Exhibit 10.1(a)
FORM OF
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of , 1997 (the "Effective Date"), by
and between Flagstar Bancorp, Inc. (the "Company") and (the "Employee").
WHEREAS, the Company wishes to assure retention of the services of the
Employee for the period provided in the Agreement; and
WHEREAS, the Employee is willing to serve in the employ of the Company for
said period.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as the of the Company. The
Employee shall render such administrative and management services for the
Company as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity. The Employment shall also promote,
by entertainment or otherwise, as and to the extent permitted by law, the
business of the Company. The Employee's other duties shall be such as the
Board of Directors of the Company ("Board") may from time to time reasonably
direct, including normal duties as an officer of the Company.
2. Consideration from Company; Joint and Several Liability. In lieu of
paying the Employee a base salary during the term of this Agreement, the
Company hereby agrees that to the extent permitted by law, it shall be jointly
and severally liable with its subsidiary, Flagstar Bank, FSB (the "Bank"), for
the payment of all amounts due under the employment agreement between the Bank
and the Employee (the "Bank Agreement"). Nevertheless, the Board a base salary
for the remaining term of this Agreement. If the Board agrees to pay such
salary, the Board shall thereafter review, not less often than annually, the
rate of the Employee's salary, and in its sole direction may decide to
increase his salary.
3. Discretionary Bonuses. The Employee shall participate in an equitable
manner with all other senior management employees of the Company in
discretionary bonuses that the Board may award from time to time to the
Company's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employer's right to
participate in such discretionary bonuses.
4. (a) Participation in Retirement, Medical and Other Plans. The Employee
shall participate in any plan that the Company maintains for the benefit of
its employees if the plan relates to (i) pension, profit-sharing, or other
retirement benefits, (ii) medical insurance or the reimbursement of medical or
dependent care expenses, or (iii) other group benefits, including disability
and life insurance plans.
(b) Employee Benefits: Expenses. The Employee shall participate in any
fringe benefits which are or may become available to the Company's senior
management employees and which are commensurate with the responsibilities and
functions to be performed by the Employee under this Agreement. The Employee
shall be reimbursed for all reasonable out-of-pocket business expenses which
he shall incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with the policies of the
Company.
(c) Liability Insurance Indemnification. The Company shall provide the
Employee (including his heirs, executors and administrators) with coverage
under a standard directors' and officers' liability insurance policy at the
Company's expense, or in lieu thereof, shall indemnify the Employee (and his
heirs, executors and administrators) to the fullest extent permitted under
Michigan 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 director or officer of the
Company (whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities); such expenses and liabilities to
include, but not limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements, and such settlements to be approved by the
Board of Directors of the Company; provided, however, that such
indemnification shall
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not extend to matters as to which the Employee is finally adjudged to be
liable for willful misconduct or gross negligence in the performance of his
duties as a director or officer of the Company.
5. Term. The Company hereby employs the Employee, and the Employee hereby
accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending thirty six (36) months thereafter (or such earlier
date as is determined in accordance with Section 9). Additionally, on each
annual anniversary date from the Effective Date, the Employee's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided the Board determines in a duly adopted
resolution that the performance of the Employee has met the Board's
requirements and standards and that this Agreement shall be extended.
6. Loyalty; Noncompetition.
(a) During the period of his employment hereunder and except for illnesses,
reasonable vacation periods, and reasonable leaves of absence, the Employee
shall devote all his full business time, attention, skill, and efforts to the
faithful performance of his duties hereunder to the Company and its
subisidiaries; provided, however, from time to time, Employee may serve on the
boards of directors of, and hold any other offices or positions in, companies
or organizations which will not present any conflict of interest with the
Company or any of its subsidiaries or affiliates, or unfavorably affect the
performance of the Employee's duties pursuant to this Agreement, or will not
violate any applicable statute or regulation. "Full business time" is hereby
defined as that amount of time usually devoted to like companies by similarly
situated executive officers. During the term of his employment under this
Agreement, the Employee shall not engage in any business or activity contrary
to the business affairs or interests of the Company, or be gainfully employed
in any other position or job other than as provided above.
(b) Nothing contained in this Section 6 shall be deemed to prevent or limit
the Employee's right to invest in the capital stock or other securities of any
business dissimilar from that of the Company, or, solely as a passive or
minority investor, in any business.
7. Standards. The Employee shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time
to time. The Company will provide the Employee with the working facilities and
staff customary for similar executives and necessary for him to perform his
duties.
8. Vacation and Sick Leave. At such reasonable times as the Board shall in
its discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; provided
that:
(a) The Employee shall be entitled to an annual vacation in accordance
with the policies that the Board periodically establishes for senior
management employees of the Company.
(b) The Employee shall not receive any additional compensation from the
Company on account of his failure to take a vacation, and the Employee
shall not accumulate unused vacation from one fiscal year to the next,
except in either case to the extent authorized by the Board.
(c) In additional to the aforesaid paid vacations, the Employee shall be
entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Company for such additional periods
of time and for such valid and legitimate reasons as the Board may in its
discretion determine. Further, the Board may grant to the Employee a leave
or leaves of absence, with or without pay, at such time or times and upon
such terms and conditions as such Board in its discretion may determine.
(d) In addition, the Employee shall be entitled to an annual sick leave
benefit as established by the Board.
9. Termination and Termination Pay. Subject to Section 11 hereof (which
shall only be applicable during the twelve-month period following a "Change in
Control" as defined herein), the Employee's employment hereunder may be
terminated under the following circumstances:
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(a) Death. The Employee's employment under this Agreement shall terminate
upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the
Employee for the remaining term of the contract payable in a lump sum if
election is made by the spouse within 30 days of Employee's death or
otherwise on a monthly basis, plus any accrued and unpaid discretionary
bonus due Employee at the time of his death, payable in a lump sum amount
within 30 days of the Employee's death. In addition, the Bank shall
maintain the existing medical insurance for the Employee's spouse for six
months after the Employee's death.
(b) Disability. The Company may terminate the Employee's employment after
having established the Employee's Disability. For purposes of this
Agreement, "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially perform his duties under this
Agreement and which results in the Employee becoming eligible for long-term
disability benefits under the Company's long-term disability plan (or, if
the Company has no such plan in effect, which impairs, or can be expected
to impair, the Employee's ability to substantially perform his duties under
this Agreement for a period of 180 consecutive days). The Employee shall be
entitled to the compensation and benefits provided for under this Agreement
for (i) any period not to exceed twelve (12) months during the term of this
Agreement and prior to the establishment of the Employee's Disability
during which the Employee is unable to work due to the physical or mental
infirmity, or (ii) any period not to exceed twelve (12) months of
Disability which is prior to the Employee's termination of employment
pursuant to this Section 9(b).
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. Termination for "Just Cause"
shall mean termination because of, in the good faith determination of the
Board, the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, 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 material breach of any provision of this Agreement. No
act, or failure to act, on the Employee's part shall be considered
"willful", unless he has acted, or failed to act, with an absence of good
faith and without a reasonable belief that his action, or failure to act,
was in the best interest of the Company. Notwithstanding the foregoing, (i)
the Employee shall not be deemed to have been terminated for Just Cause
unless there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than a majority
of the entire Employee and an opportunity for the Employee to be heard
before the Board), finding that in the good faith opinion of the Board the
Employee was guilty of conduct set forth above in the second sentence of
this Subsection (c) and specifying the particulars thereof in detail.
(d) Without Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time for a reason other than
Just Cause, in which event the Employee shall be entitled to receive the
following compensation and benefits (unless such termination occurs within
the time period set forth in Section 11(b) hereof, of which event the
benefits and compensation provided for in Section 11 shall apply): (i) the
salary provided pursuant to Section 2 hereof, up to the date of termination
of the term (including any renewal term) of this Agreement (the "Expiration
Date"), plus said salary for an additional 12-month period, and (ii) at the
Employee's election, either (A) cash in an amount equal to the cost to the
Employee of obtaining all health, life, disability and benefits which the
Employee would have been eligible to participate in through the Expiration
Date based upon the benefit levels substantially equal to those that the
Company provided for the Employee at the date of termination of employment
or (B) continued participation under such Company benefit plans through the
Expiration Date, but only to the extent the Employee continues to qualify
for participation therein. All amounts payable to the Employee shall be
paid, at the option of the Employee, either (I) in periodic payments
through the Expiration Date, or (II) in one lump sum within 10 days of such
termination.
(e) Voluntary Termination by Employee. Subject to Section 11 hereof, the
Employee may voluntarily terminate employment with the Company during the
term of this Agreement, upon at least 60 days' prior written notice to the
Board of Directors, in which case the Employee shall receive only his
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compensation, vested rights and employee benefits up to the date of his
termination (unless such termination occurs pursuant to Section 9(d)(2)
hereof or within the time period set forth Section 11(a) hereof, in which
went the benefits and compensation provided for in Section 9(d) or 11, as
applicable, shall apply.
10. No Mitigation. The Employee 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 Employee in any subsequent
employment.
11. Change in Control.
(a) Notwithstanding any provision herein to the contrary, if the Employee's
employment under this Agreement is terminated by the Company, without the
Employee's prior written consent and for a reason other than Just Cause, in
connection with or within 12 months after any Change in Control (as
hereinafter defined ) of the Bank of the Company, the Employee shall be paid
an amount equal to the difference between (i) product of 2.99 times his "base
amount" as defined in Section 280G(b)(3) of the Internal Revenue code of 1986,
as amended (the "Code") and regulations promulgated thereunder, and (ii) the
sum of any other parachute payments (as defined under Section 280G(b)(2) of
the Code) that the Employee receives on account of the change in control. Said
sum shall be paid in one lump sum within ten (10) days of such termination,
and shall be paid in lieu of the payment of any benefits under Section 9
hereof. The Bank shall also maintain existing insurance for six months after
termination of the Employee's employment, or if Employee dies within such six
months, the Bank shall maintain health insurance for the Employee's spouse, if
living, for the remainder of the six month period. At the election of the
Employee, which election is to be made within 30 days of Employee's
termination, such payments shall be made in a lump sum or paid monthly during
the remaining term of this Agreement following the Employee's termination, and
shall be payable, in the event of the Employee's death before full payment is
made to the Employee's surviving spouse, if any, and otherwise to his estate.
In the event that no election is made, payment to the Employee will be made on
a monthly basis during the remaining term of this Agreement.
The term "Change in Control" shall mean (i) the ownership, holding or power
to vote more than 25% of the Bank's or the Company's voting stock, (2) the
acquisition of the ability to control of the election of a majority of the
Bank's or the Company's directors, (3) the acquisition of a controlling
influence over the management or policies of the Company by any person or by
persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) (except in the case of (1), (2) and (3)
hereof, ownership of control of the Bank by the Company itself shall not
constitute a "Change in Control"), or (4) during any period of two consecutive
years, individuals who at the beginning of such period constitute the board of
directors of the Bank or the Company (the "Continuing Directors") cease for
any reason to constitute at least two-thirds thereof; provided, however, that
any individual whose election or nomination for election as a member of the
board of directors of the Bank or the Company was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. The term "person" means an individual other
than the Employee, or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein. The decision of the
Continuing Directors as to whether a Change in Control has occurred shall be
conclusive and binding.
(b) Notwithstanding any other provision of this Agreement to the contrary,
the Employee may voluntarily terminate his employment under this Agreement
following a Change in Control of the Company, and the Employee shall thereupon
be entitled to receive the payment described in Section 11(a) of this
Agreement, upon the occurrence of any of the following events, or within 12
months thereafter, which have not been consented to in advance by the Employee
in writing: (i) the requirement that the Employee move his personal residence,
or perform his principal executive functions, more than 30 miles from his
primary office as of the date of the change in control; (ii) a material
reduction in the Employee's base compensation as in effect on the date of the
change in control or as the same may be increased from time to time; (iii) the
failure by the Company to continue to provide the Employee with compensation
and benefits provided for under this Agreement, as the same may be increased
from time to time, or with benefits substantially similar to those provided to
him under any of the
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employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Company which would directly
or indirectly reduce any of such benefits or deprive the Employee of any
material fringe benefit enjoyed by him at the time of the change in control;
(iv) the assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced at
Section 1; (v) a failure to reelect the Employee to the Board if he is then
serving on the Hoard; or (vi) a material diminution or reduction in the
Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Company. Said sum
shall be paid in lieu of the payment of any benefits under Section 9 hereof.
(c) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
12. Arbitration; Reimbursement of Expenses.
(a) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitration award in any court having
jurisdiction; provided, however, that until the Expiration Date the Employee
shall be entitled to such specific performance of his right to be paid during
the pendancy of any dispute or controversy arising under or in connection with
this Agreement. Any arbitration proceeding shall be governed by and subject to
Alabama arbitration law.
(b) Reimbursement. All reasonable costs and legal fees paid or incurred by
the Employee pursuant to any dispute or question of interpretation relating to
this Agreement, or its specific performance, shall be paid or reimbursed by
the Company, if the Employee is the prevailing party. Such payment or
reimbursement shall be made within 10 days of the Employee's furnishing to the
Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the Employee.
13. Federal Income Tax Withholding. The Company may withhold all Federal and
State income or other taxes for any benefit payable under this Agreement as
shall be required pursuant to any law or governmental regulation or ruling.
14. Successors and Assigns.
(a) Company. This Agreement shall not be assignable by the Company;
provided, however, that this Agreement shall inure to the benefit of and be
binding upon any corporated or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Company.
(b) Employee. Since the Company is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Company; provided, however, that nothing in this paragraph
shall preclude (i) the Employee from designating a beneficiary to receive any
benefit payable hereunder upon his death, or (ii) the executor, administrator
or other legal representatives of the Employee or his estate from assigning
any rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attached, levying or similar process or assignment by operation
of law, and any attempt, voluntarily or involuntarily, to effect any such
action shall be null, void and of no effect.
15. 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.
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16. Applicable Law. Except to the extent preempted by Federal law, the laws
of the State of Michigan shall govern this Agreement in all respects, whether
as to its validity, construction, capacity, performance or otherwise.
17. 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.
18. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST: Flagstar Bancorp, Inc.
_____________________________ By: _________________________________
Secretary
_____________________________________
WITNESS:
_____________________________
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