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Exhibit 10(c)
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of April, 1999 by and between Mechanics
and Farmers Bank, a North Carolina banking corporation with its principal office
in Durham, North Carolina (the "Bank"), and W. Xxxxxx Xxxxxxxxxx, a resident of
Durham, North Carolina (the "Executive").
RECITALS
A. The Bank and Executive acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Executive acknowledge that at some
point it may be appropriate for the Bank to participate in this
industry consolidation.
B. The Bank recognizes the value of Executive's services to the Bank and
desires to insure that Executive has adequate incentive to continue in
the employment of the Bank.
C. Given the current consolidation occurring within the financial
institutions industry, Executive desires to continue in the employment
of the Company with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Executive agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings indicated:
(a) "Cause" shall mean (A) the rendering of a final judgment
against Executive by a court of competent jurisdiction, which
is not subject to further appeal, for the willful and
continued failure by Executive to substantially perform his or
her duties to the Bank, the Bank's policies or federal and/or
state law (other than any such failure resulting from his or
her incapacity due to physical or mental illness); which
breach of duty has materially and adversely affected the
safety and soundness of the Bank; or (B) Executive's
conviction of a felony which is not subject to further appeal.
For purposes of this definition, no act, or failure to act on
Executive's part, shall be considered "willful" unless done,
or omitted to be done, by him or her not in good faith and
without reasonable belief that his or her action or omission
is in the best interest of the Bank.
(b) "Change in Control" shall mean either:
(A) the acquisition, directly or indirectly, by any
person or group of persons of shares in the Bank
other than by M&F Bancorp, Inc. in connection with
the formation of the Bank's holding company or
otherwise, 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% 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.
For purposes of this definition, "person" shall be as defined
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934.
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(c) "Coincident With" shall mean any time within nine months prior
to the occurrence of a Change in Control of the Bank.
2. CHANGE IN CONTROL AND RETENTION BONUS. If a Change in Control of the
Bank is consummated and on the date of the consummation of the Change
in Control, Executive is employed by Bank, Bank shall pay to Executive
in a lump sum, in cash, within five days following the consummation
date of the Change in Control, a Retention Bonus of twelve (12) months
base salary.
If the lump sum payment under this Section 2, either alone or together
with other payments which 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 payment shall be reduced to the largest amount as will
result in no portion of the lump sum payment under this Section 2 being
subject to the excise tax imposed by Section 4999 of the Code. The
determination of any reduction in the lump sum payment under this
Section 2, pursuant to the foregoing provision, shall be made by the
Bank in good faith.
3. TERMINATION BY BANK NOT FOR CAUSE COINCIDENT WITH A CHANGE IN CONTROL.
In the event Executive's employment is terminated by action of the Bank
not for Cause Coincident With a Change in Control, the Bank shall pay
Executive within five days following the consummation date of the
Change in Control the same Retention Bonus in amount and manner
described in Section 2 above. In the event of Executive's termination
pursuant to this Section 3, Executive shall not be subject to any
non-compete or similar restrictions that exist with regard to
Executive, contractually or otherwise.
4. TERMINATION OF EMPLOYMENT BY EXECUTIVE/NON-COMPETITION AGREEMENT. In
the event Executive voluntarily terminates his or her own employment at
any time subsequent to receipt of the Retention Bonus provided for in
paragraph 2 above, 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 sixty (60) mile radius
of the main office of the Bank, or such other office of the Bank at
which such Employee was physically located during the majority of
Employee's work tenure for the Company, for a period of 12 months
following the date of such termination.
5. WITHHOLDING. All payments made by the Bank hereunder to Executive 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.
6. EMPLOYMENT AT WILL. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of Executive
by the Bank. At all times, Executive shall remain an "At Will" employee
of the Bank subject to the rights arising under this Agreement.
7. NON-DISCLOSURE. During the term of his or her employment hereunder, or
at any time thereafter, Executive shall not disclose or use (except in
the course of his or her employment hereunder) any confidential or
proprietary information or data of the Bank or any of its subsidiaries
or affiliates, including any such information with respect to a sale or
merger of the Bank, regardless of whether such information or data is
embodied in writing or other physical form.
8. 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
Bank and the use of the pooling of interests accounting method is a
condition precedent to the consummation of such Change in Control by
the acquiror, then this Agreement shall be deemed valid only to the
extent that
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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
accounting method shall be supported by an opinion letter from the
acquiror's independent accounting firm or from the Securities and
Exchange Commission.
9. SUCCESSORS; BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the Bank and Executive and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to him or
her hereunder if she had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to his or her
devisee, legatee or other designee, or if there be no such designee, to
Executive's estate.
10. 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 and signed by Executive and
authorized officers of the Bank. No waiver by any party hereto at any
time 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 have 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 rights, duties, or obligations that Executive or the Bank
may have under any other written agreement between such parties, under
any employee pension benefit plan or Executive welfare benefit plan as
defined in the Executive Retirement Income Security Act of 1974 as
amended, and maintained by the Bank, or under any established personnel
practice or policy applicable to Executive.
11. TERMINATION OF AGREEMENT. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate, five (5)
years from the date first listed above.
12. 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.
13. 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.
14. MEDIATION/ARBITRATION. 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 a 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 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.
15. MISCELLANEOUS
(a) No adequate remedy at law. The Bank and Executive recognize
that each party shall have no adequate remedy at law for
breach by the other of any of the agreements contained herein,
and in the
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event of any such breach, the Bank and Executive hereby agree
and consent that the other shall be entitled to a decree of
specific performance, mandamus, injunction 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
set-off 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 Executive
from designating one or more beneficiaries to receive any
amount that may be payable after his or her death, and shall
not preclude the legal representative of Executive's estate
from assigning any right hereunder to the person or persons
entitled thereto under his or her will or, in the case of
intestacy, as applicable, to his or her estate.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but which
together will constitute one and the same instrument.
17. 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 similar notice:
to the Bank: Mechanics & Farmers Bank
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xx. Xxxxx X. Xxxxxx, Chairman,
President and CEO
to Executive:
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Executed and effective as of the date first above written.
MECHANICS AND FARMERS BANK
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Chairman, President & CEO
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx, Compensation and
Management Development Committee
EXECUTIVE
/s/ W. Xxxxxx Xxxxxxxxxx
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W. Xxxxxx Xxxxxxxxxx
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