Exhibit 10(d)
FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made this 24th day of November, 2003, by
and among COASTAL FINANCIAL CORPORATION, a Delaware corporation ("the Company"),
COASTAL FEDERAL BANK, a wholly owned subsidiary of the Company (the "Bank"), and
Xxxxxx X. Xxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Company and the Bank desire to retain the services of the
Executive as Executive Vice President/Chief Marketing Director of the Company
and the Bank;
WHEREAS, the Company and the Bank have previously entered into an
employment agreement with the Executive;
WHEREAS, the Executive and the respective Boards of Directors of the Bank
and the Company desire to enter into an updated and revised agreement setting
forth the terms and conditions of the continuing employment of the Executive and
the related rights and obligations of each of the parties;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. Employment. The Executive is employed as Executive Vice President/Chief
Marketing Director of the Company and the Bank. The Executive shall perform all
duties which are customarily performed by persons situated in a similar
executive capacity and such other duties as are delegated to him by the Chief
Executive Officer from time to time.
2. Location and Facilities. The Executive will be furnished with the
working facilities and staff customary for executive officers with the title and
duties set forth in Section 1 and as are necessary for him to perform his
duties. The location of such facilities and staff shall be at the principal
administrative offices of the Company and the Bank, or at such other site or
sites customary for such offices.
3. Term.
a. The term of this Agreement shall be (i) the initial term,
consisting of the period commencing on the date of this Agreement
(the "Effective Date") and ending on the first anniversary of the
Effective Date, plus (ii) any and all extensions of the initial
term made pursuant to this Section 3.
b. Commencing on the Effective Date and on each day thereafter, the
term under this Agreement shall be renewed automatically for an
additional one (1) day period beyond the then effective
expiration date without action by any party, provided that
neither the Company, on the one hand, nor Executive, on the
other, shall have given at least sixty (60) days written notice
of its or his desire that the term not be renewed. In the case
such notice is given by one party to the other, the term of this
Agreement shall become fixed and shall end on the first
anniversary of the date of written notice.
4. Base Salary.
a. The Bank agrees to pay the Executive during the term of this
Agreement a base salary at the rate of $152,750.00 per annum,
payable in accordance with the Bank's customary payroll
practices.
b. The Board of the Bank shall review annually the rate of the
Executive's base salary based upon factors they deem relevant,
and may maintain or increase his salary, provided that no such
action shall reduce the rate of salary below the rate in effect
on the Effective Date.
c. In the absence of action by the Board of the Bank, the Executive
shall continue to receive salary at the per annum rate specified
on the Effective Date or, if another rate has been established
under the provisions of this Section 4, the rate last properly
established by action of the Board of the Bank under the
provisions of this Section 4.
5. Bonuses. The Executive shall be entitled to participate in any
discretionary bonus or other incentive compensation programs that the Board
of the Company or the Bank may establish from time to time for the benefit
of the officers or employees of the Company or the Bank.
6. Benefit Plans. The Executive shall be entitled to participate in
such life insurance, medical, dental, pension, profit sharing, and
retirement plans, stock compensation plans and other programs and
arrangements as may be approved from time to time by the Company or the
Bank for the benefit of their respective employees.
7. Vacation and Leave. The Executive shall be entitled to vacations
and other leave in accordance with Bank policy for senior executives.
8. Expense Payments and Reimbursements. The Executive shall be
reimbursed for all reasonable out-of-pocket business expenses that he shall
incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with applicable policies of
the Company or the Bank.
9. Loyalty.
a. During the term of this Agreement the Executive: (i) shall devote
all his time, attention, skill, and efforts to the faithful
performance of his duties hereunder; provided, however, that from
time to time, the Executive may serve on the boards of directors
of, and hold any other offices or positions in, companies or
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organizations which will not present any conflicts of interest
with the Company or the Bank or any of their subsidiaries or
affiliates, unfavorably affect the performance of Executive's
duties pursuant to this Agreement, or violate any applicable
statute or regulation; and (ii) shall not engage in any business
or activity contrary to the business affairs or interests of the
Company or the Bank.
b. Nothing contained in this Agreement shall prevent or limit the
Executive's right to invest in the capital stock or other
securities of any business dissimilar from that of the Company
and the Bank, or, solely as a passive, minority investor, in any
business.
c. The Executive agrees to maintain the confidentiality of any and
all information concerning the operation or financial status of
the Company and the Bank; the names or addresses of any of its
borrowers, depositors and other customers; any information
concerning or obtained from such customers; and any other
information concerning the Company and the Bank to which he may
be exposed during the course of his employment. The Executive
further agrees that, unless required by law or specifically
permitted by the Board in writing, he will not disclose to any
person or entity, either during or subsequent to his employment,
any of the above-mentioned information which is not generally
known to the public, nor shall he employ such information in any
way other than for the benefit of the Company and the Bank.
10. Termination and Termination Pay. Subject to Section 11 of
this Agreement, the Executive's employment under this Agreement may be
terminated in the following circumstances:
a. Death. The Executive's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in
which event the Executive's estate shall be entitled to receive
the compensation due to the Executive through the last day of the
calendar month in which his death occurred.
b. Retirement. This Agreement shall be terminated upon the
retirement of the Executive under the retirement benefit plan or
plans in which he participates pursuant to Section 6 of this
Agreement or otherwise. For all other purposes, the Executive's
termination of employment at retirement shall be treated in the
same manner as if he voluntarily terminated employment pursuant
to Section 10(f).
c. Disability.
i. The Company, the Bank, or the Executive may terminate the
Executive's employment after having established the
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Executive's Disability. For purposes of this Agreement,
"Disability" means a physical or mental infirmity that
impairs the Executive's ability to substantially perform his
duties under this Agreement and that results in the
Executive's becoming eligible for long-term disability
benefits under the Company's or the Bank's long-term
disability plan (or, if the Company or the Bank has no such
plan in effect, that impairs the Executive's ability to
substantially perform his duties under this Agreement for a
period of one hundred eighty (180) consecutive days). The
Boards of the Company and the Bank shall determine whether
or not the Executive is and continues to be permanently
disabled for purposes of this Agreement in good faith, based
upon competent medical advice and other factors that they
reasonably believe to be relevant. As a condition to any
benefits, such Board may require the Executive to submit to
such physical or mental evaluations and tests as it deems
reasonably appropriate.
ii. In the event of such Disability, the Executive's obligation
to perform services under this Agreement will terminate. In
the event of such termination, the Executive shall continue
to receive seventy-five (75) percent of his monthly base
salary (at the annual rate in effect on his date of
termination) through the earlier of the date of the
Executive's death, the date he attains age 65 or the date
which is one (1) year after the Executive's termination
date. Such payments shall be reduced by the amount of any
short- or long-term disability benefits payable to the
Executive under any other disability program sponsored by
the Company or the Bank. In addition, during any period of
the Executive's Disability in which he is receiving payments
under this paragraph, the Executive and his dependents
shall, to the greatest extent possible, continue to be
covered under all benefit plans (including, without
limitation, retirement plans and medical, dental and life
insurance plans) of the Company and the Bank in which
Executive participated prior to his Disability on the same
terms as if Executive were actively employed by the Company
and the Bank.
d. Just Cause.
i. The Board of the Company or the Bank may, by written notice
to the Executive in the form and manner specified in this
paragraph, immediately terminate his employment with the
Company or the Bank, respectively, at any time, for Just
Cause. The Executive shall have no right to receive
compensation or other benefits for any period after
termination for Just Cause except for vested benefits.
Termination for "Just Cause" shall mean termination because
of, in the good faith determination of the Company's or the
Bank's Board, the Executive's:
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(1) Personal dishonesty;
(2) Incompetence;
(3) Willful misconduct;
(4) Breach of fiduciary duty involving personal profit;
(5) Intentional failure to perform duties under this
Agreement;
(6) Willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) that
reflects adversely on the reputation of the Bank, any
felony conviction, any violation of law involving moral
turpitude, or any violation of a final cease-and-desist
order; or
(7) Material breach by the Executive of any provision of
this Agreement.
ii Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Just Cause by the Company
or the Bank unless there shall have been delivered to the
Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths (3/4) of the
entire membership of the Board of the Company or the Bank at
a meeting of such Board called and held for the purpose
(after reasonable notice to the Executive and an opportunity
for the Executive to be heard before the Board with
counsel), finding that, in the good faith opinion of such
Board, the Executive was guilty of conduct described above
and specifying the particulars thereof.
e. Certain Regulatory Events.
i. If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by
an order issued under Sections 8(e)(4) or 8(g)(1) of the
Federal Deposit Insurance Act ("FDIA") (12 U.S.C. xx.xx.
1818(e)(4) and (g)(1)), all obligations of the Bank under
this Agreement shall terminate as of the effective date of
the order, but vested rights of the parties shall not be
affected.
ii. If the Bank is in default (as defined in Section 3(x)(1) of
FDIA), all obligations of the Bank under this Agreement
shall terminate as of the date of default, but vested rights
of the parties shall not be affected.
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iii. If a notice served under Sections 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. Sections 1818(e)(3) and (g)(1)) suspends
and/or temporarily prohibits the Executive from
participating in the conduct of the Bank's affairs, the
Bank's obligations under this Agreement shall be suspended
as of the date of such service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the
Bank shall, (x) pay the Executive all or part of the
compensation withheld while its contract obligations were
suspended, and (y) reinstate (in whole or in part) any of
its obligations which were suspended.
f. Voluntary Termination by Executive. In addition to his other
rights to terminate under this Agreement, the Executive may
voluntarily terminate employment with the Bank and the Company
during the term of this Agreement upon at least sixty (60) days
prior written notice, in which case the Executive shall receive
only his compensation, vested rights and employee benefits up to
the date of his termination.
g. Without Just Cause or With Good Reason.
i. In addition to termination pursuant to Sections 10(a)
through 10(f), (x) the Boards of the Company or the Bank,
respectively, may, by written notice to the Executive,
immediately terminate his employment with the Company or the
Bank, respectively, at any time for a reason other than Just
Cause (a termination "Without Just Cause") and (y) the
Executive may, by written notice to the Boards of the
Company and the Bank, immediately terminate this Agreement
at any time within ninety (90) days following an event
constituting "Good Reason" as defined below (a termination
"With Good Reason").
ii. Subject to Section 11 hereof, in the event of termination
under this Section 10(g), the Executive shall be entitled to
receive his continued base salary (determined at the highest
annual rate of base salary in effect pursuant to Section 4
of this Agreement for any of the twelve (12) months
immediately preceding the date of such termination) and
prorated cash bonus for the remaining term of the Agreement
(determined by reference to the highest annual cash bonus
received by the Executive in any of the three (3) calendar
years preceding the date of termination). The sum due under
this Section 10(g) shall be paid in one lump sum within ten
(10) calendar days of such termination. Also, in such event,
the Executive shall, for the remaining term of the
Agreement, receive the benefits he would have received
during the remaining term of the Agreement under any
tax-qualified or non-tax-qualified retirement programs in
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which the Executive participated prior to his termination
(with the amount of the benefits determined by reference to
the benefits received by the Executive under such programs
during the twelve (12) months preceding his termination or,
if applicable, the accruals made on the Executive's behalf
under such programs) and continue to participate in any
benefit plans of the Company and the Bank that provide
health (including medical and dental), life or disability
insurance, or similar coverage upon terms no less favorable
than the most favorable terms provided to senior executives
of the Bank during such period. In the event that the
Company or the Bank is unable to provide such coverage by
reason of the Executive no longer being an employee, the
Company and the Bank shall provide the Executive with
comparable coverage on an individual policy basis or, if
individual coverage is not available, provide a cash payment
equivalent to the value of such coverage.
iii. "Good Reason" shall exist if, without Executive's express
written consent, the Company or the Bank materially breach
any of their respective obligations under this Agreement.
Without limitation, such a material breach shall be deemed
to occur upon any of the following:
(1) A material reduction in the Executive's
responsibilities or authority, or a requirement that
the Executive report to any person or group other than
the Boards of the Company and the Bank (or any other
effective reduction in reporting responsibilities) in
connection with his employment with the Company or the
Bank;
(2) Assignment to the Executive of duties of a
non-executive nature or duties for which he is not
reasonably equipped by his skills and experience;
(3) A reduction in salary or benefits contrary to the terms
of this Agreement, or, following a Change in Control as
defined in Section 11 of this Agreement, any reduction
in salary or material reduction in benefits below the
amounts to which he was entitled prior to the Change in
Control;
(4) Termination of incentive and benefit plans, programs or
arrangements, or reduction of the Executive's
participation to such an extent as to materially reduce
their aggregate value below their aggregate value as of
the Effective Date; or
(5) A requirement that the Executive relocate his principal
business office or his principal place of residence
outside of the area consisting of a thirty five (35)
mile radius from the current main office and any branch
of the Bank, or the assignment to the Executive of
duties that would reasonably require such a relocation.
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iv. Notwithstanding the foregoing, a reduction or elimination of
the Executive's participation or benefits under one or more
benefit plans maintained by the Company or the Bank as part
of a good faith, overall reduction or elimination of such
plan or plans or benefits thereunder applicable to all
participants in a manner that does not discriminate against
the Executive (except as such discrimination may be
necessary to comply with law) shall not constitute an event
of Good Reason or a material breach of this Agreement,
provided that benefits of the type or to the general extent
as those offered under such plans prior to such reduction or
elimination are not available to other officers of the
Company or the Bank or any company that controls either of
them under a plan or plans in or under which the Executive
is not entitled to participate.
v. Notwithstanding anything in this Agreement to the contrary,
during the period beginning three (3) months prior to the
announcement by the Bank or the Company of an event
constituting a Change in Control (as defined in Section
11(a)) and ending twelve (12) months following the effective
date of a Change in Control, the Executive may voluntarily
terminate his employment under this Agreement for any reason
and such termination shall constitute termination With Good
Reason.
h. Continuing Covenant Not to Compete or Interfere with
Relationships. Regardless of anything herein to the
contrary, following a termination by the Company, the Bank
or the Executive pursuant to Section 10(g) and continuing
until the first anniversary of the effective date of such
termination, the Executive shall not serve as an officer,
director or employee of any bank holding company, bank,
savings association, savings and loan holding company, or
mortgage company which offers products or services competing
with those offered by the Company or the Bank from any
office in any city, town or county where Bank maintains an
office as of the date of the Executive's termination and
shall not interfere with the relationship of the Company or
the Bank and any of its employees, agents, or
representatives.
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11. Termination in Connection with a Change in Control.
a. For purposes of this Agreement, a "Change in Control" shall
be deemed to occur on the earliest of
i. The acquisition by any entity, person or group (other
than the acquisition by a tax-qualified retirement plan
sponsored by the Company or the Bank) of beneficial
ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of more than 25%
of the outstanding capital stock of the Company or the
Bank entitled to vote for the election of directors
("Voting Stock");
ii. The commencement by any entity, person, or group (other
than the Company or the Bank, a subsidiary of the
Company or the Bank, or a tax-qualified retirement plan
sponsored by the Company or the Bank) of a tender offer
or an exchange offer for more than 25% of the
outstanding Voting Stock of the Company or the Bank;
iii. The effective time of (x) a merger or consolidation of
the Company or the Bank with one or more other
corporations as a result of which the holders of the
outstanding Voting Stock of the Company or the Bank
immediately prior to such merger exercise voting
control over less than 51 % of the Voting Stock of the
surviving or resulting corporation, or (y) a transfer
of substantially all of the property of the Company or
the Bank other than to an entity of which the Company
or the Bank owns at least 51% of the Voting Stock; and
iv. At such time that, during any period of two (2)
consecutive years, individuals who at the beginning of
such period constitute the Board of the Company or the
Bank (the "Continuing Directors") cease for any reason
to constitute at least two-thirds thereof, provided
that any individual whose election or nomination for
election as a member of the Board was approved by a
vote of at least two-thirds (2/3) of the Continuing
Directors then in office shall be considered a
Continuing Director.
b. If within the period beginning three (3) months prior to the
announcement by the Bank or the Company of an event
constituting a Change in Control and ending twelve (12)
months following the effective date of a Change in Control,
(i) the Company or the Bank shall terminate the Executive's
employment Without Just Cause, or (ii) the Executive shall
voluntarily terminate his employment With Good Reason, the
Company or the Bank shall, within ten (10) calendar days of
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the termination of the Executive's employment, make a
lump-sum cash payment to him equal to one (1) times the sum
of the Executive's (x) current base salary (determined at
the highest annual rate of base salary in effect pursuant to
Section 4 of this Agreement for the twelve (12) months
immediately preceding the effective date of the Change in
Control or, if higher, the rate in effect on the Executive's
termination date) and (y) the highest cash bonus paid to the
Executive or accrued on the Executive's behalf with respect
to any of the three (3) most recently completed fiscal years
of the Bank preceding the effective date of the Change in
Control. This cash payment shall be made in lieu of any
payment also required under Section 10(g) of this Agreement
because of a termination in such period. The Executive's
rights under Section 10(g) are not otherwise affected by
this Section 11. Also, in such event, the Executive shall,
for a twelve (12) month period following his termination of
employment, receive the benefits he would have received over
such period under any tax-qualified or non-tax-qualified
retirement programs in which the Executive participated
prior to his termination (with the amount of the benefits
determined by reference to the benefits received by the
Executive under such programs during the twelve (12) months
preceding the Change in Control or, if applicable, the
accruals made on the Executive's behalf during such period)
and continue to participate in any benefit plans of the
Company and the Bank that provide health (including medical
and dental), life or disability insurance, or similar
coverage upon terms no less favorable than the most
favorable terms provided to senior executives of the Bank
during such period. In the event that the Company or the
Bank is unable to provide such coverage by reason of the
Executive no longer being an employee, the Company and the
Bank shall provide the Executive with comparable coverage
through an individual policy or, if individual coverage is
not available, provide a cash payment equivalent to the
value of such coverage.
12. Indemnification and Liability Insurance.
a. Indemnification. The Company and the Bank agree to indemnify
the Executive (and his heirs, executors, and
administrators), and to advance expenses related thereto, to
the fullest extent permitted under applicable law and
regulations against any and all expenses and liabilities
reasonably incurred by him in connection with or arising out
of any action, suit, or proceeding in which he may be
involved by reason of his having been an Executive of the
Company or the Bank or any of their subsidiaries (whether or
not he continues to be an Executive at the time of incurring
any such expenses or liabilities) such expenses and
liabilities to include, but not be limited to, judgments,
court costs, and attorney's fees and the cost of reasonable
settlements, such settlements to be approved by the Board of
the Company or the Bank, if such action is brought against
the Executive in his capacity as an Executive of the Company
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or the Bank or any of their subsidiaries. Indemnification
for expenses shall not extend to matters for which the
Executive has been terminated for Just Cause. Nothing
contained herein shall be deemed to provide indemnification
prohibited by applicable law or regulation.
b. Insurance. During the period in which indemnification of the
Executive is required under this Section, the Company or the
Bank shall provide the Executive (and his heirs, executors,
and administrators) with coverage under a standard
Executives' and directors' liability policy at the expense
of the Company or the Bank, at least equivalent to such
coverage provided to senior Executives of the Company or the
Bank.
13. Reimbursement of Executive's Expenses to Enforce this
Agreement. The Company or the Bank shall reimburse the Executive for
all out-of-pocket expenses, including, without limitation, reasonable
attorney's fees, incurred by the Executive in connection with
successful enforcement by the Executive of the obligations of the
Company or the Bank to the Executive under this Agreement. Successful
enforcement shall mean the grant of an award of money or the
requirement that the Company or the Bank take some action specified by
this Agreement (i) as a result of court order; or (ii) otherwise by
the Company or the Bank following an initial failure of the Company or
the Bank to pay such money or take such action promptly after written
demand therefore from the Executive stating the reason that such money
or action was due under this Agreement at or prior to the time of such
demand.
14. Adjustment of Certain Payments and Benefits.
a. Tax Indemnification. Anything in this Agreement to the
contrary notwithstanding, and except as set forth below, in
the event it shall be determined that any payment, benefit
or distribution made or provided by the Company or the Bank
to or for the benefit of the Executive (whether made or
provided pursuant to the terms of this Agreement or
otherwise) (each referred to herein as a "Payment"), would
be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by the Executive with
respect to such excise tax (the excise tax, together with
any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Executive
shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
b. Determination of Gross-Up Payment. Subject to the provisions
of Section 14(c), all determinations required to be made
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under this Section 14, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payments
and the assumptions to be utilized in arriving at such
determination, shall be made by a certified public
accounting firm reasonably acceptable to the Company as may
be designated by the Executive (the "Accounting Firm") which
shall provide detailed supporting calculations both to the
Company, the Bank and the Executive within fifteen (15)
business days of the receipt of notice from the Executive
that there have been Payments, or such earlier time as is
requested by the Company and the Bank. All fees and expenses
of the Accounting Firm shall be borne solely by the Company
and the Bank. Any Gross-Up Payment, as determined pursuant
to this Section 14, shall be paid by the Company to the
Executive within five days of (i) the later of the due date
for the payments of any Excise Tax, and (ii) the receipt of
the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code, at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company and the Bank should have been made
("Underpayment"), consistent with the calculations required
to be made hereunder. In the event that the Company and the
Bank exhaust their remedies pursuant to Section 14(c) and
the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive.
c. Treatment of Claims. The Executive shall notify the Company
and the Bank in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by
the Company and the Bank of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no
later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the
Company and the Bank of the nature of such claims and the
date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration
of the thirty (30) day period following the date on which it
gives such notice to the Company and the Bank (or such
shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company and the
Bank notify the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the
Executive shall:
i. give the Company and the Bank any information
reasonably request by the Company and the Bank relating
such claim,
ii. take such action in connection with contesting such
claim as the Company and the Bank shall reasonably
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request in writing from time to time, including,
without limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company and the Bank,
iii. cooperate with the Company and the Bank in good faith
in order effectively to contest such claim, and
iv. permit the Company and the Bank to participate in any
proceedings relating to such claim; provided, however,
that the Company and the Bank shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with
such contest and indemnity and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with
respect thereto) imposed as a result of such
representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this
Section 14(c), the Company and the Bank shall control
all proceedings taken in connection with such contest
and, at their sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of
such claim and may, at their sole option, either direct
the Executive to pay the tax claimed and xxx for a
refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more
appellate courts, as the Company and the Bank shall
determine; provided, however, that if the Company and
the Bank direct the Executive to pay such claim and xxx
for a refund, the Company and the Bank shall advance
the amount of such payment to the Executive, on an
interest-free basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to
any imputed income with respect to such advance.
Furthermore, the Company's and the Bank's control of
the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest,
as the case may be, any other issues raised by the
Internal Revenue Service or any other taxing authority.
d. Adjustments to the Gross-Up Payment. If, after the receipt
by the Executive of an amount advanced by the Company
pursuant to Section 14(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the
requirements of Section 14(c)) promptly pay to the Company
the amount of such refund (together with any interest paid
or credited thereon after applicable taxes). If, after the
receipt by the Executive of an amount advanced by the
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Company pursuant to Section 14(c), a determination is made
that the Executive shall not be entitled to any refund with
respect to such claim and such denial of refund occurs prior
to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of the
Gross-Up Payment.
15. Injunctive Relief. If there is a breach or threatened breach
of Section 10(h) of his Agreement or the prohibitions upon disclosure
contained in Section 9(c) of this Agreement, the Company or the Bank
and the Executive agree that there is no adequate remedy at law for
such breach, and that the Company and the Bank each shall be entitled
to injunctive relief restraining the Executive from such breach or
threatened breach, but such relief shall not be the exclusive remedy
hereunder for such breach. The parties hereto likewise agree that the
Executive, without limitation, shall be entitled to injunctive relief
to enforce the obligations of the Company and the Bank under Section
11 of this Agreement.
16. Successors and Assigns.
a. This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Company or the
Bank which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially
all of the assets or stock of the Company or the Bank.
b. Since the Bank and the Company are contracting for the
unique and personal skills of the Executive, the Executive
shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written
consent of the Bank and the Company.
17. No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be
offset or reduced by the amount of any compensation or benefits
provided to the Executive as a result of any subsequent employment.
18. Notices. All notices, requests, demands and other
communications in connection with this Agreement shall be made in
writing and shall be deemed to have been given when delivered by hand
or 48 hours after mailing at any general or branch United States Post
Office, by registered or certified mail, postage prepaid, addressed as
follows, or to such other address as shall have been designated in
writing by the addressee:
a. If to the Company or the Bank: Copy to:
Corporate Secretary
Coastal Financial Corporation
0000 Xxx Xxxxxx
Xxxxxx Xxxxx, X.X. 00000
14
b. If to the Executive:
Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxx
Xxxxxx Xxxxx, X.X. 00000
19. Joint and Several Liability; Payments by the Company and the Bank.
To the extent permitted by law, except as otherwise provided herein, the
Company and the Bank shall be jointly and severally liable for the payment
of all amounts due under this Agreement. The Company hereby agrees that it
shall be jointly and severally liable with the Bank for the payment of all
amounts due under this Agreement and shall guarantee the performance of the
Bank's obligations thereunder, provided that the Company shall not be
required by this Agreement to pay to the Executive a salary or any bonuses
or any other cash payments, except in the event that the Bank does not
fulfill the obligations to the Executive hereunder for such payments.
20. No Plan Created by this Agreement. The Executive, the Company and
the Bank expressly declare and agree that this Agreement was negotiated
among them and that no provision or provisions of this Agreement are
intended to, or shall be deemed to, create any plan for purposes of the
Employee Retirement Income Security Act or any other law or regulation, and
the Company, the Bank and the Executive each expressly waives any right to
assert the contrary. Any assertion in any judicial or administrative
filing, hearing, or process by or on behalf of the Executive or the Company
or the Bank that such a plan was so created by this Agreement shall be
deemed a material breach of this Agreement by the party making such an
assertion.
21. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
22. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Delaware shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or
otherwise.
23. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
24. Headings. Headings contained herein are for convenience of
reference only.
25. Entire Agreement. This Agreement, together with any understandings
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, other than written agreements with respect to
specific plans, programs or arrangements described in Sections 5 and 6.
This Agreement supercedes and replaces in its entirety the Agreement dated
October 27, 1998, as amended, between the Company, the Bank and the
Executive.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
Attest: COASTAL FINANCIAL CORPORATION
/s/ Xxxxx X. Xxxxx By: /s/ X.X. Xxxxxxxx
-------------------------------- -----------------------------------------
Xxxxx X. Xxxxx X.X. Xxxxxxxx
Title: Chairman
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
Attest: COASTAL FEDERAL BANK
/s/ Xxxxx X. Xxxxx By:/s/ X.X. Xxxxxxxx
-------------------------------- -----------------------------------------
Xxxxx X. Xxxxx X.X. Xxxxxxxx
Title: Chairman
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
Witness:
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxx
-------------------------------- -----------------------------------------
Xxxxxxx X. Xxxxxxx EXECUTIVE Xxxxxx X. Xxxxxx
