate parent, no "Change in Control" shall be
deemed to have taken place solely by reason of such reorganization,
notwithstanding the fact that the Company may have become the wholly-owned
subsidiary of another company in such reorganization and members of the Board of
Directors of the Company may have become members of the Board of Directors of
such successor company, and thereafter the term "Company" for purposes of this
paragraph shall refer to such successor or ultimate parent company.); or
(C) a third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934 (as in effect on the
date hereof), acquires control, as defined in 12 C.F.R. (S) 574.4, or any
successor regulation, of the Company that would require the filing of an
application for acquisition of control or notice of change in control in a
manner set forth in 12 C.F.R. (S) 574.3, or any successor regulation.
6. DEATH OF EXECUTIVE. If Executive shall die during the term of this
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Agreement, his employment with the Company and this Agreement shall terminate
and the Company shall pay to a beneficiary designated in writing by Executive,
or in the absence of such designation, to Executive's estate, the full amount of
his theretofore unpaid base salary and pro-rated incentive compensation for the
period of employment up to the date of termination, and the Company shall have
no further obligations hereunder. The preceding sentence shall not be construed
to limit any benefit payable in the event of the death of Executive under any
applicable benefit plans or other arrangements.
7. DISABILITY OF EXECUTIVE. If Executive becomes Totally and Permanently
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Disabled (as defined below) during the term of this Agreement, the Company may
terminate
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Executive's employment and this Agreement, except Sections 8 and 9 hereof, by
giving Executive written notice of such termination not less than 5 days before
the effective date thereof. If Executive's employment and this Agreement are
terminated pursuant to this Section 7, the Company shall pay to Executive his
theretofore unpaid base salary and pro-rated incentive compensation for the
period of employment up to the date of termination, and the Company shall have
no further obligations to Executive under this Agreement. The preceding
sentence shall not be construed to limit any benefit payable to Executive under
any applicable benefit plans or other arrangements. The Executive is Totally
and Permanently Disabled for purposes of this Section 7 if he is disabled or
incapacitated to the extent that he is unable to perform the duties of Vice
President of the Company or the Bank for more than three (3) consecutive months,
and such disability or incapacity is expected to continue for more than three
(3) additional months as certified by a medical doctor of Executive's own
choosing and concurred in by a doctor of the Company's choosing.
8. COVENANT NOT TO COMPETE. Executive acknowledges that the Company would
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be substantially damaged by an association of Executive with a depository
institution that competes for customers with the Company, the Bank and any
subsidiaries of the Company or the Bank. Without the consent of the Company,
Executive shall not at any time during the term of this Agreement or Executive's
employment, and for a period of three years thereafter (regardless of the reason
for termination), (a) solicit any person who was a customer of the Company or
the Bank or any of their subsidiaries during the two year period prior to the
termination of this Agreement or Executive's employment hereunder for Executive
or any other person, to offer the same products or render the same services to
such customer as were provided or proposed to be provided by the Company or the
Bank or any of their subsidiaries to such customer as of the time of termination
of Executive's employment, (b) directly or indirectly, on Executive's behalf or
in the service or on the behalf of others, render or be retained to render
similar services as described in Section 1 hereof, whether as an officer,
partner, trustee, consultant, or employee for any depository institution, which
has a banking office located within 25 miles of any office of the Bank or any
banking office of the Company as of the date of Executive's termination of
employment, provided, however, that Executive shall not be deemed to have
breached this undertaking if his sole relationship with any other such entity
consists of his holding, directly or indirectly, an equity interest in such
entity not greater than three percent (3%) of such entity's outstanding equity
interest, or (c) actively induce or solicit any employees of the Company or the
Bank to leave such employ. For purposes of this Section 8, "person" shall
include any individual, corporation, partnership, trust, firm, proprietorship,
venture or other entity of any nature whatsoever.
9. CONFIDENTIAL INFORMATION. Executive acknowledges that he now has, and
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hereunder will have, access to important and confidential information regarding
the business and services of the Company, the Bank and their subsidiaries, and
that the disclosure to, or the use of such information by, any business in
competition with the Company, the Bank or their subsidiaries shall result in
substantial and undeterminable harm to the Company, the Bank and its
subsidiaries. In order to protect the Company, the Bank and its subsidiaries
against such
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harm and from unfair competition, Executive agrees with the Company that while
employed by the Company and at any time thereafter, Executive will not disclose,
communicate or divulge to anyone, or use in any manner adverse to the Company,
the Bank or their subsidiaries any information concerning customers, methods of
business, financial information or other confidential information of the
Company, the Bank, or their subsidiaries, except for information as is in the
public domain or ascertainable through common sources of public information
(otherwise than as a result of any breach of this covenant by Executive).
10. LIMITATION ON TERMINATION OR DISABILITY PAY. Any payments made to
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Executive pursuant to this Agreement or otherwise are subject to and conditioned
upon the compliance of such payments with 12 U.S.C. (S) 1828(k) and any
regulations promulgated thereunder.
11. LEGAL FEES AND EXPENSES. The Company shall pay all legal fees and
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expenses that Executive may incur in connection with his enforcement of the
terms of this Agreement, but only if and after a legal judgment or settlement
has been reached. Executive shall be entitled to receive interest thereon for
the period of any delay in payment from the date such payment was due at the
rate determined by adding two hundred basis points to the six-month Treasury
Xxxx rate.
12. INQUIRIES REGARDING PROPOSED ACTIVITIES. In the event Executive shall
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inquire in writing of the Company whether any proposed action on the part of
Executive would be considered by the Company to be prohibited by or in breach of
the terms of this Agreement, the Company shall have 30 days after receipt of
such notice to express in writing to Executive its position with respect thereof
and in the event such writing shall not be given to Executive, such proposed
action, as set forth in the writing of the Company, shall not be deemed to be a
violation of or breach of this Agreement.
13. NO DUTY OF MITIGATION. Executive shall not be required to mitigate
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the amount of any payment or benefit provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by
Executive as the result of employment by another employer, by retirement
benefits after the date of termination or otherwise.
14. SUCCESSORS. This Agreement may not be assigned by the Company except
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in connection with a merger involving the Company or a sale of substantially all
of its assets (subject to the Change in Control provisions of Section 5(f)), and
the obligations of the Company provided for in this Agreement shall be formally
assumed by, and be the binding legal obligations of, any successor to the
Company by purchase, merger, consolidation, or otherwise. This Agreement may not
be assigned by Executive during his life, and upon his death will be binding
upon and inure to the benefit of his heirs, legatees and the legal
representatives of his estate.
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15. NOTICE. For the purposes of this Agreement, notices and all other
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communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement (provided that all
notices to the Company shall be directed to the attention of the Board of
Directors of the Company with a copy to the Secretary of the Company), or to
such other address as either party may have furnished to the other in writing in
accordance herewith.
16. AMENDMENTS. No amendment or additions to this Agreement shall be
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binding unless in writing and signed by all parties, except as herein otherwise
provided.
17. SEVERABILITY. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If,
however, any provision of this Agreement is declared invalid or unenforceable by
a court of competent jurisdiction, then the parties hereto shall in good faith
amend this Agreement to include an alternative provision that accomplishes a
similar result.
18. GOVERNING LAW. This Agreement shall be governed by the laws of the
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United States to the extent applicable and otherwise by the internal laws of the
State of Missouri.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
EQUALITY BANCORP, INC.
By: ___________________________________
Its:____________________________________
EXECUTIVE
_______________________________________
Xxxxxxx X. Xxxxxx
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