Exhibit 10.1
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SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release ("Separation Agreement") is
entered into by and between Xxxxxx X. Xxxxx ("Xx. Xxxxx"), and First Federal
Bank (the "Bank"), a federally-chartered stock savings bank, with its principal
administrative office at 000 Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxx 00000 and First
Federal Bankshares, Inc., a Delaware stock corporation (the "Company"). In this
Separation Agreement, the "Bank" shall at all times include any and all related
entities, corporations, partnerships and subsidiaries (including the Company),
as well as their respective current and former directors, officers, trustees,
partners, employees, successors in interest, representatives and agents, both in
their representative and individual capacities.
WHEREAS, Xx. Xxxxx has decided to resign in order to devote more time to
his family and to have the opportunity to pursue other opportunities, including
exploring full or partial early retirement; and
WHEREAS, the Bank and the Board are grateful for Xx. Xxxxx'x many years of
dedicated service and leadership and thank him for his contributions to the
Bank's success; and
WHEREAS, the Bank and Xx. Xxxxx executed an employment agreement dated
October 4, 1999 (the "Employment Agreement") and notwithstanding the terms of
the Employment Agreement, the Bank and the Company and Xx. Xxxxx mutually agree
that Xx. Xxxxx'x employment with the Bank and the Company will terminate on a
date that is mutually agreed upon between Xx. Xxxxx and the Bank, but no later
than the Company's 2006 Annual Meeting of Stockholders, expected to be held on
October 26, 2006 (the "2006 Annual Meeting"). Xx. Xxxxx and the Bank and the
Company further agree that his service as a director of the Bank and the Company
will terminate effective at the 2006 Annual Meeting; and
WHEREAS, the Bank and Xx. Xxxxx agree that the terms of this Separation
Agreement shall supersede the Employment Agreement, such that all obligations of
the Bank and Xx. Xxxxx under the Employment Agreement shall cease as of the date
this Separation Agreement is executed by both the Bank and Xx. Xxxxx.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is agreed by the parties as follows:
1. Resignation. Xx. Xxxxx hereby resigns his position as Executive Vice
President of the Bank effective on a date that is mutually agreed upon between
Xx. Xxxxx and the Bank, but no later than the Company's 2006 Annual Meeting
("Termination of Employment"). Xx. Xxxxx also hereby resigns as a member of the
Bank's Board of Directors, effective on the date of the 2006 Annual Meeting.
2. Settlement Pay. Provided that Xx. Xxxxx has signed this Separation
Agreement, on January 2, 2007, the Bank agrees to pay Xx. Xxxxx a one-time lump
sum amount equal to Two Hundred Thousand Dollars ($200,000), less appropriate
taxes and deductions ("Settlement Pay"). The Settlement Pay is being offered to
Xx. Xxxxx solely in exchange for his promise to be bound by the terms of this
Separation Agreement and is above and beyond what he would otherwise be entitled
to receive under the Employment Agreement. In addition, the Settlement Pay is
intended to be exempt from being treated as "deferred compensation" under
Internal Revenue Code Section 409A under the "short term deferral rule" set
forth in Proposed Treasury Regulations Section 1.409A-1(b)(4). Payment of the
Settlement Pay shall be reported on IRS Form W-2 for calendar year 2007 as
"supplemental wages."
3. Employee Benefits.
(a) Health Insurance.
(i) COBRA. Xx. Xxxxx (and his spouse and dependents) shall be entitled to
receive continued health insurance coverage under applicable state or federal
"COBRA" laws for eighteen (18) months following his Termination of Employment,
provided that Xx. Xxxxx (and/or his spouse or dependents) timely elects such
continuation coverage and timely remits the applicable premiums.
(ii) HIPAA. In accordance with the Health Insurance Portability and
Accountability Act of 1996 (HIPAA), Xx. Xxxxx (and his spouse and dependents)
shall receive a certificate of creditable coverage from the Bank's group health
plan as of the date of his Termination of Employment, which, provided that Xx.
Xxxxx (and/or his spouse and dependents) does not have a break in group health
insurance coverage of more than 63 calendar days, may be used to reduce or
eliminate any pre-existing condition exclusion which may be imposed by a group
health plan maintained by Xx. Xxxxx'x next employer. If Xx. Xxxxx (and/or his
spouse and dependents) timely elects COBRA group health care continuation
coverage, Xx. Xxxxx (and/or his spouse and dependents) will receive another
certificate of creditable coverage with respect to their period of group health
care coverage under the Bank's group health plan while on COBRA. Provided that
Xx. Xxxxx (and/or his spouse and dependents) does not have a break in group
health insurance coverage of more than 63 calendar days following the end of
such COBRA coverage, such certificate of creditable coverage may be used to
reduce or eliminate any pre-existing condition exclusion which may be imposed by
a group health plan maintained by Xx. Xxxxx'x next employer.
(b) Stock Options. Stock options awarded to Xx. Xxxxx shall be exercisable
in accordance with their terms following Xx. Xxxxx'x Termination of Employment.
Specifically, vested incentive stock options must be exercised within 90 days of
Xx. Xxxxx'x Termination of Employment.
(c) Other Benefits. All other employee benefits shall cease as of Xx.
Xxxxx'x Termination of Employment, including, but not limited to, life insurance
coverage, disability insurance coverage, retirement plan participation and other
fringe benefits.
4. Post-Termination Obligations
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(a) General. All payments under this Agreement shall be subject to Xx.
Xxxxx'x compliance with this Section 4.
(b) Litigation Cooperation. Xx. Xxxxx shall, upon reasonable notice,
furnish such information and assistance to the Bank or the Company as may
reasonably be required by the Bank or the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party; provided, however, that Xx. Xxxxx shall not be required to
provide information or assistance with respect to any litigation between Xx.
Xxxxx and the Bank or the Company or any of its subsidiaries or affiliates.
(c) Confidentiality. Xx. Xxxxx recognizes and acknowledges that the
knowledge of the business activities and plans for business activities of the
Bank and the Company and affiliates thereof, as it may exist from time to time,
is a valuable, special and unique asset of the business of the Bank and the
Company and affiliates thereof. Accordingly, Xx. Xxxxx will not, for an eighteen
(18) month period following his Termination of Employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Bank and the Company and affiliates thereof to any person, firm, corporation, or
other entity for any reason or purpose whatsoever (except for such disclosure as
may be required to be provided to any regulatory agency with jurisdiction over
the Bank or the Company or any affiliate). Notwithstanding the foregoing, Xx.
Xxxxx may disclose any knowledge of general banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Bank or the Company, and Xx. Xxxxx may
disclose any information regarding the Bank or the Company which is otherwise
publicly available or that he is otherwise legally required to disclose. In the
event of a breach or threatened breach by Xx. Xxxxx of the provisions of this
Section 4, the Bank and the Company will be entitled to an injunction
restraining Xx. Xxxxx from disclosing, in whole or in part, his knowledge of the
past, present, planned or considered business activities of the Bank or any of
their affiliates, or from rendering any services to any person, firm,
corporation or other entity to whom such knowledge, in whole or in part, has
been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting the Bank from pursuing any other remedies available to
them for such breach or threatened breach, including the recovery of damages
from Xx. Xxxxx.
(d) Non-Compete. Xx. Xxxxx agrees not to compete with the Bank and the
Company and any affiliate for a period of eighteen (18) months following his
Termination of Employment in any city, town or county in which the Bank has an
office or has filed an application for regulatory approval to establish an
office, determined as of the date of his Termination of Employment, except as
agreed to pursuant to a resolution duly adopted by the Board. Xx. Xxxxx agrees
that during such period and within said cities, towns and counties, Xx. Xxxxx
shall not work for or advise, consult or otherwise serve with, directly or
indirectly, any entity whose business materially competes with the depository,
lending or other business activities of the Bank or the Company. The parties
hereto, recognizing that irreparable injury will result to the Bank and the
Company, their business and property in the event of Xx. Xxxxx'x breach of this
Section 4(d), agree that in the event of any such breach by Xx. Xxxxx, the Bank
and the Company will be entitled, in addition to a pro-rata refund of the amount
paid to Xx. Xxxxx under Section 2 and any other remedies and damages available,
to an injunction to restrain the violation hereof by Xx. Xxxxx, his partners,
agents, servants, employers, employees and all persons acting for or with him.
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Xx. Xxxxx represents and admits that his experience and capabilities are such
that he can obtain employment in a business engaged in other lines and/or of a
different nature than the Bank and the Company, and that the enforcement of a
remedy by way of injunction will not prevent Xx. Xxxxx from earning a
livelihood. Nothing herein will be construed as prohibiting the Bank and the
Company from pursuing any other remedies available to them for such breach or
threatened breach, including the recovery of damages from Xx. Xxxxx.
(e) Non-Solicitation. Xx. Xxxxx further agrees that he will not, in any
manner whatsoever, for a period of eighteen (18) months following his
Termination of Employment, either as an individual or as a partner, stockholder,
director, officer, principal, employee, agent, consultant, or in any other
relationship or capacity, with any person, firm, corporation or other business
entity, either directly or indirectly, solicit or induce or aid in the
solicitation or inducement of any employees of the Bank or the Company to leave
their employment with the Bank or the Company. Xx. Xxxxx further agrees that he
will not, in any manner whatsoever, for a period of eighteen (18) months
following the his Termination of Employment, either as an individual or as a
partner, stockholder, director, officer, principal, employee, agent, consultant
or in any other relationship or capacity with any person, firm, corporation or
other business entity, either directly or indirectly, solicit the business of
any customers or clients of the Bank or the Company.
(f) Non-Disparagement. Xx. Xxxxx and the Bank and the Company agree that
they will engage in no conduct which is either intended to or could reasonably
be expected to harm each other in the operation of their business. Both parties
agree they will not take any action, legal or otherwise, which might embarrass,
harass, or adversely affect each other or which might in any way work to the
detriment of each other, whether directly or indirectly. In particular and by
way of illustration not limitation, each party agrees that it will not directly
or indirectly contact customers or any entity that has a business relationship
with the other, in order to disparage the good morale or business reputation or
business practices of Xx. Xxxxx or the Bank and the Company, or any of its
current and former officers, directors, managers or employees.
(g) Consulting Obligation. Xx. Xxxxx agrees to make himself available to
the Bank and the Company as a consultant for up to ten (10) hours per month for
a period of eighteen (18) months following his Termination of Employment, for no
additional consideration. The Bank shall notify Xx. Xxxxx when the Bank requires
his services as a consultant.
(h) Return of Property. Immediately upon his Termination of Employment, Xx.
Xxxxx shall return to the Bank and/or the Company all of the property which
belongs to the Bank and/or the Company, including, but not limited to, the
automobile that the Bank has made available for Xx. Xxxxx'x use, computers,
keys, cell phones, credit cards and other tangible property, as well as all
original or copies of records, notes, reports, proposals, lists, correspondence,
materials or other documents.
5. Mutual Release.
(a) Release of the Bank and the Company by Xx. Xxxxx; Agreement Not to Xxx.
In exchange for the Settlement Pay to which Xx. Xxxxx would not otherwise be
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entitled, Xx. Xxxxx, on behalf of himself, his heirs and assigns, irrevocably
and unconditionally releases the Bank and the Company from all claims,
controversies, liabilities, demands, causes of action, debts, obligations,
promises, acts, agreements, rights of contribution and/or indemnification, and
damages of whatever kind or nature, whether known or unknown, suspected or
unsuspected, foreseen or unforeseen, liquidated or contingent, actual or
potential, jointly and individually, that he has had or now has, based on any
and all aspects of Xx. Xxxxx'x employment with the Bank or the Company or his
separation from that employment, including, but not limited to, any and all
claims for breach of express or implied contract or covenant of good faith and
fair dealing (whether written or oral), all claims for retaliation or violation
of public policy, breach of promise, detrimental reliance or tort (e.g.,
intentional infliction of emotional distress, defamation, assault, battery,
false imprisonment, wrongful termination, interference with contractual or
advantageous relationship, etc.), whether based on common law or otherwise; all
claims arising under Title VII of the Civil Rights Act of 1964, as amended; the
Age Discrimination in Employment Act; the Americans with Disabilities Act;
claims for emotional distress, mental anguish, personal injury, loss of
consortium; any and all claims that may be asserted on Xx. Xxxxx'x behalf by
others (including the Equal Employment Opportunity Commission); or any other
federal, state or local laws or regulations relating to employment or benefits
associated with employment. The foregoing list is meant to be illustrative
rather than inclusive. Notwithstanding the above, it is understood that Xx.
Xxxxx does not waive any rights he may have to vested benefits under any
retirement or employee welfare plan that may be due him upon his Termination of
Employment.
Xx. Xxxxx waives the rights and claims set forth above, and he also agrees not
to institute, or have instituted, a lawsuit against the Bank or the Company
based on any such claims or rights.
XX. XXXXX ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL AND FINAL BAR TO
ANY AND ALL CLAIM(S) OF ANY TYPE THAT HE MAY NOW HAVE AGAINST THE BANK OR THE
COMPANY BUT THAT IT DOES NOT RELEASE ANY CLAIMS THAT MAY ARISE AFTER THE DATE OF
HIS TERMINATION OF EMPLOYMENT.
(b) Release of Xx. Xxxxx by the Bank and the Company. The Bank, its past,
present or future parent, affiliated, related and/or subsidiary entities and
their predecessors and successors and assigns, and the past, present, or future
directors, shareholders, officers, employees, agents, attorney and
representatives of such entities, do hereby forever release and discharge Xx.
Xxxxx, his heirs, beneficiaries, devisees, executors, administrators, attorneys,
personal representatives, and assigns from any and all claims, debts, demands,
accounts, judgments, rights, causes of action, damages, costs, charges,
complaints, obligations, promises, agreements, controversies, suits, expenses,
compensation, responsibility and liability of every kind and character
whatsoever (including attorneys' fees and costs) (hereinafter collectively
referred to as "claims"), whether in law or in equity and whether or not known,
asserted, or suspected which the Bank has against Xx. Xxxxx from the beginning
of time up to and including the date of his Termination of Employment.
6. Indemnification. For a period of six (6) years following his Termination
of Employment, the Bank shall provide Xx. Xxxxx (and his heirs, executors and
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administrators) with coverage under a standard directors' and officers'
liability insurance policy at the Bank's expense, and shall indemnify Xx. Xxxxx
(and his heirs, executors and administrators) to the to fullest extent permitted
under federal law against 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 a trustee, director or officer
of the Bank (whether or not he was a trustee, director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and reasonable attorneys'
fees and the cost of reasonable settlements (such settlements must be approved
by the Bank's Board). If such action, suit or proceeding is brought against Xx.
Xxxxx in his capacity as an officer, trustee or director of the Bank, however,
such indemnification shall not extent to matters as to which Xx. Xxxxx is
finally adjudged to be liable for willful misconduct in the performance of his
duties.
7. Adequate Consideration. Xx. Xxxxx and the Bank agree that the Settlement
Pay constitutes adequate and ample consideration for the rights and claims that
Xx. Xxxxx is waiving under this Separation Agreement. Xx. Xxxxx further agrees
that the Settlement Pay shall be in lieu of any other compensation or benefits
to which Xx. Xxxxx may be entitled or may claim to be entitled, except as
specified herein.
8. Binding Arbitration. In the event that either party institutes legal
proceedings to enforce the terms of this Separation Agreement, it is
specifically understood and agreed that such a claim shall be submitted to final
and binding arbitration pursuant to the rules of the American Arbitration
Association, and that except for any claims under the Age Discrimination in
Employment Act, the prevailing party shall recover its costs and reasonable
attorney's fees incurred in such arbitration proceeding.
9. Non-Admission of Liability. Each party acknowledges that the other is
entering into this Separation Agreement voluntarily to end their relationship in
a professional manner, and that in making this Separation Agreement, neither
party admits that it has done anything wrong to the other.
10. Amendment and Termination. Xx. Xxxxx and the Bank agree that this
Separation Agreement cannot be amended or terminated except by a writing
executed by both of the parties hereto or their respective administrators,
trustees, personal representatives, and successors.
11. Miscellaneous.
(a) Severability. If any provision of this Separation Agreement, or any
part of any provision of this Separation Agreement, is found to be invalid by a
court of competent jurisdiction, such shall not affect the validity of any other
provision, or part thereof, of this Separation Agreement.
(b) Governing Law. The parties further agree that this Separation Agreement
is governed by the laws of the State of Iowa.
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(c) Entire Agreement. The Bank, the Company and Xx. Xxxxx agree that this
Separation Agreement constitutes their entire final understanding and agreement
with respect to the subject matter hereof and supersedes all prior or
contemporaneous negotiations, promises, covenants, agreements, or
representations concerning all matters directly, indirectly, or collaterally
related to the subject matter of this Separation Agreement, including, but not
limited to, the Employment Agreement.
12. Acknowledgement.
XX. XXXXX ACKNOWLEDGES THAT HE HAS CAREFULLY READ AND UNDERSTANDS THIS
SEPARATION AGREEMENT AND AGREES THAT THE BANK HAS NOT MADE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED HEREIN. XX. XXXXX ALSO ACKOWLEDGES THAT HE HAS BEEN
ADVISED TO CONSULT WITH AN ATTORNEY OF HIS OWN CHOOSING REGARDING THE TERMS OF
THIS SEPARATION AGREEMENT; THAT HE HAS BEEN GIVEN TWENTY-ONE (21) DAYS TO
CONSIDER THE TERMS OF THIS SEPARATION AGREEMENT, AND THAT IF HE SIGNS THIS
SEPARATION AGREEMENT BEFORE THE TWENTY-ONE DAY PERIOD, HE DOES SO KNOWINGLY AND
VOLUNTARILY. XX. XXXXX ALSO ACKNOWLEDGES THAT HE ENTERS INTO THIS SEPARATION
AGREEMENT VOLUNTARILY, WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE, AND WITHOUT
PRESSURE OR COERCION. XX. XXXXX FURTHER ACKNOWLEDGES THAT HE HAS HAD SUFFICIENT
TIME TO CONSIDER THIS SEPARATION AGREEMENT AND CONSULT WITH AN ATTORNEY OF HIS
CHOOSING PRIOR TO EXECUTING THIS SEPARATION AGREEMENT.
XX. XXXXX ALSO ACKNOWLEDGES THAT HE MAY REVOKE THIS SEPARATION AGREEMENT WITHIN
SEVEN DAYS FOLLOWING HIS SIGNATURE ON THIS SEPARATION AGREEMENT BY DELIVERING
WRITTEN NOTIFICATION OF SUCH REVOCATION TO XXXXXXX XXXXXXX, THE PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF THE BANK. THIS SEPARATION AGREEMENT BECOMES EFFECTIVE
ON THE EIGHTH DAY AFTER XX. XXXXX SIGNS THIS SEPARATION AGREEMENT. SAID
REVOCATION IS NOT EFFECTIVE UNLESS IT IS RECEIVED BY XX. XXXXXXX DURING THE
7-DAY PERIOD.
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IN WITNESS WHEREOF, the Bank and Xx. Xxxxx have executed this Separation
Agreement and General Release.
FIRST FEDERAL BANK
July 6, 2006 By: /s/ Xxxxxxx Xxxxxxx
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Date Xxxxxxx X. Xxxxxxx
Chief Executive Officer
FIRST FEDERAL BANKSHARES, INC.
July 6, 2006 By: /s/ Xxxxxxx Xxxxxxx
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Date Xxxxxxx X. Xxxxxxx
Chief Executive Officer
July 6, 2006 By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
