Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 26th day of
February, 1999 by and between GUARANTY FINANCIAL CORPORATION, a Virginia
corporation, hereinafter called the "Corporation", and XXXXXX X. XXXXX,
hereinafter called the "Employee", and provides as follows:
RECITALS
WHEREAS, the Corporation is a bank holding company engaged in the
operation of a bank; and
WHEREAS, Employee has been involved in the management of the business
and affairs of the Corporation and, therefore, possesses managerial experience,
knowledge, skills and expertise in, and confidential information pertaining to,
such business; and
WHEREAS, the continued employment of Employee is in the best interests
of the Corporation and the Employee; and
WHEREAS, the parties have mutually agreed upon the terms and conditions
of Employee's continued employment by the Corporation as hereinafter set forth;
TERMS OF AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and of the
mutual promises and undertakings of the parties as hereinafter set forth, the
parties covenant and agree as follows:
Section 1. Employment. (a) Employee shall be employed to perform such
services for The Corporation and/or one or more Affiliates as may be assigned to
Employee by the Corporation from time to time upon the terms and conditions
hereinafter set forth. Employee's services shall be rendered in a senior
management or executive capacity and shall be of the type for which Employee is
suited by background and training.
(b) References in this Agreement to services rendered for the
Corporation and compensation and benefits payable or provided by the Corporation
shall include services rendered for and compensation and benefits payable or
provided by any Affiliate. References in this Agreement to the "Corporation"
also shall mean and refer to each Affiliate for which Employee performs
services. References in this Agreement to "Affiliate" shall mean any business
entity that, directly or indirectly, through one or more intermediaries, is
controlled by the Corporation.
(c) The provisions of this Agreement supersede the provisions
of any previously existing employment agreement or agreement providing change of
control benefits between Employee and the Corporation and/or any Affiliate.
(d) The parties recognize that the Board of Directors of the
Corporation shall manage the business affairs of the Corporation and that the
relationship between the Corporation and Employee shall be that of an employer
and an employee. The Board of Directors shall have the sole authority to set and
establish the hours of operation of the business and to set and establish
reasonable work schedules and standards applicable to Employee.
Section 2. Term. The term of this Agreement shall continue until
February 26, 2004 unless sooner terminated under the terms of this Agreement.
Section 3. Exclusive Service. Employee shall devote his best efforts
and full time to rendering services on behalf of the Corporation in furtherance
of its best interests. Employee shall comply with all policies, standards and
regulations of the Corporation now or hereafter promulgated, and shall perform
his duties under this Agreement to the best of his abilities and in accordance
with general business standards of conduct.
Section 4. Salary. (a) As compensation while employed hereunder,
Employee, during his faithful performance of this Agreement, in whatever
capacity rendered, shall receive an annual base salary of $150,000 payable on
such terms and in such installments as the parties may from time to time
mutually agree upon. The Employee's performance will be evaluated annually.
Provided the Employee does not receive an unfavorable performance review, the
Employee shall receive an increase in annual base salary each year, equal to the
less of 5% of the previous year's base salary or the average annual increase
approved by the Board of Directors for all employees. The Board of Directors, in
its discretion, may decrease Employee's base salary if the Corporation sustains
a net loss in a calendar year or the Corporation fails to remain well
capitalized, as defined in regulations of the Board of Governors of the Federal
Reserve System. In no event, however, shall such salary be reduced below
$135,000
(b) The Corporation shall withhold state and federal income
taxes, social security taxes and such other payroll deductions as may from time
to time be required by law or agreed upon in writing by Employee and the
Corporation. The Corporation shall also withhold and remit to the proper party
any amounts agreed to in writing by the Corporation and the Employee for
participation in any corporate sponsored benefit plans for which a contribution
is required.
(c) Except as otherwise expressly set forth hereunder, no
compensation shall be paid pursuant to this Agreement in respect of any month or
portion thereof subsequent to any termination of Employee's employment by the
Corporation.
Section 5. Corporate Benefit Plans. Employee shall be entitled to
participate in or become a participant in any employee benefit plan maintained
by the Corporation for which he is or will become eligible on such terms as the
Board of Directors may, in its discretion, establish, modify or otherwise
change.
The Corporation shall provide Employee with a disability insurance
policy providing benefits commensurate with other employees as so amended by the
Board from time to time.
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The Corporation shall pay the premiums on group term insurance on the
life of the Employee in an amount equal to two times his base salary, provided
such life insurance does not exceed $200,000.
Section 6. Bonuses. Employee shall receive only such bonuses as the
Board of Directors, in its discretion, decides to pay to Employee.
Section 7. Expense Account. The Corporation shall reimburse Employee
for reasonable and customary business expenses incurred in the conduct of the
Corporation's business. Such expenses will include business meals, out-of-town
lodging and travel expenses. In no event will there be reimbursement for items
which are not tax-deductible to the Corporation as a business expense. Employee
agrees to timely submit records and receipts of reimbursable items and agrees
that the Corporation can adopt reasonable rules and policies regarding such
reimbursement. The Corporation agrees to make prompt payment to the Employee
following receipt and verification of such reports.
The Corporation will provide the Employee a Chrysler LHS or comparable
American made automobile for personal and business use and will pay or reimburse
the Employee for all maintenance, insurance, fuel and taxes on such automobile.
Section 8. Personal and Sick Leave. Employee shall be entitled to the
same personal and sick leave as the Board of Directors may from time to time
designate for all full-time employees of the Corporation.
Section 9. Vacations. Employee shall be entitled to fifteen (15) week
days of vacation leave each year (20 days after 10 years of continuous service)
which shall be taken at such time or times as may be approved by the Corporation
and during which Employee's compensation hereunder shall continue to be paid.
Section 10. Termination. (a) Notwithstanding the termination of
Employee's employment pursuant to any provision of this Agreement, the parties
shall be required to carry out any provisions of this Agreement which
contemplate performance by them subsequent to such termination. In addition, no
termination shall affect any liability or other obligation of either party which
shall have accrued prior to such termination, including, but not limited to, any
liability, loss or damage on account of breach. No termination of employment
shall terminate the obligation of the Corporation to make payments of any vested
benefits provided hereunder or the obligations of the Employee under Sections
11, 12 and 13.
(b) Employee's employment hereunder may be terminated by
Employee upon thirty (30) days written notice to the Corporation.
(c) This Agreement shall terminate upon death of the Employee;
provided, however, that in such event the Corporation shall pay to the estate of
the Employee the compensation including salary and accrued bonus, if any, which
otherwise would be payable to the Employee through the end of the month in which
his death occurs.
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(d) The Corporation may terminate Employee's employment other
than for "Cause", as defined in Section 10(e), at any time upon written notice
to Employee, which termination shall be effective immediately. In the event the
Corporation terminates Employee pursuant to this Section 10(d), Employee shall
receive a monthly amount equal to one-twelfth (1/12) his rate of annual base
salary in effect immediately preceding such termination ("Termination
Compensation") in each month for the twelve (12) months following termination,
so long as Employee complies with Sections 11 and 12. Payments of the
Termination Compensation shall be made at the times such payments would have
been made in accordance with Section 4(a). In addition, Employee shall continue
to participate in welfare benefit plans for which officers of the Corporation
generally are eligible, on the same terms as applicable from time to time to
such officers, or receive benefits of comparable value, for all periods Employee
receives Termination Compensation. Notwithstanding anything in this Agreement to
the contrary, if Employee breaches Section 11 or 12, Employee will not
thereafter be entitled to receive any further compensation or benefits pursuant
to this Section 10(d). Any payment to which the Employee is entitled under this
Section 10(d) shall be reduced dollar for dollar by any amounts received by
Employee pursuant to Section 10(i).
(e) The Corporation shall have the right to terminate
Employee's employment under this Agreement at any time for Cause, which
termination shall be effective immediately. Termination for "Cause" shall
include termination for Employee's personal dishonesty, incompetence, willful
misconduct, breach of a 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, conviction of a felony or of a misdemeanor involving
moral turpitude, misappropriation of the Corporation's assets (determined on a
reasonable basis) or those of its Affiliates, or material breach of any other
provision of this Agreement. In the event Employee's employment under this
Agreement is terminated for Cause, Employee shall thereafter have no right to
receive compensation or other benefits under this Agreement.
(f) The Corporation may terminate Employee's employment under
this Agreement, after having established the Enployee's disability by giving to
the Employee written notice of its intention to terminate his employment for
disability and his employment with the Corporation shall terminate effective on
the 90th day after receipt of such notice if within 90 days after such receipt
the Employee shall fail to return to the full-time performance of the essential
functions of his position (and if the Employee's disability has been established
pursuant to the definition of "disability" set forth below). For purposes of
this Agreement, "disability" means either (i) disability which after the
expiration of more than 13 consecutive weeks after its commencement is
determined to be total and permanent by a physician selected and paid for by the
Corporation or its insurers, and acceptable to the Employee or his legal
representative, which consent shall not be unreasonably withheld or (ii)
disability as defined in the policy of disability insurance maintained by the
Corporation or its Affiliates for the benefit of the Employee, whichever shall
be more favorable to the Employee. Notwithstanding any other provision of this
Agreement, the Corporation shall comply with all requirements of the Americans
with Disabilities Act, 42 U.S.C. ss. 12101 et. seq.
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(g) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the Corporation's affairs by a notice
served pursuant to the Federal Deposit Insurance Act, the Corporation's
obligations under this Employment Agreement shall be suspended as of the date of
service unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Corporation may in its discretion (i) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(h) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Corporation's affairs by an order
issued under the Federal Deposit Insurance Act, all obligations of the
Corporation under this Employment Agreement shall terminate as of the effective
date of the order, but vested rights of the parties shall not be affected.
(i)(1) If, Employee's employment terminates for any reason
within one hundred twenty (120) days after a Change of Control shall have
occurred, then on or before the Employee's last day of employment with the
Corporation, the Corporation shall pay to the Employee as compensation for
services rendered to the Corporation and its Affiliates a cash amount (subject
to any applicable payroll or other taxes required to be withheld) equal to 299%
of the Employee's "annualized includable compensation for the base period", as
defined in Section 280G of the Internal Revenue Code of 1986 (the "Code"),
provided that, at the option of the Employee, the cash amount required to be
paid hereby shall be paid by the Corporation in equal monthly installments over
the thirty-six (36) months succeeding the date of termination, payable on the
first day of each such month.
(2) For purposes of this Agreement, a Change of Control occurs
if, after the date of this Agreement, (i) any person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934 (but
excluding Xxxxxxx X. Xxxxx or any group of which the Employee or Xxxxxxx X.
Xxxxx is a member), becomes the owner or beneficial owner of Corporation
securities having 20% or more of the combined voting power of the then
outstanding Corporation securities that may be cast for the election of the
Corporation's directors other than a result of an issuance of securities
initiated by the Corporation, or open market purchases approved by the Board of
Directors, as long as the majority of the Board of Directors approving the
purchases is a majority at the time the purchases are made; or (ii) as the
direct or indirect result of, or in connection with, a tender or exchange offer,
a merger or other business combination, a sale of assets, a contested election
of directors, or any combination of these events, the persons who were directors
of the Corporation before such events cease to constitute a majority of the
Corporation's Board, or any successor's board, within two years of the last of
such transactions. For purposes of this Agreement, a Change of Control occurs on
the date on which an event described in (i) or (ii) occurs. If a Change of
Control occurs on account of a series of transactions or events, the Change of
Control occurs on the date of the last of such transactions or events.
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(3) It is the intention of the parties that no payment be made
or benefit provided to the Employee pursuant to this Agreement that would
constitute an "excess parachute payment" within the meaning of Section 280G of
the Code and any regulations thereunder, thereby resulting in a loss of an
income tax deduction by the Corporation or the imposition of an excise tax on
the Employee under Section 4999 of the Code. If the independent accountants
serving as auditors for the Corporation on the date of a Change of Control (or
any other accounting firm designated by the Corporation) determine that some or
all of the payments or benefits scheduled under this Agreement, as well as any
other payments or benefits on a Change of Control, would be nondeductible by the
Company under Section 280G of the Code, then the payments scheduled under this
Agreement will be reduced to one dollar less than the maximum amount which may
be paid without causing any such payment or benefit to be nondeductible. The
determination made as to the reduction of benefits or payments required
hereunder by the independent accountants shall be binding on the parties. The
Employee shall have the right to designate within a reasonable period, which
payments or benefits will be reduced; provided, however, that if no direction is
received from the Employee, the Corporation shall implement the reductions in
its discretion.
Section 11. Confidentiality/Nondisclosure. Employee covenants and
agrees that any and all information concerning the customers, businesses and
services of the Corporation of which he has knowledge or access as a result of
his association with the Corporation in any capacity, shall be deemed
confidential in nature and shall not, without the proper written consent of the
Corporation, be directly or indirectly used, disseminated, disclosed or
published by Employee to third parties other than in connection with the usual
conduct of the business of the Corporation. Such information shall expressly
include, but shall not be limited to, information concerning the Corporation's
trade secrets, business operations, business records, customer lists or other
customer information. Upon termination of employment the Employee shall deliver
to the Corporation all originals and copies of documents, forms, records or
other information, in whatever form it may exist, concerning the Corporation or
its business, customers, products or services. In construing this provision it
is agreed that it shall be interpreted broadly so as to provide the Corporation
with the maximum protection. This Section 11 shall not be applicable to any
information which, through no misconduct or negligence of Employee, has
previously been disclosed to the public by anyone other than Employee.
Section 12. Covenant Not to Compete. During the term of this Agreement
and throughout any further period that he is an officer or employee of the
Corporation, and for a period of twelve (12) months from and after the date that
Employee is (for any reason) no longer employed by the Corporation or for a
period of twelve (12) months from the date of entry by a court of competent
jurisdiction of a final judgment enforcing this covenant in the event of a
breach by Employee, whichever is later, Employee covenants and agrees that he
will not, directly or indirectly, either as a principal, agent, employee,
employer, stockholder, co-partner or in any other individual or representative
capacity whatsoever: (i) engage in a Competitive Business anywhere within a ten
(10) mile radius of any office operated by the Corporation on the date the
Employee's employment terminates; or (ii) solicit, or assist any other person or
business entity in soliciting, any depositors or other customers of the
Corporation to make deposits in or to become customers of any other financial
institution conducting a Competitive Business; or (iii) induce any individuals
to terminate their employment with the Corporation or its Affiliates. As used in
this Agreement,
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the term "Competitive Business" means all banking and financial products and
services that are substantially similar to those offered by the Corporation on
the date that the Employee's employment terminates. Notwithstanding the
foregoing, this Section 12 shall not apply if Employee's employment terminates
after a Change of Control.
Section 13. Injunctive Relief, Damages, Etc. The Employee agrees that
given the nature of the positions held by Employee with the Corporation, that
each and every one of the covenants and restrictions set forth in Sections 11
and 12 above are reasonable in scope, length of time and geographic area and are
necessary for the protection of the significant investment of the Corporation in
developing, maintaining and expanding its business. Accordingly, the parties
hereto agree that in the event of any breach by Employee of any of the
provisions of Sections 11 or 12 that monetary damages alone will not adequately
compensate the Corporation for its losses and, therefore, that it may seek any
and all legal or equitable relief available to it, specifically including, but
not limited to, injunctive relief and the Employee shall be liable for all
damages, including actual and consequential damages, costs and expenses,
including legal costs and actual attorneys' fees, incurred by the Corporation as
a result of taking action to enforce, or recover for any breach of, Section 11
or Section 12. The covenants contained in Sections 11 and 12 shall be construed
and interpreted in any judicial proceeding to permit their enforcement to the
maximum extent permitted by law. Should a court of competent jurisdiction
determine that any provision of the covenants and restrictions set forth in
Section 12 above is unenforceable as being overbroad as to time, area or scope,
the court may strike the offending provision or reform such provision to
substitute such other terms as are reasonable to protect the Corporation's
legitimate business interests.
Section 14. Binding Effect. This Employment Agreement shall be binding
upon and inure to the benefit of the Corporation and Employee and their
respective heirs, legal representatives, executors, administrators, successors
and assigns, but neither this Agreement, nor any of the rights hereunder, shall
be assignable by the Employee or any beneficiary or beneficiaries designated by
the Employee.
Section 15. Governing Law. This Employment Agreement shall be subject
to and construed in accordance with the laws of Virginia.
Section 16. Invalid Provisions. The invalidity or unenforceability of
any particular provision of this Employment Agreement shall not affect the
validity or enforceability of any other provisions hereof, and this Employment
Agreement shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.
Section 17. Notices. Any and all notices, designations, consents,
offers, acceptance or any other communications provided for herein shall be
given in writing and shall be deemed properly delivered if delivered in person
or by registered or certified mail, return receipt requested, addressed in the
case of the Corporation to its registered office or in the case of Employee to
his last known address.
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Section 18. Entire Agreement.
(a) This Employment Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
and all other agreements, either oral or in writing, among the parties hereto
with respect to the subject matter hereof.
(b) This Employment Agreement may be executed in one or more
counterparts, each of which shall be considered an original copy of this
Agreement, but all of which together shall evidence only one agreement.
Section 19. Amendment and Waiver. This Employment Agreement may not be
amended except by an instrument in writing signed by or on behalf of each of the
parties hereto. No waiver of any provision of this Employment Agreement shall be
valid unless in writing and signed by the person or party to be charged.
Section 20. Case and Gender. Wherever required by the context of this
Employment Agreement, the singular or plural case and the masculine, feminine
and neuter genders shall be interchangeable.
Section 21. Captions. The captions used in this Employment Agreement
are intended for descriptive and reference purposes only and are not intended to
affect the meaning of any Section hereunder.
IN WITNESS WHEREOF, the Corporation has caused this Employment
Agreement to be signed by its duly authorized officer and Employee has hereunto
set his hand and seal on the day and year first above written.
GUARANTY FINANCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Title: Chairman of the Board
--------------------------------
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
------------------------------
EMPLOYEE
/s/ Xxxxxx X. Xxxxx
---------------------------------(SEAL)
Xxxxxx X. Xxxxx
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