EXHIBIT 10.3
Employment Agreement
This Employment Agreement (the "Agreement") is made and entered into
as of ________, 2001 by and among CharterBank, a federally-chartered savings
bank having an office at 000 Xxxxx Xxxxxx, Xxxx Xxxxx, XX 00000 (the "Bank"),
Charter Financial Corp., a federally-chartered corporation having an office at
000 Xxxxx Xxxxxx, Xxxx Xxxxx, XX 00000 (the "Company") and Xxxxxx X. Xxxxxxx, an
individual residing at 0000 Xxxxxx Xxxx Xxxx, Xxxxxxxx, XX 00000 (the
"Executive").
Introductory Statement
The Bank has reorganized from a federally-chartered mutual savings
bank to a federally-chartered stock savings bank and has become a wholly-owned
subsidiary of the Company, a mid-tier stock holding company, which is majority
owned by First Charter MHC, a mutual holding company (the "Reorganization"). In
connection with the Reorganization, certain shares of the Company's common stock
were sold in an initial public stock offering. The Executive has served the
Bank in an executive capacity for many years and is familiar with the Bank's
operations.
The Board of Directors of the Bank and the Board of Directors of the
Company have concluded that it is in the best interests of the Bank, the Company
and their prospective shareholders to secure a continuity in management
following the Reorganization. They also consider it desirable to establish a
working environment for the Executive which minimizes the personal distractions
that might result from possible business combinations in which the Company or
the Bank might be involved. For these reasons, the Board of Directors of the
Bank and the Board of Directors of the Company have decided to offer to enter
into a contract with the Executive for his future services. The Executive has
accepted this offer.
The terms and conditions which the Bank, the Company and the Executive
have agreed to are as follows.
Agreement
Section 1. Employment.
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The Company and the Bank hereby continue to employ the Executive, and
the Executive hereby accepts such continued employment, during the period and
upon the terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment
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Period.
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(a) The Company and the Bank shall employ the Executive during an
initial period of three (3) years beginning on the effective date of the
Reorganization (the "Employment Commencement Date") and ending on the day before
the third (3/rd/) anniversary of the Employment Commencement Date, and during
the period of any additional extensions described in section 2(b) (the
"Employment Period").
(b) The Board of Directors of the Bank and the Company shall conduct
an annual review of the Executive's performance on or about each anniversary of
the Employment Commencement Date (each, an "Anniversary Date") and may, on the
basis of such review and by written notice to the Executive, offer to extend the
Employment Period through the day before the third (3/rd/) anniversary of the
relevant Anniversary Date. In such event, the Employment Period shall be deemed
extended in the absence of objection from the Executive by written notice to
Bank given within ten (10) business days after his receipt of the Bank's offer
of extension.
(c) Except as otherwise expressly provided in this Agreement, any
reference in this Agreement to the term "Remaining Unexpired Employment Period"
as of any date shall mean the period beginning on such date and ending on the
day before the third (3/rd/) anniversary of the Employment Commencement Date or,
if later, on the day before the third (3/rd/) anniversary of the last
Anniversary Date as of which the Employment Period was extended pursuant to
section 2(b).
(d) Nothing in this Agreement shall be deemed to prohibit the Company
or the Bank from terminating the Executive's employment before the end of the
Employment Period with or without notice for any reason. This Agreement shall
determine the relative rights and obligations of the Bank, the Company and the
Executive in the event of any such termination. In addition, nothing in this
Agreement shall require the termination of the Executive's employment at the
expiration of the Employment Period. Any continuation of the Executive's
employment beyond the expiration of the Employment Period shall be on an "at-
will" basis unless the Bank, the Company and the Executive agree otherwise.
Section 3. Duties.
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The Executive shall serve as Chief Executive Officer and President of
the Company and as Chief Executive Officer and President of the Bank, having
such power, authority and responsibility and performing such duties as are
prescribed by or under their respective By-Laws and as are customarily
associated with such positions. The Executive shall devote his full business
time and attention (other than during weekends, holidays, approved vacation
periods, and periods of illness or approved leaves of absence) to the business
and affairs of the Bank and the Company and shall use his best efforts to
advance their respective best interests.
Section 4. Cash Compensation.
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In consideration for the services to be rendered by the Executive
hereunder, the Bank and the Company shall pay to him a salary at an initial
annual rate of ____________ ($_______), payable in approximately equal
installments in accordance with their respective customary payroll practices for
senior officers. The Bank's and the Company's respective Boards of Directors
shall review the Executive's annual rate of salary at such times during the
Employment Period as they deem appropriate, but not less frequently than once
every twelve (12) months, and may, in their discretion, approve a salary
increase. In addition to salary, the Executive may receive other cash
compensation from the Company or the Bank for services hereunder at such times,
in such amounts and on such terms and conditions as the Boards of Directors of
the Bank and the Company may determine. If the Executive is discharged or
suspended, or is subject to any regulatory prohibition or
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restriction with respect to participation in the affairs of the Bank, he shall
continue to perform services for the Company in accordance with this Agreement
but shall not directly or indirectly provide services to or participate in the
affairs of the Bank in a manner inconsistent with the terms of such discharge or
suspension or any applicable regulatory order.
Section 5. Employee Benefit Plans and Programs.
-----------------------------------
During the Employment Period, the Executive shall be treated as an
employee of the Company and the Bank and shall be entitled to participate in and
receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company and the Bank, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Company's and the Bank's customary practices.
Section 6. Indemnification and Insurance.
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(a) During the Employment Period and for a period of six years
thereafter, the Company and the Bank shall cause the Executive to be covered by
and named as an insured under any policy or contract of insurance obtained by
them to insure their directors and officers against personal liability for acts
or omissions in connection with service as an officer or director of the Company
or the Bank or service in other capacities at their request. The coverage
provided to the Executive pursuant to this section 6 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Company and the
Bank shall indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company and the Bank or any subsidiary or affiliate
thereof.
Section 7. Outside Activities.
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The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as he may disclose to and as
may be approved by the Boards of Directors of the Company and the Bank (which
approval shall not be unreasonably withheld); provided, however, that such
service shall not materially interfere with the performance of his duties under
this Agreement. The Executive may also engage in personal business and
investment activities which do not materially interfere with the performance of
his duties hereunder; provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading policy established
by the Company or the Bank and generally applicable to all similarly situated
executives.
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Section 8. Working Facilities and Expenses.
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The Executive's principal place of employment shall be at the Bank's
executive offices at the address first above written, or at such other location
as the Bank, the Company and the Executive may mutually agree upon. The Bank
and the Company shall provide the Executive at his principal place of employment
with a private office, secretarial services and other support services and
facilities suitable to his positions with the Company and the Bank and necessary
or appropriate in connection with the performance of his assigned duties under
this Agreement. The Company shall provide to the Executive for his exclusive
use an automobile owned or leased by the Company and appropriate to his
position, to be used in the performance of his duties hereunder, including
commuting to and from his personal residence. The Bank or the Company shall
reimburse the Executive for his ordinary and necessary business expenses,
including, without limitation, all expenses associated with his business use of
the aforementioned automobile, fees for memberships in such clubs and
organizations as the Executive, the Company and the Bank shall mutually agree
are necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the payer of an itemized
account of such expenses in such form as the payer may reasonably require.
Section 9. Termination Due to Death.
------------------------
The Executive's employment with the Bank and the Company shall
terminate, automatically and without any further action on the part of any party
to this Agreement, on the date of the Executive's death. In such event:
(a) The Bank and the Company shall pay to the Executive's
estate his earned but unpaid compensation (including, without
limitation, salary and all other items which constitute wages under
applicable law) as of the date of his termination of employment. This
payment shall be made at the time and in the manner prescribed by law
applicable to the payment of wages but in no event later than thirty
(30) days after the date of the Executive's termination of
employment.
(b) The Company and the Bank shall provide the benefits, if
any, due to the Executive's estate, surviving dependents or his
designated beneficiaries under the employee benefit plans and
programs and compensation plans and programs maintained for the
benefit of the officers and employees of the Company and the Bank.
The time and manner of payment or other delivery of these benefits
and the recipients of such benefits shall be determined according to
the terms and conditions of the applicable plans and programs.
The payments and benefits described in sections 9(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
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Section 10. Termination Due to Disability.
-----------------------------
The Bank and the Company may terminate the Executive's employment upon
a determination, by separate votes of a majority of the members of the Boards of
Directors of the Company and the Bank, acting in reliance on the written advice
of a medical professional acceptable to them, that the Executive is suffering
from a physical or mental impairment which, at the date of the determination,
has prevented the Executive from performing his assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Executive from
performing his assigned duties on a substantially full-time basis for a period
of at least one hundred and eighty (180) days during the period of one (1) year
beginning with the date of the determination. In such event:
(a) The Bank and the Company shall pay and deliver to the
Executive (or in the event of his death before payment, to his estate
and surviving dependents and beneficiaries, as applicable) the Standard
Termination Entitlements.
(b) In addition to the Standard Termination Entitlements, the
Bank and the Company shall continue to pay the Executive his base
salary, at the annual rate in effect for him immediately prior to the
termination of his employment, during a period ending on the earliest
of: (i) the expiration of one hundred and eighty (180) days after the
date of termination of his employment; (ii) the date on which long-
term disability insurance benefits are first payable to him under any
long-term disability insurance plan covering employees of the Bank or
the Company (the "LTD Eligibility Date"); (iii) the date of his
death; and (iv) the expiration of the Remaining Unexpired Employment
Period (the "Initial Continuation Period"). If the end of the Initial
Continuation Period is neither the LTD Eligibility Date nor the date
of his death, the Company and the Bank shall continue to pay the
Executive his base salary, at an annual rate equal to sixty percent
(60%) of the annual rate in effect for him immediately prior to the
termination of his employment, during an additional period ending on
the earliest of the LTD Eligibility Date, the date of his death and
the expiration of the Remaining Unexpired Employment Period.
A termination of employment due to disability under this section 10 shall be
effected by joint notice of termination given to the Executive by the Company
and the Bank and shall take effect on the later of the effective date of
termination specified in such notice or the date on which the notice of
termination is deemed given to the Executive.
Section 11. Discharge with Cause.
--------------------
(a) The Bank and the Company may terminate the Executive's
employment during the Employment Period, and such termination shall be
deemed to have occurred with "Cause", only if:
(i) the Board of Directors of the Bank and the Board of
Directors of the Company, by separate majority votes of their entire
membership, determine that the
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Executive should be discharged because of personal dishonesty,
incompetence, willful misconduct, breach of 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, or
any material breach of this Agreement; and
(ii) at least forty-five (45) days prior to the votes
contemplated by section 11(a)(i), the Bank and the Company have
provided the Executive with notice of their intent to discharge the
Executive for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause (the "Notice of
Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the votes contemplated by section 11(a)(i),
the Executive (together with his legal counsel, if he so desires) is
afforded a reasonable opportunity to make both written and oral
presentations before the Boards of Directors of the Company and the
Bank for the purpose of refuting the alleged grounds for Cause for
his discharge; and
(iv) after the votes contemplated by section 11(a)(i), the
Company and the Bank have furnished to the Executive a notice of
termination which shall specify the effective date of his termination
of employment (which shall in no event be earlier than the date on
which such notice is deemed given) and include a copy of a resolution
or resolutions adopted by the Board of Directors of the Bank and the
Board of Directors of the Company, certified by their corporate
secretaries and signed by each member of their respective Board of
Directors voting in favor of adoption of the resolution(s),
authorizing the termination of the Executive's employment with Cause
and stating with particularity the facts and circumstances found to
constitute Cause for his discharge (the "Final Discharge Notice").
For purposes of this section 11, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board and the Bank Board or based upon the
written advice of counsel for the Company or the Bank shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company and the Bank.
(b) If the Executive is discharged during the Employment Period
with Cause, the Company and the Bank shall pay and provide to him (or, in the
event of his death, to his estate, his surviving beneficiaries and his
dependents) the Standard Termination Entitlements only. Following the giving of
a Notice of Intent to Discharge, the Bank and the Company may temporarily
suspend the Executive's duties and authority and, in such event, may also
suspend the payment of salary and other cash compensation, but not the
Executive's participation in retirement, insurance and other employee benefit
plans. If the Executive is not discharged, or is discharged without Cause,
within forty-five (45) days after the giving of a Notice of Intent to Discharge,
payments of salary and cash compensation shall resume, and all payments withheld
during the period of suspension shall be
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promptly restored. If the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed forfeited and
shall not be included in the Standard Termination Entitlements. If a Final
Discharge Notice is given later than forty-five (45) days, but sooner than
ninety (90) days, after the giving of the Notice of Intent to Discharge, all
payments made to the Executive during the period beginning with the giving of
the Notice of Intent to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be applied to offset the
Standard Termination Entitlements. If the Bank and the Company do not give a
Final Discharge Notice to the Executive within ninety (90) days after giving a
Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed
withdrawn and any future action to discharge the Executive with Cause shall
require the giving of a new Notice of Intent to Discharge.
Section 12. Discharge without Cause.
-----------------------
The Bank and the Company may discharge the Executive at any time
during the Employment Period and, unless such discharge constitutes a discharge
with Cause:
(a) The Bank and the Company shall pay and deliver to the
Executive (or in the event of his death before payment, to his
estate and surviving dependents and beneficiaries, as applicable)
the Standard Termination Entitlements.
(b) In addition to the Standard Termination Entitlements:
(i) During the Remaining Unexpired Employment
Period, the Bank and the Company shall provide for the
Executive and his dependents continued group life, health
(including hospitalization, medical and major medical),
dental, accident and long-term disability insurance benefits
on substantially the same terms and conditions (including
any required premium-sharing arrangements, co-payments and
deductibles) in effect for them immediately prior to the
Executive's termination. The coverage provided under this
section 12(b)(i) may, at the election of the Bank and the
Company, be secondary to the coverage provided as part of
the Standard Termination Entitlements and to any employer-
paid coverage provided by a subsequent employer or through
Medicare, with the result that benefits under the other
coverages will offset the coverage required by this section
12(b)(i).
(ii) The Bank and the Company shall make a lump sum
payment to the Executive (or, in the event of his death
before payment, to his estate), in an amount equal to the
estimated present value of the salary that Executive would
have earned if he had continued working for the Bank during
the Remaining Unexpired Employment Period at the highest
annual rate of salary achieved during that portion of the
Employment Period which is prior to Executive's termination
of employment with the Bank, where such present value is to
be determined using a discount rate equal to the applicable
short-term federal rate prescribed under section 1274(d) of
the Internal Revenue Code of 1986 ("Code"), compounded using
the compounding period
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corresponding to the Bank's regular payroll periods for its
officers. Such lump sum shall be paid in lieu of all other
payments of salary provided for under this Agreement in
respect of the period following any such termination.
(iii) The Bank and the Company shall make a lump sum
payment to the Executive (or, in the event of his death
before payment, to his estate), in an amount equal to the
payments that would have been made to Executive under any
cash bonus or long-term or short-term cash incentive
compensation plan maintained by, or covering employees of,
the Bank if he had continued working for the Bank during the
Remaining Unexpired Employment Period and had earned the
maximum bonus or incentive award in each calendar year that
ends during the Remaining Unexpired Employment Period, such
payments to be equal to the product of:
(A) the maximum percentage rate at which an
award was ever available to Executive under such incentive
compensation plan; multiplied by
(B) the salary that would have been paid to
Executive during each such calendar year at the highest
annual rate of salary achieved during that portion of the
Employment Period which is prior to Executive's termination
of employment with the Bank.
Such payment shall be made (without discounting for early
payment) within thirty (30) days following the Executive's
termination of employment.
The payments and benefits described in section 12(b) are referred to in this
Agreement as the "Additional Termination Entitlements".
Section 13. Resignation.
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(a) The Executive may resign from his employment with the Bank and
the Company at any time. A resignation under this section 13 shall be effected
by notice of resignation given by the Executive to the Company and the Bank and
shall take effect on the later of the effective date of termination specified in
such notice or the date on which the notice of termination is deemed given by
the Executive. The Executive's resignation of any of the positions within the
Bank or the Company to which he has been assigned shall be deemed a resignation
from all such positions.
(b) The Executive's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs within ninety (90) days
after any of the following:
(i) the failure of the Company or the Bank (whether by act
or omission of their respective Boards of Directors, or
otherwise) to appoint or re-appoint or elect or re-elect the
Executive to the position(s) with the Company and the Bank,
specified in section 3 of this Agreement or to a more senior
office;
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(ii) if the Executive is or becomes a member of the Board
of Directors of the Company or the Bank, the failure of their
respective shareholders (whether in an election in which the
Executive stands as a nominee or in an election where the
Executive is not a nominee) to elect or re-elect the Executive to
membership at the expiration of his term of membership, unless
such failure is a result of the Executive's refusal to stand for
election;
(iii) a material failure by the Company or the Bank,
whether by amendment of their respective certificates of
incorporation or organization, by-laws, action of their
respective Boards of Directors or otherwise, to vest in the
Executive the functions, duties, or responsibilities prescribed
in section 3 of this Agreement; provided that the Executive shall
have given notice of such failure to the Company and the Bank,
and the Company or the Bank have not fully cured such failure
within thirty (30) days after such notice is deemed given;
(iv) any reduction of the Executive's rate of base salary
in effect from time to time, whether or not material, or any
failure (other than due to reasonable administrative error that
is cured promptly upon notice) to pay any portion of the
Executive's compensation as and when due;
(v) any change in the terms and conditions of any
compensation or benefit program in which the Executive
participates which, either individually or together with other
changes, has a material adverse effect on the aggregate value of
his total compensation package; provided that the Executive shall
have given notice of such material adverse effect to the Company
and the Bank, and the Company or the Bank has not fully cured
such failure within thirty (30) days after such notice is deemed
given;
(vi) any material breach by the Company or the Bank of any
material term, condition or covenant contained in this Agreement;
provided that the Executive shall have given notice of such
material adverse effect to the Company and the Bank, and the
Company or the Bank have not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vii) a change in the Executive's principal place of
employment to a place that is not the principal executive office
of the Bank, or a relocation of the Bank's principal executive
office to a location that is both more than twenty-five (25)
miles away from the Executive's principal residence and more than
twenty-five (25) miles away from the location of the Bank's
principal executive office on the date of this Agreement.
In all other cases, a resignation by the Executive shall be deemed to be without
Good Reason.
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(c) In the event of the Executive's resignation before the
expiration of the Employment Period, the Company and the Bank shall pay and
deliver the Standard Termination Entitlements. In addition, if the Executive's
resignation is deemed to be a resignation with Good Reason, the Company and the
Bank shall also pay and deliver the Additional Termination Entitlements.
Section 14. Terms and Conditions of the Additional Termination
Entitlements.
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The Company, the Bank and the Executive hereby stipulate that the
damages which may be incurred by the Executive following any termination of
employment are not capable of accurate measurement as of the date first above
written and that the Additional Termination Entitlements constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage and without regard to the Executive's efforts, if any, to
mitigate damages. The Company, the Bank and the Executive further agree that
the Company and the Bank may condition the payment and delivery of the
Additional Termination Entitlements on the receipt of the Executive's
resignation from any and all positions which he holds as an officer, director or
committee member with respect to the Company, the Bank or any subsidiary or
affiliate of either of them.
Section 15. Termination Upon or Following a Change of Control.
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(a) A "Change of Control" shall be deemed to have occurred upon the
happening of any of the following events:
(i) the consummation of a reorganization, merger or
consolidation of the Company with one or more other persons,
other than a transaction following which:
(A) at least 51% of the equity ownership interests
of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act")) in substantially the same relative
proportions by persons who, immediately prior to such
transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Company;
and
(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity
resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative proportions
by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) at least 51% of the
securities entitled to vote generally in the election of
directors of the Company;
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(ii) the acquisition of all or substantially all of the
assets of the Company or beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 25% or more
of the outstanding securities of the Company entitled to vote
generally in the election of directors by any person or by any
persons acting in concert;
(iii) a complete liquidation or dissolution of the Company;
(iv) the occurrence of any event if, immediately following
such event, at least 50% of the members of the Board of Directors
of the Company do not belong to any of the following groups:
(A) individuals who were members of the Board of
Directors of the Company on the date of this Agreement; or
(B) individuals who first became members of the
Board of Directors of the Company after the date of this
Agreement either:
(1) upon election to serve as a member of the
Board of Directors of the Company by affirmative vote
of three-quarters of the members of such board, or of
a nominating committee thereof, in office at the time
of such first election; or
(2) upon election by the shareholders of the
Board of Directors of the Company to serve as a
member of such board, but only if nominated for
election by affirmative vote of three-quarters of the
members of the Board of Directors of the Company, or
of a nominating committee thereof, in office at the
time of such first nomination;
provided, however, that such individual's election or
nomination did not result from an actual or threatened
election contest (within the meaning of Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents
(within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on
behalf of the Board of Directors of the Company; or
(v) any event which would be described in section
15(a)(i), (ii), (iii) or (iv) if the term "Bank" were substituted
for the term "Company" therein.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of (i) any acquisition of securities or assets of the Company, the Bank,
or a subsidiary of either of them, by the Company, the Bank, or any subsidiary
of either of them, or by any employee benefit plan maintained by any of them or
(ii) the conversion of First Charter, MHC to a stock form company and the
issuance of additional shares of the Company in connection therewith. For
purposes of this section 15(a), the
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term "person" shall have the meaning assigned to it under sections 13(d)(3) or
14(d)(2) of the Exchange Act.
(b) For purposes of this Agreement, a "Pending Change of Control"
shall mean: (i) the signing of a definitive agreement for a transaction which,
if consummated, would result in a Change of Control; (ii) the commencement of a
tender offer which, if successful, would result in a Change of Control; or (iii)
the circulation of a proxy statement seeking proxies in opposition to management
in an election contest which, if successful, would result in a Change of
Control.
(c) Notwithstanding anything in this Agreement to the contrary, if
the Executive's employment with the Bank and the Company terminates due to death
or disability within one (1) year after the occurrence of a Pending Change of
Control and if a Change of Control occurs within two (2) years after such
termination of employment, he (or in the event of his death, his estate) shall
be entitled to receive the Standard Termination Entitlements and the Additional
Termination Entitlements that would have been payable if a Change of Control had
occurred on the date of his termination of employment and he had resigned with
Good Reason immediately thereafter; provided, that payment shall be deferred
without interest until, and shall be payable immediately upon, the actual
occurrence of a Change of Control.
(d) Notwithstanding anything in this Agreement to the contrary: (i)
in the event of the Executive's resignation within sixty (60) days after the
occurrence of a Change of Control, he shall be entitled to receive the Standard
Termination Entitlements and Additional Termination Entitlements that would be
payable if his resignation were a resignation for Good Reason, without regard to
the actual circumstances of his resignation; and (ii) for a period of one (1)
year after the occurrence of a Change of Control, no discharge of the Executive
shall be deemed a discharge with Cause unless the votes contemplated by section
11(a) of this Agreement are supported by at least two-thirds of the members of
the Board of Directors of the Company and the Bank at the time the vote is taken
who were also members of the Board of Directors of the Company and the Bank
immediately prior to the Change of Control.
(e) Notwithstanding anything in this Agreement to the contrary, for
purposes of computing the Additional Termination Entitlements due upon a
termination of employment that occurs, or is deemed to have occurred, after a
Change of Control, the Remaining Unexpired Employment Period shall be deemed to
be three (3) full years.
Section 16. Covenant Not To Compete.
-----------------------
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company or the Bank, he shall not, without
the written consent of the Company, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding company, bank or bank holding company, any other entity engaged
in the business of accepting deposits or making loans or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within the
State of Georgia or any city or county in any other state in which the Company
or the Bank maintains
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an office; provided, however, that this section 16 shall not apply if the
Executive is entitled to the Additional Termination Entitlements.
Section 17. Confidentiality.
---------------
Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of himself, or any person or entity other than the Company or any entity which
is a subsidiary of the Company or of which the Company is a subsidiary, any
material document or information obtained from the Company, or from its parent
or subsidiaries, in the course of his employment with any of them concerning
their properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 17 shall prevent the Executive,
with or without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation or
disclosure is required under applicable law.
Section 18. Solicitation.
------------
The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Company or the Bank, he
shall not, without the written consent of the Company and the Bank, either
directly or indirectly:
(a) solicit, offer employment to, or take any other
action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any
officer or employee of the Company, the Bank or any of their
respective subsidiaries or affiliates to terminate his or her
employment and accept employment or become affiliated with, or
provide services for compensation in any capacity whatsoever to,
any savings bank, savings and loan association, bank, bank
holding company, savings and loan holding company, or other
institution engaged in the business of accepting deposits, making
loans or doing business within the counties specified in section
16;
(b) provide any information, advice or recommendation
with respect to any such officer or employee of any savings bank,
savings and loan association, bank, bank holding company, savings
and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business
within the counties specified in section 16; that is intended, or
that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of
the Company, the Bank, or any of their respective subsidiaries or
affiliates to terminate his employment and accept employment or
become affiliated with, or provide services for compensation in
any capacity whatsoever to, any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding
company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the
counties specified in section 16;
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(c) solicit, provide any information, advice or
recommendation or take any other action intended, or that a
reasonable person acting in like circumstances would expect, to
have the effect of causing any customer of the Company to
terminate an existing business or commercial relationship with
the Company.
Section 19. No Effect on Employee Benefit Plans or Programs.
-----------------------------------------------
The termination of the Executive's employment during the term of this
Agreement or thereafter, whether by the Company, by the Bank or by the
Executive, shall have no effect on the rights and obligations of the parties
hereto under the Company's or the Bank's qualified or non-qualified retirement,
pension, savings, thrift, profit-sharing or stock bonus plans, group life,
health (including hospitalization, medical and major medical), dental, accident
and long term disability insurance plans or such other employee benefit plans
or programs, or compensation plans or programs, as may be maintained by, or
cover employees of, the Company or the Bank from time to time; provided,
however, that nothing in this Agreement shall be deemed to duplicate any
compensation or benefits provided under any agreement, plan or program covering
the Executive to which the Company is a party and any duplicative amount payable
under any such agreement, plan or program shall be applied as an offset to
reduce the amounts otherwise payable hereunder.
Section 20. Successors and Assigns.
----------------------
This Agreement will inure to the benefit of and be binding upon the
Executive, his legal representatives and testate or intestate distributees, and
the Company and the Bank and their respective successors and assigns, including
any successor by merger or consolidation or a statutory receiver or any other
person or firm or corporation to which all or substantially all of the assets
and business of the Company may be sold or otherwise transferred. Failure of
the Company to obtain from any successor its express written assumption of the
Company's obligations hereunder at least sixty (60) days in advance of the
scheduled effective date of any such succession shall be deemed a material
breach of this Agreement.
Section 21. Notices.
-------
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Executive:
Xxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
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If to the Company or the Bank:
Charter Financial Corp.
000 Xxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Attention: Chairman, Personnel & Compensation Committee
of the Board of Directors
Section 22. Waiver.
------
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be
made in writing, designated as a waiver, and signed by the party against whom
its enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 23. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
Section 24. Governing Law.
-------------
Except to the extent preempted by federal law, this Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Georgia applicable to contracts entered into and to be performed entirely
within the State of Georgia.
Section 25. Headings and Construction.
-------------------------
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
Section 26. Entire Agreement; Modifications.
-------------------------------
This instrument contains the entire agreement of the parties relating
to the subject matter hereof, and supersedes in its entirety any and all prior
agreements, understandings or representations relating to the subject matter
hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
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Section 27. Non-duplication.
---------------
In the event that the Executive shall perform services for the Bank or
any other direct or indirect subsidiary or affiliate of the Company or the Bank,
any compensation or benefits provided to the Executive by such other employer
shall be applied to offset the obligations of the Company hereunder, it being
intended that this Agreement set forth the aggregate compensation and benefits
payable to the Executive for all services to the Company, the Bank and all of
their respective direct or indirect subsidiaries and affiliates.
Section 28. Relative Obligations of the Bank and the Company.
------------------------------------------------
The Company shall, with respect to the Executive's services hereunder
and the compensation therefor and with respect to any termination of the
Executive's employment, have all of the obligations imposed on the Bank under
this Agreement to the same extent as though the name of the Company were
substituted for the name of the Bank herein and the Executive shall, with
respect to the services hereunder and the compensation therefor and with respect
to any termination of the Executive's employment, have all of the rights,
privileges and duties relative to the Company as though the name of the Company
were substituted for the name of the Bank herein. If the Executive performs
services for both the Bank and the Company, any entitlement of the Executive to
severance compensation and other termination benefits under this Agreement shall
be determined on the basis of the aggregate compensation payable to the
Executive by the Bank and the Company, and liability therefor shall be
apportioned between the Bank and the Company in the same manner as compensation
paid to the Executive for services to each of them; provided, however, that the
Company shall be jointly and severally liable with the Bank for all obligations
of the Bank under this Agreement; and provided, further, that in no event shall
the Bank bear any liability for actions of, or obligations undertaken by, the
Company under this Agreement. It is the intent and purpose of this section 28
that the Executive have the same legal and economic rights that he would have if
all of his services were rendered to and all of his compensation were paid by
the Company. This section 28 shall be construed and enforced to give effect to
such intent and purpose.
Section 29. Indemnification for Attorneys' Fees.
------------------------------------
The Bank and the Company shall indemnify, hold harmless and defend
Executive against reasonable costs, including legal fees, incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding. The determination whether the Executive shall have substantially
prevailed on the merits and is therefore entitled to such indemnification, shall
be made by the court or arbitrator, as applicable. In the event of a settlement
pursuant to a settlement agreement, any indemnification payment under this
section 29 shall be made only after a determination by the members of the Board
(other than the Executive and any other member of the Board to which the
Executive is related by blood or marriage) that the Executive has acted in good
faith and that such indemnification payment is in the best interests of the Bank
and the Company.
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Section 30. Required Regulatory Provisions.
------------------------------
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the Executive under
section 12(b) hereof exceed the three times the Executive's average annual
compensation (within the meaning of OTS Regulatory Bulletin 27a or any successor
thereto) for the last five consecutive calendar years to end prior to his
termination of employment with the Bank (or for his entire period of employment
with the Bank if less than five calendar years). The compensation payable to
the Executive hereunder shall be further reduced (but not below zero) if such
reduction would avoid the assessment of excise taxes on excess parachute
payments (within the meaning of section 280G of the Code).
(b) Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Bank, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with section
18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C. (S)1828(k),
and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a notice
served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. (S)1818(e)(3)
or 1818(g)(1), the Bank's obligations under this Agreement shall be suspended as
of the date of service of such notice, unless stayed by appropriate proceedings.
If the charges in such notice are dismissed, the Bank, in its discretion, may
(i) pay to the Executive all or part of the compensation withheld while the
Bank's obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(d) Notwithstanding anything herein contained to the contrary, 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
8(g)(1) of the FDI Act, 12 U.S.C. (S)1818(e)(4) or (g)(1), all prospective
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights and obligations of the Bank and the
Executive shall not be affected.
(e) Notwithstanding anything herein contained to the contrary, if
the Bank is in default (within the meaning of section 3(x)(1) of the FDI Act, 12
U.S.C. (S)1813(x)(1), all prospective obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except to the
extent that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the OTS or his designee or the
Federal Deposit Insurance Corporation ("FDIC"), at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in section 13(c) of the FDI Act, 12 U.S.C. (S)1823(c); (ii)
by the Director of the OTS or his designee at the time such Director or designee
approves a supervisory merger to resolve problems related to the
-17-
operation of the Bank or when the Bank is determined by such Director to be in
an unsafe or unsound condition. The vested rights and obligations of the parties
shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
Section 31. Effective Date.
--------------
This Agreement shall become effective (the "Effective Date") upon the
later of the following two dates: (a) the effective date of the Bank's
conversion from a federally chartered mutual savings bank to a stock form
savings bank pursuant to the Reorganization or (b) the date the OTS advises the
Bank in writing that it either approves or has no objection to the terms and
conditions of this Agreement. The Bank, the Company and the Executive each
hereby acknowledge and agree that the terms of this Agreement shall have no
force or effect prior to such Effective Date.
In Witness Whereof, the Bank and the Company have caused this
Agreement to be executed and the Executive has hereunto set his hand, all as of
the day and year first above written.
__________________________________
Xxxxxx X. Xxxxxxx
CharterBank
Attest:
By____________________________ By________________________________
Name: Name:
Title: Title:
[Seal]
Charter Financial Corp.
Attest:
By____________________________ By________________________________
Name: Name:
Title: Title:
[Seal]
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