EXHIBIT 10.12
May 10, 2002
Xxx Xxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
RE: Xxxxxxxx Bank Bonus/Compensation/Stock Agreement
Dear Xxx:
Thank you for all your efforts for Intrepid Capital. Everyone here is in total
admiration of your skills, your organization, your intellect, your dedication to
the task, and your willingness to be removed from your family temporarily.
I appreciate very much your outlining a five-and six-month bonus calculation, as
well as your willingness to consider cash, stock options, and deferred
compensation as elements of a bonus.
Bob, I asked Xxxx to review your work to be sure that we are not overlooking
anything in our discussion. He suggested that we add interest, etc., and bonuses
to others in our calculation.
I fully appreciate your suggested 40% of net and the fact that it is net versus
other current arrangements, but I do want to point out some dissimilar aspects
just to fully develop our conversation. The typical 40% payout person has no
guaranteed income or salary, requires no company financing or substantial risk,
or employing multiple other people, and the attendant insurance, etc.
Regardless of that, I'm glad that we got together in a very lean period for us
in November 2000, and I'm obviously thrilled that our association led to the
Xxxxxxxx Bank and the pending acquisition of First Bank of Jacksonville. It has
been a terrific relationship to date, and I think the future will outshine the
past.
Having said all that, let me propose a three-pronged and possibly four-pronged
approach to a bonus arrangement that fully rewards your efforts:
1. Cash - $300,000 payable $100,000 immediately (May 15, 2002)
and the balance as you desire and in no case later than the
final FDIC payment on the original Xxxxxxxx Bank contract.
2. Deferred Income - $300,000 payable $100,000 per year for the
years 2003, 2004, and 2005, payable $25,000 per quarter on the
first payroll in each quarter.
3. Stock Options - An option to buy up to 200,000 shares of
Intrepid stock at $2/per share. (This is our standard employee
stock option plan.)
All of these elements are in addition to other compensation anticipated for
running First Bank or other duties that you may undertake at the conclusion of
the Xxxxxxxx Bank obligation.
4. Additional Long-term Deferred Compensation Potential - After
the risk exposure is lessened in the First Bank acquisition,
the use of the life insurance contract to help fund an income
to you and/or your family in the event of death, disability,
or retirement. This is a fairly typical non-
qualified deferred compensation agreement in which the
payments to you or your family are deductible and ultimately
the proceeds are tax-free to Intrepid. This plan is not
currently in place, but it is my thought that on a selected
basis, this can be a valuable additional element in key person
compensation.
Let's try to get to an agreement today so that the Intrepid share price doesn't
impact you adversely.
Again, thank you for a truly yeoman performance!
Warmest regards,
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
President and CEO ACKNOWLEDGED AND AGREED TO:
/lb
/s/ Xxxxxx X. Xxxxxx 5/10/02
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Xxxxxx X. Xxxxxx date
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