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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of August 1,
1998, is made by and between MSB Investments Corp., a South Carolina corporation
(the "Employer" or the "Company") which is the proposed bank holding company for
a proposed national bank (the "Bank"), and XXXXX X. XXXXXXX, an individual
resident of South Carolina (the "Executive").
The Employer is in the process of organizing the Bank, and the
Executive has agreed to serve as President and Chief Executive Officer of the
Bank and the Company. Upon organization of the Bank, the Employer and the
Executive contemplate that this Agreement will be assigned by the Employer to
the Bank and that the Bank will assume the duties of the Company hereunder
(except pursuant to Section 3). In addition, if the organizers of the Company
elect to form a separate corporation to serve as the holding company of the
Bank, this Agreement will be assigned to that corporation and the Executive will
serve as President and Chief Executive Officer of that corporation. Following
any such assignment, the term "Employer" as used herein from time to time shall
refer to the Bank.
The Employer recognizes that the Executive's contribution to the growth
and success of the Bank during its organization and initial years of operations
will be a significant factor in the success of the Bank. The Employer desires to
provide for the employment of the Executive in a manner which will reinforce and
encourage the dedication of the Executive to the Bank and promote the best
interests of the Bank and its shareholders. The Executive is willing to serve
the Employer on the terms and conditions herein provided. Certain terms used in
this Agreement are defined in Section 17 hereof.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
Executive shall serve the Employer, as President and Chief Executive Officer of
the Bank and the Company upon the terms and conditions set forth herein. The
Executive shall also serve on the Board of Directors of the Company and the
Bank. The Executive shall have such authority and responsibilities consistent
with his position as are set forth in the Company's or the Bank's Bylaws or
assigned by the Company's or the Bank's Board of Directors (the "Board") from
time to time. The Executive shall devote his full business time, attention,
skill and efforts to the performance of his duties hereunder, except during
periods of illness or periods of vacation and leaves of absence consistent with
Bank policy. The Executive may devote reasonable periods to service as a
director or advisor to other organizations, to charitable and community
activities, and to managing his personal investments, provided that such
activities do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company or the Bank.
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2. Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall commence on the date hereof
and be for a term (the "Term") of three years; provided that the Executive or
the Bank may at any time, by written notice, fix the Term to a finite term of
two years commencing with the date of the notice. Notwithstanding the foregoing,
the Term of employment hereunder will end on the date that the Executive attains
the retirement age, if any, specified in the Bylaws of the Bank for directors of
the Bank.
3. Compensation and Benefits.
(a) Starting August 1, 1998, the Employer shall pay the
Executive a salary of $96,000, plus his yearly medical insurance premium. The
Board (or an appropriate committee of the Board) shall review the Executive's
salary at least annually and may increase (but not decrease) the Executive's
base salary if it determines in its sole discretion that an increase is
appropriate.
(b) The Executive shall receive a cash bonus in the
amount of $10,000 on the date that the Bank opens for business (the "Opening
Date"). For each calendar year beginning the year that the Bank opens, the
Executive shall be eligible to receive a cash bonus equaling up to 36% of his
salary if the Bank achieves certain performance levels for return on assets and
non-performing loans or other specified goals and criteria agreed to by the
Employer and the Executive (the "Bonus Plan"), with such bonus to be paid no
later than March 31st of the following calendar year.
(c) The Executive shall participate in the Bank's
long-term equity incentive program and be eligible for the grant of stock
options, restricted stock, and other awards thereunder or under any similar plan
adopted by the Company. On the date of the closing of the stock offering for the
initial capitalization of the Bank, or as soon thereafter as an appropriate
stock option plan is adopted by the Board, the Company shall grant to the
Executive an option to purchase a number of shares of Common Stock equal to 5%
of the number of shares sold in the offering. The award agreement for the stock
option shall provide that one-fifth of the shares subject to the option will
vest on each of the first five anniversaries of the Opening Date, but only if
the Executive remains employed by the Company on such date. In addition, the
award agreement will provide that the Executive's option shall be qualified as
an incentive stock option under the Internal Revenue Code of 1986, as amended
(the "Code"); all options shall be exercisable at any time during the ten years
following the date of grant at a price per share equal to the public offering
price in the offering (subject to standard antidilution adjustments in the event
of stock splits, dividends or combinations), which the parties agree is the fair
market value of the Common Stock as of the date of grant; and all options shall
be nontransferable and nonassignable by the Executive or by any other person
entitled hereunder to exercise any such rights; provided, however, that upon the
death of the Executive any rights granted hereunder shall be transferable by the
Executive's will or by the applicable laws of descent and distribution. In the
event of a Change in Control, the restrictions on any outstanding incentive
awards (including restricted stock) granted to the Executive under any incentive
plan or arrangement shall lapse and such incentive award shall become 100%
vested and all stock options, performance units, and stock appreciation rights
granted to the Executive shall become immediately exercisable and shall
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become 100% vested. Nothing herein shall be deemed to preclude the granting to
the Executive of warrants or options under a director option plan in addition to
the options granted hereunder.
(d) The Executive shall participate in all retirement,
welfare and other benefit plans or programs of the Employer now or hereafter
applicable generally to employees of the Employer or to a class of employees
that includes senior executives of the Employer.
(e) The Employer shall provide the Executive with a term
life insurance policy providing for death benefits totaling $500,000 payable to
the Executive's spouse and heirs (and may provide for additional death benefits
of up to $500,000 payable to the Employer), and the Executive shall cooperate
with the Employer in the securing and maintenance of such policy. The Employer
shall also pay for an accident liability policy on the Executive totaling
$1,000,000 to protect the Employer from damages or lawsuits resulting from
injuries to third parties caused by the Executive.
(f) Prior to the Opening Date, the Employer shall provide
the Executive with a $700 monthly automobile allowance. Beginning upon the
Opening Date, at the Company's election, the Company shall provide the Executive
with either an automobile (at a cost not to exceed $30,000) owned or leased by
the Company of a make and model appropriate to the Executive's status, or a $700
monthly automobile allowance. If the Company provides the Executive with an
automobile, the Company shall provide for reasonable expenses associated with
the automobile, including, but not limited to insurance, taxes, etc.
(g) In addition, commencing on the Opening Date, the
Employer shall obtain a membership in and pay the initiation fee (not to exceed
$8,000) for and the dues pertaining to Xxxxx Tree Country Club and shall
designate the Executive as the authorized user of such membership for so long as
the Executive remains the President and CEO of the Employer and this Agreement
remains in force.
(h) The Employer shall reimburse the Executive for
reasonable travel and other expenses related to the Executive's duties which are
incurred and accounted for in accordance with the normal practices of the
Employer.
4. Termination.
(a) The Executive's employment under this Agreement may
be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) upon the disability of the Executive for a
period of 180 days which, in the opinion of the Board of
Directors, renders him unable to perform the essential
functions of his job and for which reasonable accommodation is
unavailable. For purposes of this Agreement, a "disability" is
defined as a physical or mental impairment that substantially
limits one or more major life activities, and a "reasonable
accommodation" is one that does not impose an undue hardship
on the Employer;
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(iii) by the Employer for Cause upon delivery of a
Notice of Termination to the Executive;
(iv) by the Executive for Good Reason upon
delivery of a Notice of Termination to the Employer within a
90-day period beginning on the 30th day after the occurrence
of a Change in Control or within a 90-day period beginning on
the one year anniversary of the occurrence of a Change in
Control;
(v) by the Employer if its effort to organize
the Bank is abandoned; and
(vi) by the Executive effective upon the 30th day
after delivery of a Notice of Termination.
(b) If the Executive's employment is terminated because
of the Executive's death, the Executive's estate shall receive any sums due him
as base salary and/or reimbursement of expenses through the end of the month
during which death occurred, plus any bonus earned or accrued under the Bonus
Plan through the date of death (including any amounts awarded for previous years
but which were not yet vested) and a pro rata share of any bonus with respect to
the current fiscal year which had been earned as of the date of the Executive's
death.
(c) During the period of any incapacity leading up to the
termination of the Executive's employment as a result of disability, the
Employer shall continue to pay the Executive his full base salary at the rate
then in effect and all perquisites and other benefits (other than any bonus)
until the Executive becomes eligible for benefits under any long-term disability
plan or insurance program maintained by the Employer, provided that the amount
of any such payments to the Executive shall be reduced by the sum of the
amounts, if any, payable to the Executive for the same period under any
disability benefit or pension plan of the Employer or any of its subsidiaries.
Furthermore, the Executive shall receive any bonus earned or accrued under the
Bonus Plan through the date of incapacity (including any amounts awarded for
previous years but which were not yet vested) and a pro rata share of any bonus
with respect to the current fiscal year which had been earned as of the date of
the Executive's incapacity.
(d) If the Executive's employment is terminated for Cause
as provided above, or if the Executive resigns (except for a termination of
employment pursuant to Section 4(e), the Executive shall receive any sums due
him as base salary and/or reimbursement of expenses through the date of such
termination.
(e) If the Executive's employment is terminated by the
Executive pursuant to clause (iv) of Section 4(a) or by the Employer for any
reason within a one year period after a Change in Control, in addition to other
rights and remedies available in law or equity, the Executive shall be entitled
to the following:
(i) the Employer shall pay the Executive in cash
within fifteen days of the date of termination severance
compensation in an amount equal to 100% of his then current
monthly base salary each month for twenty-four months from the
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date of termination, plus any bonus earned or accrued under
the Bonus Plan through the date of termination (including any
amounts awarded for previous years but which were not yet
vested) and a pro rata share of any bonus with respect to the
current fiscal year which had been earned as of the date of
termination.
(ii) for the period beginning on the date of
termination and lasting until the lesser of ten years or the
date that the Executive attains the age of 65 (the
"Continuation Period"), the Employer shall at its expense
continue on behalf of the Executive and his dependents and
beneficiaries the life insurance, disability, medical, dental,
and hospitalization benefits provided (x) to the Executive at
any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the Employer
during the Continuation Period. Such coverage and benefits
(including deductibles and costs) shall be no less favorable
to the Executive and his dependents and beneficiaries than the
most favorable of such coverages and benefits during any of
the periods referred to above. The Employer's obligation
hereunder with respect to the foregoing benefits shall be
limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer's benefit plans, in
which case the Employer may reduce the coverage of any
benefits it is required to provide the Executive hereunder as
long as the aggregate coverages and benefits of the combined
benefit plans are comparable to the coverages and benefits
required to be provided hereunder. This subsection (ii) shall
not be interpreted so as to limit any benefits to which the
Executive or his dependents or beneficiaries may be entitled
under any of the Employer's employee benefit plans, programs,
or practices following the Executive's termination of
employment, including, without limitation, retiree medical and
life insurance benefits; and
(iii) the restrictions on any outstanding
incentive awards (including restricted stock) granted to the
Executive under the Company's or the Bank's long-term equity
incentive program or any other incentive plan or arrangement
shall lapse and become 100% vested, all stock options and
stock appreciation rights granted to the Executive shall
become immediately exercisable and shall become 100% vested,
all performance units granted to the Executive shall become
100% vested, and the restrictive covenants contained in
Section 9 shall not apply to the Executive.
(f) If the Executive's employment is terminated pursuant
to clause (v) of Section 4(a), the Executive shall receive any sums due him as
base salary and/or reimbursement of expenses through the date of such
termination.
(g) If the Employer terminates the Executive's employment
other than pursuant to clauses (i), (ii), (iii) or (v) of Section 4(a), the
Employer shall pay to the Executive severance compensation in an amount equal to
100% of his then current monthly base salary each month for twelve months from
the date of termination, plus any bonus earned or accrued
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under the Bonus Plan through the date of termination (including any amounts
awarded for previous years but which were not yet vested) and a pro rata share
of any bonus with respect to the current fiscal year which had been earned as of
the date of the Executive's termination.
(h) With the exceptions of the provisions of this Section
4, and the express terms of any benefit plan under which the Executive is a
participant, it is agreed that, upon termination of the Executive's employment,
the Employer shall have no obligation to the Executive for, and the Executive
waives and relinquishes, any further compensation or benefits (exclusive of
COBRA benefits). At the time of termination of employment, the Employer and the
Executive shall enter into a mutually satisfactory form of release acknowledging
such remaining obligations and discharging both parties, as well as the
Employer's officers, directors and employees with respect to their actions for
or on behalf of the Employer, from any other claims or obligations arising out
of or in connection with the Executive's employment by the Employer, including
the circumstances of such termination.
(i) In the event that the Executive's employment is
terminated for any reason, the Executive shall (and does hereby) tender his
resignation as a director of the Employer and effective as of the date of
termination.
(j) The parties intend that the severance payments and
other compensation provided for herein are reasonable compensation for the
Executive's services to the Employer and shall not constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986 and any regulations thereunder. In the event that the Employer's
independent accountants acting as auditors for the Employer on the date of a
Change in Control determine that the payments provided for herein constitute
"excess parachute payments," then the compensation payable hereunder shall be
increased, on a tax gross-up basis, so as to reimburse the Executive for the tax
payable by the Executive, pursuant to Section 4999 of the Internal Revenue Code,
on such "excess parachute payments," taking into account all taxes payable by
the Executive with respect to such tax gross-up payments hereunder, so that the
Executive shall be, after payment of all taxes, in the same financial position
as if no taxes under Section 4999 had been imposed upon him.
5. Ownership of Work Product. The Employer shall own all Work
Product arising during the course of the Executive's employment (prior, present
or future). For purposes hereof, "Work Product" shall mean all intellectual
property rights, including all Trade Secrets, U.S. and international copyrights,
patentable inventions, and other intellectual property rights in any
programming, documentation, technology or other work product that relates to the
Employer, its business or its customers and that employee conceives, develops,
or delivers to the Employer at any time during his employment, during or outside
normal working hours, in or away from the facilities of the Employer, and
whether or not requested by the Employer. If the Work Product contains any
materials, programming or intellectual property rights that the Executive
conceived or developed prior to, and independent of, the Executive's work for
the Employer, the Executive agrees to point out the pre-existing items to the
Employer and the Executive grants the Employer a worldwide, unrestricted,
royalty-free right, including the right to sublicense such items. The Executive
agrees to take such actions and execute such
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further acknowledgments and assignments as the Employer may reasonably request
to give effect to this provision.
6. Protection of Trade Secrets. The Executive agrees to maintain
in strict confidence and, except as necessary to perform his duties for the
Employer, the Executive agrees not to use or disclose any Trade Secrets of the
Employer during or after his employment. "Trade Secret" means information,
including a formula, pattern, compilation, program, device, method, technique,
process, drawing, cost data or customer list, that: (i) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
7. Protection of Other Confidential Information. In addition, the
Executive agrees to maintain in strict confidence and, except as necessary to
perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
24 months following termination of the Executive's employment. "Confidential
Business Information" shall mean any internal, non-public information (other
than Trade Secrets already addressed above) concerning the Employer's financial
position and results of operations (including revenues, assets, net income,
etc.); annual and long-range business plans; product or service plans; marketing
plans and methods; training, educational and administrative manuals; customer
and supplier information and purchase histories; and employee lists. The
provisions of Sections 6 and 7 above shall also apply to protect Trade Secrets
and Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.
8. Return of Materials. The Executive shall surrender to the
Employer, promptly upon its request and in any event upon termination of the
Executive's employment, all media, documents, notebooks, computer programs,
handbooks, data files, models, samples, price lists, drawings, customer lists,
prospect data, or other material of any nature whatsoever (in tangible or
electronic form) in the Executive's possession or control, including all copies
thereof, relating to the Employer, its business, or its customers. Upon the
request of the Employer, employee shall certify in writing compliance with the
foregoing requirement.
9. Restrictive Covenants.
(a) No Solicitation of Customers. During the Executive's
employment with the Employer and for a period of 12 months thereafter, the
Executive shall not (except on behalf of or with the prior written consent of
the Employer), either directly or indirectly, on the Executive's own behalf or
in the service or on behalf of others, (A) solicit, divert, or appropriate to or
for a Competing Business, or (B) attempt to solicit, divert, or appropriate to
or for a Competing Business, any person or entity that was a customer of the
Employer or any of its Affiliates on the date of termination and is located in
the Territory. This restriction does not apply after a Change in Control.
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(b) No Recruitment of Personnel. During the Executive's
employment with the Employer and for a period of 12 months thereafter, the
Executive shall not, either directly or indirectly, on the Executive's own
behalf or in the service or on behalf of others, (A) solicit, divert, or hire
away, or (B) attempt to solicit, divert, or hire away, to any Competing Business
located in the Territory, any employee of or consultant to the Employer or any
of its Affiliates engaged or experienced in the Business, regardless of whether
the employee or consultant is full-time or temporary, the employment or
engagement is pursuant to written agreement, or the employment is for a
determined period or is at will. This restriction does not apply after a Change
in Control.
(c) Non-Competition Agreement. During the Executive's
employment with the Employer and for a period of 12 months thereafter, the
Executive shall not (without the prior written consent of the Employer) compete
with the Employer or any of its Affiliates by, directly or indirectly, forming,
serving as an organizer, director or officer of, or consultant to, or acquiring
or maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located in the Territory.
Notwithstanding the foregoing, the Executive may serve as an officer of or
consultant to a depository institution or holding company therefor even though
such institution operates one or more offices or branches in the Territory, if
the Executive's employment does not directly involve, in whole or in part, the
depository financial institution's or holding company's operations in the
Territory. This restriction does not apply after a Change in Control.
10. Independent Provisions. The provisions in each of the above
Sections 9(a), 9(b), and 9(c) are independent, and the unenforceability of any
one provision shall not affect the enforceability of any other provision.
11. Successors; Binding Agreement. The rights and obligations of
this Agreement shall bind and inure to the benefit of the surviving corporation
in any merger or consolidation in which the Employer is a party, or any assignee
of all or substantially all of the Employer's business and properties. The
Executive's rights and obligations under this Agreement may not be assigned by
him, except that his right to receive accrued but unpaid compensation,
unreimbursed expenses and other rights, if any, provided under this Agreement
which survive termination of this Agreement shall pass after death to the
personal representatives of his estate.
12. Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other; provided, however, that all
notices to the Employer shall be directed to the attention of the Employer with
a copy to the Secretary of the Employer. All notices and communications shall be
deemed to have been received on the date of delivery thereof.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of South
Carolina without giving effect to the
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conflict of laws principles thereof. Any action brought by any party to this
Agreement shall be brought and maintained in a court of competent jurisdiction
in State of South Carolina.
14. Non-Waiver. Failure of the Employer to enforce any of the
provisions of this Agreement or any rights with respect thereto shall in no way
be considered to be a waiver of such provisions or rights, or in any way affect
the validity of this Agreement.
15. Enforcement. The Executive agrees that in the event of any
breach or threatened breach by the Executive of any covenant contained in
Section 9(a), 9(b), or 9(c) hereof, the resulting injuries to the Employer would
be difficult or impossible to estimate accurately, even though irreparable
injury or damages would certainly result. Accordingly, an award of legal
damages, if without other relief, would be inadequate to protect the Employer.
The Executive, therefore, agrees that in the event of any such breach, the
Employer shall be entitled to obtain from a court of competent jurisdiction an
injunction to restrain the breach or anticipated breach of any such covenant,
and to obtain any other available legal, equitable, statutory, or contractual
relief. Should the Employer have cause to seek such relief, no bond shall be
required from the Employer, and the Executive shall pay all attorney's fees and
court costs which the Employer may incur to the extent the Employer prevails in
its enforcement action.
16. Saving Clause. 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. If any
provision or clause of this Agreement, or portion thereof, shall be held by any
court or other tribunal of competent jurisdiction to be illegal, void, or
unenforceable in such jurisdiction, the remainder of such provision shall not be
thereby affected and shall be given full effect, without regard to the invalid
portion. It is the intention of the parties that, if any court construes any
provision or clause of this Agreement, or any portion thereof, to be illegal,
void, or unenforceable because of the duration of such provision or the area or
matter covered thereby, such court shall reduce the duration, area, or matter of
such provision, and, in its reduced form, such provision shall then be
enforceable and shall be enforced. The Executive and the Employer hereby agree
that they will negotiate in good faith to amend this Agreement from time to time
to modify the terms of Sections 9(a), 9(b), and 9(c), the definition of the term
"Territory," and the definition of the term "Business," to reflect changes in
the Employer's business and affairs so that the scope of the limitations placed
on the Executive's activities by Section 9 accomplishes the parties' intent in
relation to the then current facts and circumstances. Any such amendment shall
be effective only when completed in writing and signed by the Executive and the
Employer.
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17. Certain Definitions.
(a) "Affiliate" shall mean any business entity controlled
by, controlling or under common control with the Employer.
(b) "Business" shall mean the operation of a depository
financial institution, including, without limitation, the solicitation and
acceptance of deposits of money and commercial paper, the solicitation and
funding of loans and the provision of other banking services, and any other
related business engaged in by the Employer or any of its Affiliates as of the
date of termination.
(c) "Cause" shall consist of any of (A) the commission by
the Executive of a willful act (including, without limitation, a dishonest or
fraudulent act) or a grossly negligent act, or the willful or grossly negligent
omission to act by the Executive, which is intended to cause, causes or is
reasonably likely to cause material harm to the Employer (including harm to its
business reputation), (B) the indictment of the Executive for the commission or
perpetration by the Executive of any felony or any crime involving dishonesty,
moral turpitude or fraud, (C) the material breach by the Executive of this
Agreement that, if susceptible of cure, remains uncured ten days following
written notice to the Executive of such breach, (D) the receipt of any form of
notice, written or otherwise, that any regulatory agency having jurisdiction
over the Employer intends to institute any form of formal or informal (e.g., a
memorandum of understanding which relates to the Executive's performance)
regulatory action against the Executive or the Employer or the Employer
(provided that the Board of Directors determines in good faith, with the
Executive abstaining from participating in the consideration of and vote on the
matter, that the subject matter of such action involves acts or omissions by or
under the supervision of the Executive or that termination of the Executive
would materially advance the Employer's compliance with the purpose of the
action or would materially assist the Employer in avoiding or reducing the
restrictions or adverse effects to the Employer related to the regulatory
action); (E) the exhibition by the Executive of a standard of behavior within
the scope of his employment that is materially disruptive to the orderly conduct
of the Employer's business operations (including, without limitation, substance
abuse or sexual misconduct) to a level which, in the Board of Directors' good
faith and reasonable judgment, with the Executive abstaining from participating
in the consideration of and vote on the matter, is materially detrimental to the
Employer's best interest, that, if susceptible of cure remains uncured ten days
following written notice to the Executive of such specific inappropriate
behavior; (F) the failure of the Executive to devote his full business time and
attention to his employment as provided under this Agreement that, if
susceptible of cure, remains uncured 30 days following written notice to the
Executive of such failure; or (G) the consistent failure by the Executive to
achieve or maintain the performance goals established by Bank management and
approved by the Board of Directors from time to time for the Executive and the
Company.
(d) "Change in Control" shall mean the occurrence during
the Term of any of the following events, unless such event is a result of a
Non-Control Transaction:
(i) The individuals who, as of the date of this
Agreement, are members of the Board of Directors of the
Employer (the "Incumbent Board") cease for any
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reason to constitute at least a majority of the Board of
Directors of the Employer; provided, however, that if the
election, or nomination for election by the Employer's
shareholders, of any new director was approved in advance by a
vote of at least a majority of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered
as a member of the Incumbent Board; provided, further, that no
individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"), or other actual or
threatened solicitation of proxies or consents by or on behalf
of any person other than the Board of Directors of the
Employer (a "Proxy Contest"), including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest.
(ii) An acquisition (other than directly from the
Employer) of any voting securities of the Employer (the
"Voting Securities") by any "Person" (as the term "person" is
used for purposes of Section 13(d) or 14(d) of the Exchange
Act) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of the combined voting power
of the Employer's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred, Voting Securities which are acquired in
a Non-Control Acquisition shall not constitute an acquisition
which would cause a Change in Control.
(iii) Approval by the shareholders of the Employer
of: (i) a merger, consolidation, or reorganization involving
the Employer; (ii) a complete liquidation or dissolution of
the Employer; or (iii) an agreement for the sale or other
disposition of all or substantially all of the assets of the
Employer to any Person (other than a transfer to a
Subsidiary).
(iv) A notice of an application is filed with the
Office of Comptroller of the Currency (the "OCC") or the
Federal Reserve Board or any other bank or thrift regulatory
approval (or notice of no disapproval) is granted by the
Federal Reserve, the OCC, the Federal Deposit Insurance
Corporation, or any other regulatory authority for permission
to acquire control of the Employer or any of its banking
subsidiaries.
(e) "Competing Business" shall mean any business that, in
whole or in part, is the same or substantially the same as the Business.
(f) "Good Reason" shall mean the occurrence after a
Change in Control of any of the events or conditions described in subsections
(i) through (viii) hereof:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable
judgment, represents a material adverse change from his
status, title,
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position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter; the assignment to the Executive of any
duties or responsibilities which, in the Executive's
reasonable judgment, are inconsistent with his status, title,
position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter; any removal of the Executive from or
failure to reappoint or reelect him to any of such offices or
positions, except in connection with the termination of his
employment for Disability or Cause, as a result of his death,
or by the Executive other than for Good Reason, or any other
change in condition or circumstances that in the Executive's
reasonable judgment makes it materially more difficult for the
Executive to carry out the duties and responsibilities of his
office than existed at any time within ninety days preceding
the date of Change in Control or at any time thereafter;
(ii) a material reduction in the Executive's base
salary or any failure to pay the Executive any compensation or
benefits to which he is entitled within five days of the date
due;
(iii) the Employer's requiring the Executive to be
based at any place outside a 30-mile radius from the executive
offices occupied by the Executive immediately prior to the
Change in Control, except for reasonably required travel on
the Employer's business which is not materially greater than
such travel requirements prior to the Change in Control;
(iv) the failure by the Employer to (A) continue
in effect (without material reduction in benefit level and/or
reward opportunities) any material compensation or employee
benefit plan in which the Executive was participating at any
time within ninety days preceding the date of a Change in
Control or at any time thereafter, unless such plan is
replaced with a plan that provides substantially equivalent
compensation or benefits to the Executive, or (B) provide the
Executive with compensation and benefits, in the aggregate,
substantially equivalent (in terms of benefit levels and/or
reward opportunities) to those provided for under each other
employee benefit plan, program and practice in which the
Executive was participating at any time within ninety days
preceding the date of a Change in Control or at any time
thereafter;
(v) the insolvency or the filing (by any party,
including the Employer) of a petition for bankruptcy of the
Employer, which petition is not dismissed within sixty days;
(vi) any material breach by the Employer of any
material provision of this Agreement;
(vii) any purported termination of the Executive's
employment for Cause by the Employer which does not comply
with the terms of this Agreement; or
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(viii) the failure of the Employer to obtain an
agreement, satisfactory to the Executive, from any successor
or assign to assume and agree to perform this Agreement, as
contemplated in Section 11 hereof.
Any event or condition described in clause (i) through (viii) above
which occurs prior to a Change in Control but which the Executive reasonably
demonstrates (A) was at the request of a third party, or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control which actually
occurs, shall constitute Good Reason for purposes of this Agreement,
notwithstanding that it occurred prior to the Change in Control. The Executive's
right to terminate his employment for Good Reason shall not be affected by his
incapacity due to physical or mental illness.
(g) "Non-Control Transaction" shall mean a transaction
described below:
(i) the shareholders of the Employer,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, at
least 50% of the combined voting power of the outstanding
voting securities of the corporation resulting from such
merger, consolidation or reorganization (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization; and
(ii) immediately following such merger,
consolidation or reorganization, the number of directors on
the board of directors of the Surviving Corporation who were
members of the Incumbent Board shall at least equal the number
of directors who were affiliated with or appointed by the
other party to the merger, consolidation or reorganization.
(h) "Territory" shall mean a radius of ten miles from (i)
the main office of the Employer or (ii) any branch office of the Employer.
(i) "Notice of Termination" shall mean a written notice
of termination from the Employer of the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
18. Expenses. The Employer shall pay all legal fees and related
expenses (including the costs of experts, evidence, and counsel) incurred by the
Executive as they become due as a result of (a) the preparation of this
Agreement, (b) the Executive's termination of employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment), and (c) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement. However, the party against
which any final judgment is obtained in any litigation resulting from the
circumstances described in clauses (b) or (c) shall
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pay or reimburse the successful party for all legal fees and related expenses
incurred by such successful party in such litigation.
19. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective as
of the date first above written.
MSB INVESTMENTS CORP.
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
Title: Treasurer
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxx
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