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Exhibit 10(a)
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is made and effective as of this 1st day of April, 1999 by and
between Mechanics and Farmers Bank, a North Carolina banking corporation with
its principal location in Durham, North Carolina (the "Bank"), and Xxxxx X.
Xxxxxx (the "Executive").
RECITALS:
A. The Bank recognizes the value of the Executive's services and
desires to insure the Executive's continued employment with the Bank.
B. The Executive wishes to continue in the employment of the Bank.
C. The Bank and the Executive mutually desire that their employment
relationship be set forth under the terms of a written employment agreement.
NOW, THEREFORE, in consideration of the foregoing and of the promises and mutual
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. EMPLOYMENT. The Bank agrees to continue to employ the Executive, and
the Executive agrees to continue to serve and be employed by the Bank,
on the terms and conditions, set forth herein.
2. TERM OF EMPLOYMENT. The employment of the Executive by the Bank as
provided under Section 1 shall commence on the effective date hereof
and end on April 1, 2000, unless further extended or sooner terminated
as hereinafter provided. On April 1, 2000 and on April 1st of each year
thereafter, the term of the Executive's employment hereunder shall be
extended automatically one (1) additional year, unless prior to the
date of such automatic extension the Bank shall have delivered to the
Executive a Notice of Termination (as defined in Section 6(a)(vii)) or
the Executive shall have delivered to the Bank a Notice of Termination
that the term of the Executive's employment hereunder shall not be
extended.
3. POSITION AND DUTIES. The Executive shall serve as President and Chief
Executive Officer of the Bank with responsibilities and authority as
may from time to time be assigned to her by the Board of Directors of
the Bank. The Executive shall devote substantially all of her working
time and efforts to the business affairs of the Bank. In addition, the
Executive shall serve on the Board of Directors of the Bank during the
term of this Agreement for so long as she is elected to such Board by
the shareholders of the Bank.
4. PLACE OF PERFORMANCE. In connection with the Executive's employment
hereunder, the Executive shall be based at the Bank's principal offices
located in Durham, North Carolina, subject to reasonable travel on the
business of the Bank.
5. COMPENSATION AND BENEFITS. In consideration of the Executive's
performance of her duties hereunder, the Bank shall provide the
Executive with the following compensation and benefits during the term
of her employment hereunder.
(a) Base Salary. The Bank shall pay to the Executive an aggregate
base salary at a rate of not less than One Hundred Fifty
Thousand and No/100 Dollars ($150,000.00) per annum, payable
in accordance with the Bank's normal payroll practices. Such
base salary may be increased from time to time by the Board of
Directors in accordance with the normal business practices of
the Bank and, if so increased, shall not thereafter during the
term of the Executive's employment hereunder be decreased
unless the decrease is generally applicable to substantially
all similarly situated Bank employees (or employees of a
successor or controlling entity of the Bank) formerly
benefited.
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Compensation of the Executive by base salary payments shall
not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit
program of the Bank. Such base salary payments (including
increases or decreases thereto) shall not in any way limit or
reduce any other obligation of the Bank hereunder, and no
other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Bank with respect to
such base salary.
(b) Performance Bonus. The Bank shall pay to the Executive with
respect to each fiscal year during the term of the Executive's
employment hereunder, a discretionary performance bonus
according to the Bank's then existing bonus plan.
(c) Expenses. The Bank, as applicable, shall promptly reimburse
the Executive for reasonable out-of-pocket expenses incurred
by the Executive in her performance of services hereunder,
including reasonable expenses of travel and living expense
while away from home on business of the Bank, provided that
such expenses are incurred, accounted for and documented in
accordance with the regular policies and procedures
established by the Bank from time to time.
(d) Employee Benefits. The Executive shall be entitled to continue
to participate in all Bank employee benefit plans and
arrangements in effect on the date hereof in which the
Executive participates, (including, but not limited to, any
employee benefit pension plan, stock option plan, life
insurance plan, vacation plan, disability plan, and the group
health-and-accident and medical insurance plans) as such plans
may continue or be altered by the Bank Board of Directors from
time to time at the Board's discretion.
(e) Vacation. The Executive shall be entitled to vacation in each
calendar year during the term of this Agreement, in accordance
with the Bank's vacation policies, as well as to all paid
holidays provided by the Bank to its employees.
(f) Services. The Bank shall furnish the Executive with office
space, secretarial and administrative assistance, and such
other facilities and services as shall be suitable to her
position and adequate for the performance of her duties
hereunder.
6. COMPENSATION AND BENEFITS IN THE EVENT OF TERMINATION OR ACQUISITION OF
THE BANK. In the event of the termination of the Executive's employment
by the Bank during the term of this Agreement, compensation and
benefits shall be paid as set forth below.
(a) Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
(i) "Cause" means any one or more of the following:
(A) Willful malfeasance or gross negligence in
the performance of Executive's duties;
(B) Conviction of a crime other than minor
traffic offenses; or
(C) Conduct which is or could be demonstrably
and significantly harmful to the Bank, as
reasonably determined by the Bank's Board of
Directors on the advice of legal counsel.
(ii) "Change in Control" shall mean either:
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(A) the acquisition, directly or indirectly, by
any person or group of persons other than in
the formation of the Bank's holding company
of shares in the Bank other than by M&F
Bancorp, Inc. in connection with the
formation of Bank's holding company or
otherwise, or, if formed, the Bank's holding
company, which, when added to any other
shares the beneficial ownership of which is
held by such acquiror(s), shall result in
ownership by any person(s) of greater than
50 percent (50%) of such stock or which
would require prior notification under any
federal or state banking law or regulation;
or
(B) the occurrence of any merger, consolidation,
exchange or reorganization to which the Bank
or, if formed, the Bank's holding company is
a party and to which the Bank, or the Bank's
holding company (or an entity controlled
thereby) is not a surviving entity, or the
sale of all or substantially all of the
assets of the Bank or the Bank's holding
company.
(C) For purposes of this sub-paragraph (ii), the
definition of "person" shall be as defined
in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934.
(iii) "Compensation" shall mean the total compensation paid
to Executive as reported or reportable in her W-2 and
1099 Forms from Bank for that year, excluding any
interest or dividends received, plus tax sheltered
compensation including, but not limited to, 401(k)
contributions, insurance premiums and the like.
(iv) "Coincident With" shall mean any time within nine
months prior to the occurrence of a Change in Control
of the Bank.
(v) "Date of Termination" shall mean: (A) if the
Executive's employment is terminated by reason of her
death, her date of death; (B) if the Executive's
employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided
that the Executive shall not have returned to the
performance of her duties as provided under
sub-paragraph (vi) of this paragraph (a)); or (C) if
the Executive's employment is terminated by action of
either party for any other reason, the date specified
in the Notice of Termination.
(vi) "Disability" shall mean the Executive's failure to
satisfactorily perform her regular duties on behalf
of the Bank on a full-time basis for ninety (90)
consecutive days or such lesser period of time as
provided under the disability insurance policy
provided through Bank, by reason of the Executive's
incapacity due to physical or mental illness, except
where within thirty (30) days after Notice of
Termination is given following such absence, the
Executive shall have returned to the satisfactory,
full-time performance of such duties. Any
determination of Disability hereunder shall be made
by the Board of Directors in good faith and on the
basis of the certificates of at least three (3)
qualified physicians chosen by it for such purpose,
one (1) of whom shall be the Executive's regular
attending physician.
(vii) "Good Reason" means any one or more of the following:
(A) Reduction, without Executive's consent, of
Executive's salary or elimination of any
compensation or benefit plan benefiting
Executive, unless the reduction or
elimination is generally applicable to
substantially all similarly situated Bank
employees (or employees of a successor or
controlling entity of the Company) formerly
benefited;
(B) The assignment to Executive without her
consent of any authority or duties
materially inconsistent (excluding
promotions entailing greater authority or
duties) with Executive's position as of the
date of this Agreement; or
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(C) A relocation or transfer of Executive's
principal place of employment that would
require Executive to commute on a regular
basis more than 25 miles each way from her
current business office at the Bank on the
date of this Agreement, unless Executive
consents to the relocation or transfer.
(viii) "Notice of Termination" shall mean a written notice
which shall include the specific termination
provision under this Agreement relied upon, and shall
set forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of the Executive's employment including
any termination resulting from the nonrenewal of this
Agreement. Any purported termination of the
Executive's employment hereunder by action of either
party shall be communicated by delivery of a Notice
of Termination to the other party. Any purported
termination of the Executive's employment hereunder
which is not effected in accordance with the
foregoing shall be ineffective for purposes of the
Agreement.
(ix) "Retirement" shall mean termination of the
Executive's employment pursuant to the Bank's regular
retirement policy applicable to the position held by
the Executive at the time of such termination.
(x) "Termination" shall mean any action, event or series
of events that causes the Executive to no longer be
employed by the Bank, for any reason, including the
failure to renew or extend this Agreement.
(b) Termination by Bank Not for Cause Prior to a Change of Control
or Termination by Executive for Good Reason Prior to a Change
in Control. If prior to, but not Coincident With, a Change in
Control there is a Termination of Executive's employment, (A)
by action of the Bank without Cause or (B) by action of the
Executive for Good Reason, the Executive shall be entitled to
receive payments under this Agreement as though the Agreement
was in effect through the end of the period set forth in
Section 2 hereof without further automatic extensions, but
such payment shall, under no circumstances, be less than the
Executive's base salary then in effect as provided under
paragraph (a) of Section 5 as calculated for a period of eight
(8) months plus directors' fees. Executive acknowledges that
such payments serve as total satisfaction of Executive's claim
under this Agreement.
(c) Termination at Any Time by Reason of the Executive's Death,
Disability or Retirement. In the event of the Executive's
death, Disability or Retirement at any time, the following
compensation and benefits shall be paid and provided the
Executive (or her beneficiary):
(i) The Executive's base salary under paragraph (a) of
Section 5 through the last day of the month in the
Date of Termination occurs, at the annual rate in
effect at the time Notice of Termination is given (or
death occurs), to the extent unpaid prior to such
Date of Termination;
(ii) Any benefits to which the Executive (or her
beneficiary) may be entitled as a result of such
termination (or death), under the terms and
conditions of the pertinent plans or arrangements in
effect at the time of the Notice of Termination under
paragraph (d) of Section 5; and
(iii) Any amounts due the Executive with respect to
paragraph (c), paragraph (e) or paragraph (h) of
Section 5 as of the Date of Termination.
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(d) Termination By the Bank at Any Time for Cause or by the
Executive at Any Time Without Good Reason. If there is a
Termination of Executive's employment before, Coincident With,
or after a Change in Control (A) by action of the Bank for
Cause or (B) by action of the Executive without Good Reason,
the following compensation and benefits shall be paid and
provided the Executive:
(i) The Executive's base salary provided under paragraph
(a) of Section 5 through the last day of the month in
which the Date of Termination occurs, at the annual
rate in effect at the time Notice of Termination is
given, to the extent unpaid prior to such Date of
Termination;
(ii) Any benefits to which the Executive may be entitled
as a result of such termination, under the terms and
conditions of the pertinent plans or arrangements in
effect at the time of the Notice of Termination under
paragraph (d) of Section 5; and
(iii) Any amounts due the Executive with respect to
paragraph (c) or paragraph (e) of Section 5 as of the
Date of Termination.
(e) Termination by Bank Not For Cause Coincident With or Following
a Change In Control or by Executive for Good Reason Coincident
With or Following a Change in Control. If Coincident With or
following a Change in Control there is a Termination of
Executive's employment (A) by action of the Executive for Good
Reason or (B) by action of the Bank not for Cause, the Bank
shall pay and provide the Executive the compensation and
benefits stipulated under sub-paragraph (d) immediately above
plus the pro rata portion of any bonus under paragraph (b) of
Section 5 which has been earned prior to the Date of
Termination, to the extent unpaid prior to such date;
provided, however, in addition thereto, the following
compensation and benefits shall be paid and provided the
Executive:
(i) If such Termination occurs Coincident With a Change
in Control or within 12 months following a Change in
Control, the Bank shall pay to the Executive in a
lump sum, in cash, within 30 days following the Date
of Termination or on the effective date of the Change
in Control, whichever occurs later, an amount equal
to 2.99 times the Compensation paid in the preceding
calendar year, or scheduled to be paid to the
Executive during the year of the Notice of
Termination, whichever is greater, plus an additional
amount sufficient to pay United States income tax on
the lump sum amount paid;
(ii) If such Termination occurs after 12 months from the
Change in Control but before the end of 24 months
following the Change in Control, the Bank shall pay
to the Executive in a lump sum, in cash, within 30
days following the Date of Termination an amount
equal to 2.0 times the Compensation paid in the
preceding calendar year, or scheduled to be paid to
the Executive during the year of the Notice of
Termination, whichever is greater, plus an additional
amount sufficient to pay United States income tax on
the lump sum amount so paid;
(iii) If such Termination occurs after 24 months following
the Change in Control but before the end of the 36th
month following the Change in Control, the Bank shall
pay to the Executive in a lump sum, in cash, within
30 days following the Date of Termination an amount
equal to 1.0 times the Compensation paid in the
preceding calendar year, or scheduled to be paid to
the Executive during the year of the Notice of
Termination, whichever is greater, plus an additional
amount sufficient to pay United States income tax on
the lump sum amount so paid; or
(iv) If such Termination occurs after the 36th month
following the Change in Control, the Bank shall pay
to the Executive in a lump sum, in cash, within 30
days following the Date of Termination the amount
provided in paragraph (b) of Section 7 hereof.
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If any lump sum payment under this paragraph (e) of Section 7,
either alone or together with other payments which the
Executive has the right to receive from the Company, would
constitute a "parachute payment" [as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the
"Code")], such lump sum severance payment shall be reduced to
the largest amount as will result in no portion of the lump
sum severance payment under this Section 7 being subject to
the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum severance
payment under this Section, pursuant to the foregoing
provision, shall be made by the Bank in good faith.
(f) Termination of Employment by Executive/Non-Competition
Agreement. In the event the Executive is no longer employed by
the Bank such that Executive receives payment pursuant to the
provisions of Section 6(e) of this Agreement, for a period of
12 months for each payment of 1.0 times Executive's previous
year's compensation, the Executive agrees not to compete,
directly or indirectly, with the Bank or any successor as an
employee, officer, director, independent contractor,
consultant, or shareholder of any financial services company
or any other entity providing financial services, including
but not limited to lending, securities, brokerage, trust or
insurance products or services within a one hundred (100) mile
radius of the main office of the Bank, or such other office of
the Bank at which such Executive was physically located during
the majority of Executive's work tenure for the Company.
(g) Continuation of Benefits. Following the Termination of
Executive's employment hereunder, the Executive shall have the
right to continue in the Bank's group health insurance plan
and other Bank benefit program as may be required by COBRA or
any other federal or state law or regulation.
(h) Compensation During Disability. In the event of the
Executive's failure to satisfactorily perform her duties
hereunder on a full-time basis by reason of her incapacity due
to physical or mental illness (as determined by the
Executive's regular attending physician) for any period not
otherwise constituting Disability as defined under
sub-paragraph (vi) of paragraph (a) of this Section 7, the
Executive's employment hereunder shall not be deemed
terminated and she shall continue to receive the compensation
and benefits provided under Section 5 in accordance with the
terms thereof.
7. RETURN OF COMPANY PROPERTY. If and when Executive ceases, for any
reason, to be employed by Bank, Executive must return to Bank all keys,
pass cards, identification cards, Bank-owned credit or debit cards, and
any other property of Bank. At the same time, Executive also must
return to Bank all originals and copies (whether in hard copy,
electronic or other form) of any documents, drawings, notes, memoranda,
designs, devices, diskettes, tapes, manuals, and specifications which
constitute proprietary information or material of Bank. The obligations
in this Section 8 include the return of documents and other materials
which may be in Executive's desk at work, in Executive's car or place
of residence or any in other location under Executive's control.
8. NON-DISCLOSURE. During the term of her employment hereunder, or at any
time thereafter, the Executive shall not disclose or use (except in the
course of his employment hereunder) any confidential or proprietary
information or data of the Bank or any of their subsidiaries or
affiliates regardless of whether such information or data is embodied
in writing or other physical form.
9. WITHHOLDING. Any provision of this Agreement to the contrary
notwithstanding, all payments made by the Bank hereunder to the
Executive or her estate or beneficiaries shall be subject to the
withholding of such amounts, if any, relating to tax and other payroll
deductions as the Bank may reasonably determine should be withheld
pursuant to any applicable law or regulation. In lieu of withholding
such amounts, the Bank may accept other provisions to the end that they
have sufficient funds to pay all taxes required by law to be withheld
in respect of any or all such payments.
10. POOLING OF INTERESTS TREATMENT. In the event anything in this Agreement
will prevent, or have the effect of preventing, the use of the pooling
of interests accounting method by an acquiror in a Change in Control of
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Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of the Change in Control by the
acquiror, then this Agreement shall be deemed valid only to the extent
that the pooling of interests accounting method can be used, provided,
however, that any determination that this Agreement would prevent, or
have the effect of preventing, the use of the pooling of interests
method for accounting purposes shall be supported by an opinion letter
from the acquiror's independent accounting firm or the Securities and
Exchange Commission.
11. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States
by registered or certified mail, or personally delivered to the party
entitled thereto, at the address stated below or to such changed
address as the addressee may have given by a similar notice:
To the Bank: Mechanics and Farmers Bank
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
To the Executive:
12. SUCCESSORS; BINDING AGREEMENT. The Bank shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Bank, by agreement in the form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Bank would be required
to perform it if no such succession had taken place. Failure of the
Bank to obtain such agreement prior to or at the time of the
effectiveness of any such succession shall be a breach of this
Agreement. For purposes of this Agreement, "Bank" shall mean the Bank
as defined above, and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in
this Section or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If the Executive should die while any amount would still be payable to
her hereunder if she had continued to live, all such amounts, except to
the extent otherwise provided under this Agreement, shall be paid in
accordance with the terms of this Agreement to her devisee, legatee or
other designee, or if there be no such designee, to the Executive's
estate.
13. MODIFICATION, WAIVER OR DISCHARGE. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and an
authorized officer of the Bank. No waiver by either party hereto at
anytime of any breach by the other party hereto of, or compliance with,
any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof had been made by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or in any
way limit the right, duties or obligations that the Executive or the
Bank may have under any other written agreement between such parties,
under any employee pension benefit plan or employee welfare benefit
plan as defined under the Employee Retirement Income Security Act of
1974, as amended, and maintained by the Bank, or under any established
personnel practice or policy applicable to the Executive.
14. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of North Carolina to the extent federal law does not apply.
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15. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in
full force and effect.
16. MISCELLANEOUS.
(a) No Adequate Remedy At Law. The Bank and the Executive
recognize that each party will have no adequate remedy at law
for breach by the other of any of the agreements contained
herein and, in the event of any such breach, the Bank and the
Executive hereby agree and consent that the other shall be
entitled to decree of specific performance, mandamus, or other
appropriate remedy to enforce performance of such agreements.
(b) Non-Assignability. No right, benefit, or interest hereunder
shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or
setoff in respect of any claim, debt or obligation, or to
execution, attachment, levy or similar process, or assignment
by operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect. Any of the foregoing to the contrary
notwithstanding, this provision shall not preclude the
Executive from designating one or more beneficiaries to
receive any amount that may be payable after her death, and
shall not preclude the legal representative of the Executive's
estate from assigning any right hereunder to the person or
persons entitled thereto under her will or, in the case of
intestacy applicable to her estate.
(c) Primary Obligor on Contract. Bank and, when formed, M&F
Bancorp, Inc., the Bank's holding company, although jointly
and severally liable for all payments under this Agreement,
between themselves, acknowledge that Bank is the primary
obligor and is primarily responsible for fulfilling the
financial obligations of this Agreement. In the event the Bank
is unable, for regulatory or financial reasons, to fulfill the
obligations under this Agreement, the terms of the Agreement
shall become the primary obligation of the Bank's holding
company. Nothing in this paragraph shall be deemed to bar
Executive from recovering under this Agreement from either
Bank or the Bank's holding company if the Agreement is
breached by either Bank or Bank's holding company.
(d) Headings and Titles. The headings and titles used in this
Agreement are for reference purposes only and are not a part
of this Agreement.
17. MEDIATION/ARBITRATION CLAUSE. In the event of any dispute, claim,
question, or disagreement arising from or relating to this Agreement or
the breach thereof ("Dispute"), the parties hereto shall use their best
efforts to resolve the Dispute in manner satisfactory to both parties
through consultation and negotiation with each other in good faith. If
the Dispute cannot be resolved through direct negotiations within a
period of sixty (60) days, the parties agree to attempt to settle the
Dispute in an amicable manner by mediation before resorting to
arbitration. Thereafter, any unresolved dispute shall be resolved by
arbitration. Any mediation or arbitration hereunder shall be conducted
in accordance with the Commercial Mediation Rules or the Commercial
Arbitration Rules, as appropriate, of the American Arbitration
Association ("AAA"), as in effect at the time of the mediation or
arbitration. In the event of arbitration, the final award of the
commercial Arbitration Tribunal shall be binding on the parties. Unless
the parties agree otherwise, such mediation or arbitration shall also
be conducted under the auspices of, and administered by, the AAA.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Executive and the Bank (by action of their duly
authorized officers) have executed this Agreement on the date first above
written.
MECHANICS AND FARMERS BANK
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx, Chairman
Compensation and Management Development
Committee, at the direction of the
Board of Directors
Attest:
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EXECUTIVE:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Attest:
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