EXHIBIT 10 (a)
FIRSTSPARTAN FINANCIAL CORP.
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of March 15, 2000, by
and between FirstSpartan Financial Corp. (the "Holding Company"), a corporation
organized under the laws of Delaware with its principal offices at 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, 00000, First Federal Bank and Xxxxx X.
Xxxxxxx ("Executive"). Any reference to "Institution" herein shall mean First
Federal Bank or any successor thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees
to serve as President and Chief Executive Officer of the Holding Company. The
Executive shall render administrative and management services to the Holding
Company such as are customarily performed by persons in a similar executive
capacity. During said period, Executive also agrees to serve, if elected or
appointed, as an officer or director of any subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first above written and shall
continue for a period of thirty-six (36) full calendar months thereafter.
Commencing on the date of the execution of this Agreement, the term of this
Agreement shall be extended for one day each day until such time as the board of
directors of the Holding Company (the "Board") or Executive elects not to extend
the term of the Agreement by giving written notice to the other party in
accordance with Section 8 of this Agreement, in which case the term of this
Agreement shall be fixed and shall end on the third anniversary of the date of
such written notice.
(b) During the period of Executive's employment hereunder, except
for periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder, including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in community, professional and
civic organizations; provided,
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however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with the Holding Company or its Subsidiaries, or materially affect the
performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Executive's employment with the Holding Company may be terminated by the Holding
Company or Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement. However, Executive shall not perform, in any
respect, directly or indirectly, during the pendency of his temporary or
permanent suspension or termination from the Institution, duties and
responsibilities formerly performed at the Institution as part of his duties and
responsibilities as President and Chief Executive Officer of the Holding
Company.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute consideration paid by the Holding Company in exchange for the duties
described in Section 1 of this Agreement. The Holding Company shall pay
Executive, as compensation, a salary of not less than $165,000 ("Base Salary").
Base Salary shall include any amounts of compensation deferred by Executive
under any tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement maintained by the Holding Company or its Subsidiaries.
Base Salary shall be payable in accordance with the Holding Company's payroll
practices. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by the
Board or by a Committee of the Board delegated such responsibility by the Board.
The Committee or the Board may increase Executive's Base Salary at anytime. Any
increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided in this Section 3(a), the
Holding Company shall also provide Executive, at no premium cost to Executive,
with all such other benefits as provided uniformly to permanent full-time
employees of the Holding Company and its Subsidiaries. In addition, Executive
shall be entitled to incentive compensation and bonuses as provided for under
any plan or arrangement of the Holding Company or its Subsidiaries in which
Executive is eligible to participate.
(b) Executive shall be entitled to participate in any employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, or in which he begins to
participate in the future, and the Holding Company and its Subsidiaries will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would materially adversely affect Executive's
rights or benefits thereunder, except to the extent that such changes are made
applicable to all Holding Company and Institution employees eligible to
participate in such plans, arrangements and perquisites on a non-discriminatory
basis. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive shall be entitled to participate in or receive
benefits under all plans relating to stock options, restricted
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stock awards, stock purchases, pension, thrift, supplemental retirement,
profit-sharing, employee stock ownership, group life insurance, medical and
other health and welfare coverage, education, cash or stock bonuses that are now
or hereafter made available by the Holding Company or its Subsidiaries to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive shall be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company and its Subsidiaries in
which Executive is eligible to participate. Nothing paid to Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
(c) The Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred in the performance of Executive's obligations under
this Agreement and may provide such additional compensation in such form and
such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as defined
below) during Executive's term of employment under this Agreement, the
provisions of this Section 4 shall apply. As used in this Agreement, an "Event
of Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) of this
Agreement, or for Termination for Cause, as defined in Section 7 of this
Agreement; or Retirement (as defined in paragraph (e) of this Section 4); (ii)
Executive's resignation from the Holding Company's employ, upon, any (A) failure
to elect or reelect or to appoint or reappoint Executive as President and Chief
Executive Officer, unless Executive so consents, (B) a material change in
Executive's function, duties, or responsibilities with the Holding Company or
its Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, unless Executive so consents, (C) a
relocation of Executive's principal place of employment by more than 25 miles
from its location at the effective date of this Agreement, unless Executive so
consents, (D) a material reduction in the benefits and perquisites to the
Executive from those being provided as of the effective date of this Agreement,
unless Executive so consents, (E) a liquidation or dissolution of the Holding
Company or the Institution, or (F) breach of this Agreement by the Holding
Company. Upon the occurrence of any event described in clauses (A), (B), (C),
(D), (E) or (F), above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than sixty (60)
days prior written notice given within six full calendar months after the event
giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date
of Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, the amount
of the remaining payments and benefits Executive would have earned if he had
continued his employment with the Holding Company during the remaining unexpired
term of this
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Agreement, based on Executive's Base Salary and benefits provided at the Date of
Termination, as set forth in Sections 3(a) and (b) of this Agreement, and the
amount still due Executive under any paragraphs of Section 3 of this Agreement
for services rendered through the Date of Termination. At the election of the
Executive, which election is to be made prior to an Event of Termination, such
payments shall be made in a lump sum. In the event that no election is made,
payment to the Executive will be made on a monthly basis in approximately equal
installments during the remaining term of the Agreement. Such payments shall not
be reduced in the event the Executive obtains other employment following
termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive
will be entitled to receive benefits due him under or contributed by the Holding
Company or its Subsidiaries on his behalf pursuant to any retirement, incentive,
profit sharing, employee stock ownership, bonus, performance, disability or
other employee benefit plan maintained by the Holding Company or its
Subsidiaries to the extent such benefits are not otherwise paid to Executive
under a separate provision of this Agreement.
(d) To the extent that the Holding Company or its Subsidiaries
continue to offer any life, medical, health, disability or dental insurance plan
or arrangement in which Executive participates in on the last day of his
employment (each being a "Welfare Plan"), after an Event of Termination (as
herein defined), Executive and his dependents shall continue participating in
such Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries do not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) Termination of Executive based on "Retirement" shall mean
termination in accordance with the Holding Company's or the Institution's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive upon
Retirement, Executive shall be entitled to all benefits under any retirement
plan of the Holding Company or its Subsidiaries and other plans to which
Executive is a party or a participant in accordance with the terms of the plan
or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Institution shall mean an event of a nature that: (i)
would be required to be reported in response to Item 1(a) of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations
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promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the date hereof (provided, that in applying the definition of
change in control as set forth under the rules and regulations of the OTS, the
Board shall substitute its judgment for that of the OTS); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Institution or the Holding Company representing 20% or more of the Institution's
or the Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Institution purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If any of the events described in Section 5(a) of this
Agreement constituting a Change in Control have occurred, or the Board has
determined that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5
upon his termination of employment on or after the date the Change in Control
occurs due to (i) Executive's dismissal at any time during the term of this
Agreement, (ii) Executive's voluntary resignation for any reason on or within a
sixty (60) day period following the date a Change in Control has occurred or
(iii) Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, reduction in the annual compensation or
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or Termination for Cause (as
defined herein), at any time during the term of this Agreement.
(c) Upon Executive's entitlement to benefits pursuant to Section
5(b) of this Agreement, the Holding Company shall pay Executive, or in the event
of his subsequent death, his beneficiary
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or beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to three (3) times Executive's average
annual compensation for the most recently completed five (5) calendar years. In
determining Executive's average annual compensation, annual compensation shall
include Base Salary and any other taxable income, including but not limited to
amounts related to the granting, vesting or exercise of restricted stock or
stock option awards, commissions, bonuses, severance payments, retirement
benefits, director or committee fees and fringe benefits paid or to be paid to
Executive or paid for Executive's benefit during any such year, as well as
pension, profit sharing plan, employee stock ownership and other retirement
contributions or benefits (whether or not taxable) made or accrued on behalf of
Executive for such year. At the election of Executive, which election is to be
made prior to a Change in Control, such payment shall be made in a lump sum
(without discount for early payment) on or immediately following the Date of
Termination (which may be the date a Change in Control occurs) or paid in equal
monthly installments during the thirty-six (36) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining thirty-six (36) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by
Executive's termination of employment, Executive will be entitled to receive
benefits due him under or contributed by the Holding Company or its Subsidiaries
on his behalf pursuant to any retirement, incentive, profit sharing, employee
stock ownership, bonus, performance, disability or other employee benefit plan
or other arrangement maintained by the Institution or the Holding Company on
Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Holding Company will
cause to be continued life, medical and disability coverage substantially
identical to the coverage maintained by the Holding Company or its Subsidiaries
for Executive and any of his dependents covered under such plans prior to the
Change in Control. Such coverage and payments shall cease upon the expiration of
thirty-six (36) full calendar months following the Date of Termination. In the
event Executive's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and his dependents with
benefits substantially similar to those Executive and his dependents would
otherwise have been entitled to receive under such plans and programs from which
their continued participation is barred or provide their economic equivalent.
6. CHANGE OF CONTROL RELATED PROVISIONS.
Notwithstanding Section 5 of this Agreement, for any taxable year
in which the Executive shall be liable, as determined for the payment of an
excise tax under Section 4999 of the Code (or any successor provision thereto),
with respect to any payment in the nature of the compensation made by the
Holding Company or its Subsidiaries (or for the benefit of) Executive pursuant
to this Agreement or otherwise, the Holding Company shall pay to the Executive
an amount determined under the following formula:
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An amount equal to: (E x P) + X
WHERE:
X = E x P
----------------------
1 - [(FI x (1 - SLI)) + SLI + E + M + PO]
E = the rate at which the excise tax is assessed
under Section 4999 of the Code;
P = the amount with respect to which such excise
tax is assessed, determined without regard to
this Section 6;
FI = the highest marginal rate of federal income,
employment, and other taxes (other than taxes
imposed under Section 4999 of the Code)
applicable to Executive for the taxable year in
question (including any effective increase in
Executive's tax rate attributable to the
disallowance of any deduction); and
SLI = the sum of the highest marginal rates of
income and payroll tax applicable to Executive
under applicable state and local laws for the
taxable year in question (including any
effective increase in Executive's tax rate
attributable to the disallowance of any
deduction); and
M = highest marginal rate of Medicare tax; and
PO = adjustment for phase out of or loss of
deduction, personal exemption or other similar
items.
(a) With respect to any payment in the nature of compensation
that is made to (or for the benefit of) Executive under the terms of this
Section 6 or otherwise and on which an excise tax under Section 4999 of the Code
may or will be assessed, the payment determined under Section 6 shall be made to
Executive on the earliest of (i) the date the Holding Company is required to
withhold such tax, (ii) the date the tax is required to be paid by Executive, or
(iii) at the time of the Change in Control. It is the intention of the parties
that the Holding Company provide Executive with a full tax gross-up under the
provisions of this Section 6, so that on a net after-tax basis, the result to
Executive shall be the same as if the excise tax under Section 4999 (or any
successor provisions) of the Code had not been imposed. The tax gross-up may be
adjusted if alternative minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the amount determined as "P", above (such greater amount being hereafter
referred to as the "Determinative Excess Parachute Payment"), then the Holding
Company's independent
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accountants shall determine the amount (the "Adjustment Amount"), the Holding
Company must pay to Executive, in order to put Executive (or the Holding
Company, as the case may be) in the same position as Executive (or the Holding
Company, as the case may be) would have been if the amount determined as "P"
above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or
benefits under this Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Holding Company as described above. The
Holding Company shall indemnify and hold Executive harmless from any and all
losses, costs and expenses (including without limitation, reasonable attorney's
fees, interest, fines and penalties) which Executive incurs as a result of so
reporting such information. Executive shall promptly notify the Holding Company
in writing whenever Executive receives notice of the Institution of a judicial
or administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Holding Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the Holding
Company may have in connection therewith without prior consent to the Holding
Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by an affirmative vote of not less than a majority of
the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. During the period beginning on the date
of the Notice of Termination for Cause pursuant to Section 8 of this Agreement
through the Date of Termination, stock options granted to Executive under any
stock option plan shall not be exercisable nor shall any unvested awards granted
to Executive under any
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stock benefit plan of the Holding Company or its Subsidiaries vest. At the Date
of Termination, such stock options and any such unvested stock awards shall
become null and void and shall not be exercisable by or delivered to Executive
at any time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the
Notice of Termination (which, in the case of a Termination for Cause, shall not
be less than thirty (30) days from the date such Notice of Termination is
given).
(c) If, within thirty (30) days after any Notice of Termination
is given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Holding Company will continue to pay Executive his full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, Base Salary) and continue him as a participant in all compensation, benefit
and insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
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10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder
pursuant to Section 4 of this Agreement, Executive agrees not to compete with
the Holding Company or its Subsidiaries for a period of one (1) year following
such termination in any city, town or county in which the Executive's normal
business office is located and the Holding Company or any of its Subsidiaries
has an office or has filed an application for regulatory approval to establish
an office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board. Executive agrees
that during such period and within said cities, towns and counties, Executive
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 Holding Company or its Subsidiaries.
The parties hereto, recognizing that irreparable injury will result to the
Holding Company or its Subsidiaries, its business and property in the event of
Executive's breach of this subsection 10(a) agree that in the event of any such
breach by Executive, the Holding Company or its Subsidiaries, will be entitled,
in addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 7 of this Agreement, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Holding
Company or its Subsidiaries, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood. Nothing herein
will be construed as prohibiting the Holding Company or its Subsidiaries from
pursuing any other remedies available to the Holding Company or its Subsidiaries
for such breach or threatened breach, including the recovery of damages from
Executive.
(b) Executive recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Holding Company
and its Subsidiaries as it may exist from time to time, is a valuable, special
and unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. In the event of a
breach or threatened breach by the Executive of the provisions of this Section,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, 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 Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
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11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Holding Company subject to
Section 11(b) of this Agreement.
(b) Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Institution, such compensation payments and benefits paid by the
Institution will be subtracted from any amount due simultaneously to Executive
under similar provisions of this Agreement. Payments pursuant to this Agreement
and the Institution Agreement shall be allocated in proportion to the level of
activity and the time expended on such activities by the Executive as determined
by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the
parties hereto and supersedes any prior employment agreement between the Holding
Company or any predecessor of the Holding Company and Executive, except that
this Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) 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 execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the
benefit of, Executive and the Holding Company and their respective successors
and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate
11
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future as to any act other than that
specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Institution, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
12
20. INDEMNIFICATION.
(a) The Holding Company shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware 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 Holding 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 be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and 12
C.F.R. Part 359 and any rules or regulations promulgated thereunder.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
13
SIGNATURES
IN WITNESS WHEREOF, FirstSpartan Financial Corp. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 20th day of March, 2000.
ATTEST: FIRSTSPARTAN FINANCIAL CORP.
/s/ R. Xxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxx
--------------------- ------------------
R. XXXXX XXXXXXX XXXXXX X. XXXX
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Xxxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxx
----------------------------- --------------------
XXXXXX XXXXX XXXXX X.XXXXXXX
President and Chief Executive Officer
14
EXHIBIT 10(b)
FIRSTSPARTAN FINANCIAL CORP.
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of March 15, 2000, by
and between FirstSpartan Financial Corp. (the "Holding Company"), a corporation
organized under the laws of Delaware with its principal offices at 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, 00000, First Federal Bank and Xxxx X.
Xxxxxxxx ("Executive"). Any reference to "Institution" herein shall mean First
Federal Bank or any successor thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees
to serve as Senior Vice President of the Holding Company. The Executive shall
render administrative and management services to the Holding Company such as are
customarily performed by persons in a similar executive capacity. During said
period, Executive also agrees to serve, if elected or appointed, as an officer
or director of any subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first above written and shall
continue for a period of thirty-six (36) full calendar months thereafter.
Commencing on the date of the execution of this Agreement, the term of this
Agreement shall be extended for one day each day until such time as the board of
directors of the Holding Company (the "Board") or Executive elects not to extend
the term of the Agreement by giving written notice to the other party in
accordance with Section 8 of this Agreement, in which case the term of this
Agreement shall be fixed and shall end on the third anniversary of the date of
such written notice.
(b) During the period of Executive's employment hereunder, except
for periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder, including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in community, professional and
civic organizations; provided,
1
however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with the Holding Company or its Subsidiaries, or materially affect the
performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Executive's employment with the Holding Company may be terminated by the Holding
Company or Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement. However, Executive shall not perform, in any
respect, directly or indirectly, during the pendency of his temporary or
permanent suspension or termination from the Institution, duties and
responsibilities formerly performed at the Institution as part of his duties and
responsibilities as Senior Vice President of the Holding Company.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute consideration paid by the Holding Company in exchange for the duties
described in Section 1 of this Agreement. The Holding Company shall pay
Executive, as compensation, a salary of not less than $102,629 ("Base Salary").
Base Salary shall include any amounts of compensation deferred by Executive
under any tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement maintained by the Holding Company or its Subsidiaries.
Base Salary shall be payable in accordance with the Holding Company's payroll
practices. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by the
Board or by a Committee of the Board delegated such responsibility by the Board.
The Committee or the Board may increase Executive's Base Salary at anytime. Any
increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided in this Section 3(a), the
Holding Company shall also provide Executive, at no premium cost to Executive,
with all such other benefits as provided uniformly to permanent full-time
employees of the Holding Company and its Subsidiaries. In addition, Executive
shall be entitled to incentive compensation and bonuses as provided for under
any plan or arrangement of the Holding Company or its Subsidiaries in which
Executive is eligible to participate.
(b) Executive shall be entitled to participate in any employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, or in which he begins to
participate in the future, and the Holding Company and its Subsidiaries will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would materially adversely affect Executive's
rights or benefits thereunder, except to the extent that such changes are made
applicable to all Holding Company and Institution employees eligible to
participate in such plans, arrangements and perquisites on a non-discriminatory
basis. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive shall be entitled to participate in or receive
benefits under all plans relating to stock options, restricted
2
stock awards, stock purchases, pension, thrift, supplemental retirement,
profit-sharing, employee stock ownership, group life insurance, medical and
other health and welfare coverage, education, cash or stock bonuses that are now
or hereafter made available by the Holding Company or its Subsidiaries to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive shall be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company and its Subsidiaries in
which Executive is eligible to participate. Nothing paid to Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
(c) The Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred in the performance of Executive's obligations under
this Agreement and may provide such additional compensation in such form and
such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as defined
below) during Executive's term of employment under this Agreement, the
provisions of this Section 4 shall apply. As used in this Agreement, an "Event
of Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) of this
Agreement, or for Termination for Cause, as defined in Section 7 of this
Agreement; or Retirement (as defined in paragraph (e) of this Section 4); (ii)
Executive's resignation from the Holding Company's employ, upon, any (A) failure
to elect or reelect or to appoint or reappoint Executive as Senior Vice
President, unless Executive so consents, (B) a material change in Executive's
function, duties, or responsibilities with the Holding Company or its
Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, unless Executive so consents, (C) a
relocation of Executive's principal place of employment by more than 25 miles
from its location at the effective date of this Agreement, unless Executive so
consents, (D) a material reduction in the benefits and perquisites to the
Executive from those being provided as of the effective date of this Agreement,
unless Executive so consents, (E) a liquidation or dissolution of the Holding
Company or the Institution, or (F) breach of this Agreement by the Holding
Company. Upon the occurrence of any event described in clauses (A), (B), (C),
(D), (E) or (F), above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than sixty (60)
days prior written notice given within six full calendar months after the event
giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date
of Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, the amount
of the remaining payments and benefits Executive would have earned if he had
continued his employment with the Holding Company during the remaining unexpired
term of this
3
Agreement, based on Executive's Base Salary and benefits provided at the Date of
Termination, as set forth in Sections 3(a) and (b) of this Agreement, and the
amount still due Executive under any paragraphs of Section 3 of this Agreement
for services rendered through the Date of Termination. At the election of the
Executive, which election is to be made prior to an Event of Termination, such
payments shall be made in a lump sum. In the event that no election is made,
payment to the Executive will be made on a monthly basis in approximately equal
installments during the remaining term of the Agreement. Such payments shall not
be reduced in the event the Executive obtains other employment following
termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive
will be entitled to receive benefits due him under or contributed by the Holding
Company or its Subsidiaries on his behalf pursuant to any retirement, incentive,
profit sharing, employee stock ownership, bonus, performance, disability or
other employee benefit plan maintained by the Holding Company or its
Subsidiaries to the extent such benefits are not otherwise paid to Executive
under a separate provision of this Agreement.
(d) To the extent that the Holding Company or its Subsidiaries
continue to offer any life, medical, health, disability or dental insurance plan
or arrangement in which Executive participates in on the last day of his
employment (each being a "Welfare Plan"), after an Event of Termination (as
herein defined), Executive and his dependents shall continue participating in
such Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries do not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) Termination of Executive based on "Retirement" shall mean
termination in accordance with the Holding Company's or the Institution's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive upon
Retirement, Executive shall be entitled to all benefits under any retirement
plan of the Holding Company or its Subsidiaries and other plans to which
Executive is a party or a participant in accordance with the terms of the plan
or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Institution shall mean an event of a nature that: (i)
would be required to be reported in response to Item 1(a) of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations
4
promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the date hereof (provided, that in applying the definition of
change in control as set forth under the rules and regulations of the OTS, the
Board shall substitute its judgment for that of the OTS); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Institution or the Holding Company representing 20% or more of the Institution's
or the Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Institution purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If any of the events described in Section 5(a) of this
Agreement constituting a Change in Control have occurred, or the Board has
determined that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5
upon his termination of employment on or after the date the Change in Control
occurs due to (i) Executive's dismissal at any time during the term of this
Agreement, (ii) Executive's voluntary resignation for any reason on or within a
sixty (60) day period following the date a Change in Control has occurred or
(iii) Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, reduction in the annual compensation or
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or Termination for Cause (as
defined herein), at any time during the term of this Agreement.
(c) Upon Executive's entitlement to benefits pursuant to Section
5(b) of this Agreement, the Holding Company shall pay Executive, or in the event
of his subsequent death, his beneficiary
5
or beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to three (3) times Executive's average
annual compensation for the most recently completed five (5) calendar years. In
determining Executive's average annual compensation, annual compensation shall
include Base Salary and any other taxable income, including but not limited to
amounts related to the granting, vesting or exercise of restricted stock or
stock option awards, commissions, bonuses, severance payments, retirement
benefits, director or committee fees and fringe benefits paid or to be paid to
Executive or paid for Executive's benefit during any such year, as well as
pension, profit sharing plan, employee stock ownership and other retirement
contributions or benefits (whether or not taxable) made or accrued on behalf of
Executive for such year. At the election of Executive, which election is to be
made prior to a Change in Control, such payment shall be made in a lump sum
(without discount for early payment) on or immediately following the Date of
Termination (which may be the date a Change in Control occurs) or paid in equal
monthly installments during the thirty-six (36) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining thirty-six (36) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by
Executive's termination of employment, Executive will be entitled to receive
benefits due him under or contributed by the Holding Company or its Subsidiaries
on his behalf pursuant to any retirement, incentive, profit sharing, employee
stock ownership, bonus, performance, disability or other employee benefit plan
or other arrangement maintained by the Institution or the Holding Company on
Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Holding Company will
cause to be continued life, medical and disability coverage substantially
identical to the coverage maintained by the Holding Company or its Subsidiaries
for Executive and any of his dependents covered under such plans prior to the
Change in Control. Such coverage and payments shall cease upon the expiration of
thirty-six (36) full calendar months following the Date of Termination. In the
event Executive's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and his dependents with
benefits substantially similar to those Executive and his dependents would
otherwise have been entitled to receive under such plans and programs from which
their continued participation is barred or provide their economic equivalent.
6. CHANGE OF CONTROL RELATED PROVISIONS.
Notwithstanding Section 5 of this Agreement, for any taxable year in
which the Executive shall be liable, as determined for the payment of an excise
tax under Section 4999 of the Code (or any successor provision thereto), with
respect to any payment in the nature of the compensation made by the Holding
Company or its Subsidiaries (or for the benefit of) Executive pursuant to this
Agreement or otherwise, the Holding Company shall pay to the Executive an amount
determined under the following formula:
6
An amount equal to: (E x P) + X
WHERE:
X = E x P
----------------------
1 - [(FI x (1 - SLI)) + SLI + E + M + PO]
E = the rate at which the excise tax is assessed
under Section 4999 of the Code;
P = the amount with respect to which such excise
tax is assessed, determined without regard to
this Section 6;
FI = the highest marginal rate of federal income,
employment, and other taxes (other than taxes
imposed under Section 4999 of the Code)
applicable to Executive for the taxable year in
question (including any effective increase in
Executive's tax rate attributable to the
disallowance of any deduction); and
SLI = the sum of the highest marginal rates of
income and payroll tax applicable to Executive
under applicable state and local laws for the
taxable year in question (including any
effective increase in Executive's tax rate
attributable to the disallowance of any
deduction); and
M = highest marginal rate of Medicare tax; and
PO = adjustment for phase out of or loss of
deduction, personal exemption or other similar
items.
(a) With respect to any payment in the nature of compensation
that is made to (or for the benefit of) Executive under the terms of this
Section 6 or otherwise and on which an excise tax under Section 4999 of the Code
may or will be assessed, the payment determined under Section 6 shall be made to
Executive on the earliest of (i) the date the Holding Company is required to
withhold such tax, (ii) the date the tax is required to be paid by Executive, or
(iii) at the time of the Change in Control. It is the intention of the parties
that the Holding Company provide Executive with a full tax gross-up under the
provisions of this Section 6, so that on a net after-tax basis, the result to
Executive shall be the same as if the excise tax under Section 4999 (or any
successor provisions) of the Code had not been imposed. The tax gross-up may be
adjusted if alternative minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the amount determined as "P", above (such greater amount being hereafter
referred to as the "Determinative Excess Parachute Payment"), then the Holding
Company's independent
7
accountants shall determine the amount (the "Adjustment Amount"), the Holding
Company must pay to Executive, in order to put Executive (or the Holding
Company, as the case may be) in the same position as Executive (or the Holding
Company, as the case may be) would have been if the amount determined as "P"
above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or
benefits under this Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Holding Company as described above. The
Holding Company shall indemnify and hold Executive harmless from any and all
losses, costs and expenses (including without limitation, reasonable attorney's
fees, interest, fines and penalties) which Executive incurs as a result of so
reporting such information. Executive shall promptly notify the Holding Company
in writing whenever Executive receives notice of the Institution of a judicial
or administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Holding Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the Holding
Company may have in connection therewith without prior consent to the Holding
Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by an affirmative vote of not less than a majority of
the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. During the period beginning on the date
of the Notice of Termination for Cause pursuant to Section 8 of this Agreement
through the Date of Termination, stock options granted to Executive under any
stock option plan shall not be exercisable nor shall any unvested awards granted
to Executive under any
8
stock benefit plan of the Holding Company or its Subsidiaries vest. At the Date
of Termination, such stock options and any such unvested stock awards shall
become null and void and shall not be exercisable by or delivered to Executive
at any time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the
Notice of Termination (which, in the case of a Termination for Cause, shall not
be less than thirty (30) days from the date such Notice of Termination is
given).
(c) If, within thirty (30) days after any Notice of Termination
is given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Holding Company will continue to pay Executive his full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, Base Salary) and continue him as a participant in all compensation, benefit
and insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall
be subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
9
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder
pursuant to Section 4 of this Agreement, Executive agrees not to compete with
the Holding Company or its Subsidiaries for a period of one (1) year following
such termination in any city, town or county in which the Executive's normal
business office is located and the Holding Company or any of its Subsidiaries
has an office or has filed an application for regulatory approval to establish
an office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board. Executive agrees
that during such period and within said cities, towns and counties, Executive
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 Holding Company or its Subsidiaries.
The parties hereto, recognizing that irreparable injury will result to the
Holding Company or its Subsidiaries, its business and property in the event of
Executive's breach of this subsection 10(a) agree that in the event of any such
breach by Executive, the Holding Company or its Subsidiaries, will be entitled,
in addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 7 of this Agreement, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Holding
Company or its Subsidiaries, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood. Nothing herein
will be construed as prohibiting the Holding Company or its Subsidiaries from
pursuing any other remedies available to the Holding Company or its Subsidiaries
for such breach or threatened breach, including the recovery of damages from
Executive.
(b) Executive recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Holding Company
and its Subsidiaries as it may exist from time to time, is a valuable, special
and unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. In the event of a
breach or threatened breach by the Executive of the provisions of this Section,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, 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 Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
10
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Holding Company subject to
Section 11(b) of this Agreement.
(b) Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Institution, such compensation payments and benefits paid by the
Institution will be subtracted from any amount due simultaneously to Executive
under similar provisions of this Agreement. Payments pursuant to this Agreement
and the Institution Agreement shall be allocated in proportion to the level of
activity and the time expended on such activities by the Executive as determined
by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any predecessor of the Holding Company and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) 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 execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the
benefit of, Executive and the Holding Company and their respective successors
and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate
11
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future as to any act other than that
specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Institution, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
12
20. INDEMNIFICATION.
(a) The Holding Company shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware 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 Holding 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 be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and 12
C.F.R. Part 359 and any rules or regulations promulgated thereunder.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
13
SIGNATURES
IN WITNESS WHEREOF, FirstSpartan Financial Corp. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 20th day of March, 2000.
ATTEST: FIRSTSPARTAN FINANCIAL CORP.
/s/ R. Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
--------------------- --------------------
R.XXXXX XXXXXXX XXXXX X. XXXXXXX
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ R. Xxxxx Xxxxxxx By: /s/ Xxxx X. Xxxxxxxx
--------------------- --------------------
R.XXXXX XXXXXXX XXXX X. XXXXXXXX
Senior Vice President
14
Exhibit 10 (c)
FIRSTSPARTAN FINANCIAL CORP.
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of March 15, 2000, by
and between FirstSpartan Financial Corp. (the "Holding Company"), a corporation
organized under the laws of Delaware with its principal offices at 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, 00000, First Federal Bank and J. Xxxxxxx
Xxxxxxxx ("Executive"). Any reference to "Institution" herein shall mean First
Federal Bank or any successor thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive
agrees to serve as Senior Vice President of the Holding Company. The Executive
shall render administrative and management services to the Holding Company such
as are customarily performed by persons in a similar executive capacity. During
said period, Executive also agrees to serve, if elected or appointed, as an
officer or director of any subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first above written and shall
continue for a period of thirty-six (36) full calendar months thereafter.
Commencing on the date of the execution of this Agreement, the term of this
Agreement shall be extended for one day each day until such time as the board of
directors of the Holding Company (the "Board") or Executive elects not to extend
the term of the Agreement by giving written notice to the other party in
accordance with Section 8 of this Agreement, in which case the term of this
Agreement shall be fixed and shall end on the third anniversary of the date of
such written notice.
(b) During the period of Executive's employment hereunder, except
for periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder, including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in community, professional and
civic organizations; provided,
1
however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with the Holding Company or its Subsidiaries, or materially affect the
performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Executive's employment with the Holding Company may be terminated by the Holding
Company or Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement. However, Executive shall not perform, in any
respect, directly or indirectly, during the pendency of his temporary or
permanent suspension or termination from the Institution, duties and
responsibilities formerly performed at the Institution as part of his duties and
responsibilities as Senior Vice President of the Holding Company.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute consideration paid by the Holding Company in exchange for the duties
described in Section 1 of this Agreement. The Holding Company shall pay
Executive, as compensation, a salary of not less than $101,506 ("Base Salary").
Base Salary shall include any amounts of compensation deferred by Executive
under any tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement maintained by the Holding Company or its Subsidiaries.
Base Salary shall be payable in accordance with the Holding Company's payroll
practices. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by the
Board or by a Committee of the Board delegated such responsibility by the Board.
The Committee or the Board may increase Executive's Base Salary at anytime. Any
increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided in this Section 3(a), the
Holding Company shall also provide Executive, at no premium cost to Executive,
with all such other benefits as provided uniformly to permanent full-time
employees of the Holding Company and its Subsidiaries. In addition, Executive
shall be entitled to incentive compensation and bonuses as provided for under
any plan or arrangement of the Holding Company or its Subsidiaries in which
Executive is eligible to participate.
(b) Executive shall be entitled to participate in any employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, or in which he begins to
participate in the future, and the Holding Company and its Subsidiaries will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would materially adversely affect Executive's
rights or benefits thereunder, except to the extent that such changes are made
applicable to all Holding Company and Institution employees eligible to
participate in such plans, arrangements and perquisites on a non-discriminatory
basis. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive shall be entitled to participate in or receive
benefits under all plans relating to stock options, restricted
2
stock awards, stock purchases, pension, thrift, supplemental retirement,
profit-sharing, employee stock ownership, group life insurance, medical and
other health and welfare coverage, education, cash or stock bonuses that are now
or hereafter made available by the Holding Company or its Subsidiaries to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive shall be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company and its Subsidiaries in
which Executive is eligible to participate. Nothing paid to Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
(c) The Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred in the performance of Executive's obligations under
this Agreement and may provide such additional compensation in such form and
such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as defined
below) during Executive's term of employment under this Agreement, the
provisions of this Section 4 shall apply. As used in this Agreement, an "Event
of Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) of this
Agreement, or for Termination for Cause, as defined in Section 7 of this
Agreement; or Retirement (as defined in paragraph (e) of this Section 4); (ii)
Executive's resignation from the Holding Company's employ, upon, any (A) failure
to elect or reelect or to appoint or reappoint Executive as Senior Vice
President, unless Executive so consents, (B) a material change in Executive's
function, duties, or responsibilities with the Holding Company or its
Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, unless Executive so consents, (C) a
relocation of Executive's principal place of employment by more than 25 miles
from its location at the effective date of this Agreement, unless Executive so
consents, (D) a material reduction in the benefits and perquisites to the
Executive from those being provided as of the effective date of this Agreement,
unless Executive so consents, (E) a liquidation or dissolution of the Holding
Company or the Institution, or (F) breach of this Agreement by the Holding
Company. Upon the occurrence of any event described in clauses (A), (B), (C),
(D), (E) or (F), above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than sixty (60)
days prior written notice given within six full calendar months after the event
giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date
of Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, the amount
of the remaining payments and benefits Executive would have earned if he had
continued his employment with the Holding Company during the remaining unexpired
term of this
3
Agreement, based on Executive's Base Salary and benefits provided at the Date of
Termination, as set forth in Sections 3(a) and (b) of this Agreement, and the
amount still due Executive under any paragraphs of Section 3 of this Agreement
for services rendered through the Date of Termination. At the election of the
Executive, which election is to be made prior to an Event of Termination, such
payments shall be made in a lump sum. In the event that no election is made,
payment to the Executive will be made on a monthly basis in approximately equal
installments during the remaining term of the Agreement. Such payments shall not
be reduced in the event the Executive obtains other employment following
termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive
will be entitled to receive benefits due him under or contributed by the Holding
Company or its Subsidiaries on his behalf pursuant to any retirement, incentive,
profit sharing, employee stock ownership, bonus, performance, disability or
other employee benefit plan maintained by the Holding Company or its
Subsidiaries to the extent such benefits are not otherwise paid to Executive
under a separate provision of this Agreement.
(d) To the extent that the Holding Company or its Subsidiaries
continue to offer any life, medical, health, disability or dental insurance plan
or arrangement in which Executive participates in on the last day of his
employment (each being a "Welfare Plan"), after an Event of Termination (as
herein defined), Executive and his dependents shall continue participating in
such Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries do not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) Termination of Executive based on "Retirement" shall mean
termination in accordance with the Holding Company's or the Institution's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive upon
Retirement, Executive shall be entitled to all benefits under any retirement
plan of the Holding Company or its Subsidiaries and other plans to which
Executive is a party or a participant in accordance with the terms of the plan
or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Institution shall mean an event of a nature that: (i)
would be required to be reported in response to Item 1(a) of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations
4
promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the date hereof (provided, that in applying the definition of
change in control as set forth under the rules and regulations of the OTS, the
Board shall substitute its judgment for that of the OTS); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Institution or the Holding Company representing 20% or more of the Institution's
or the Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Institution purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If any of the events described in Section 5(a) of this
Agreement constituting a Change in Control have occurred, or the Board has
determined that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5
upon his termination of employment on or after the date the Change in Control
occurs due to (i) Executive's dismissal at any time during the term of this
Agreement, (ii) Executive's voluntary resignation for any reason on or within a
sixty (60) day period following the date a Change in Control has occurred or
(iii) Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, reduction in the annual compensation or
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or Termination for Cause (as
defined herein), at any time during the term of this Agreement.
(c) Upon Executive's entitlement to benefits pursuant to Section
5(b) of this Agreement, the Holding Company shall pay Executive, or in the event
of his subsequent death, his beneficiary
5
or beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to three (3) times Executive's average
annual compensation for the most recently completed five (5) calendar years. In
determining Executive's average annual compensation, annual compensation shall
include Base Salary and any other taxable income, including but not limited to
amounts related to the granting, vesting or exercise of restricted stock or
stock option awards, commissions, bonuses, severance payments, retirement
benefits, director or committee fees and fringe benefits paid or to be paid to
Executive or paid for Executive's benefit during any such year, as well as
pension, profit sharing plan, employee stock ownership and other retirement
contributions or benefits (whether or not taxable) made or accrued on behalf of
Executive for such year. At the election of Executive, which election is to be
made prior to a Change in Control, such payment shall be made in a lump sum
(without discount for early payment) on or immediately following the Date of
Termination (which may be the date a Change in Control occurs) or paid in equal
monthly installments during the thirty-six (36) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining thirty-six (36) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by
Executive's termination of employment, Executive will be entitled to receive
benefits due him under or contributed by the Holding Company or its Subsidiaries
on his behalf pursuant to any retirement, incentive, profit sharing, employee
stock ownership, bonus, performance, disability or other employee benefit plan
or other arrangement maintained by the Institution or the Holding Company on
Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Holding Company will
cause to be continued life, medical and disability coverage substantially
identical to the coverage maintained by the Holding Company or its Subsidiaries
for Executive and any of his dependents covered under such plans prior to the
Change in Control. Such coverage and payments shall cease upon the expiration of
thirty-six (36) full calendar months following the Date of Termination. In the
event Executive's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and his dependents with
benefits substantially similar to those Executive and his dependents would
otherwise have been entitled to receive under such plans and programs from which
their continued participation is barred or provide their economic equivalent.
6. CHANGE OF CONTROL RELATED PROVISIONS.
Notwithstanding Section 5 of this Agreement, for any taxable year in
which the Executive shall be liable, as determined for the payment of an excise
tax under Section 4999 of the Code (or any successor provision thereto), with
respect to any payment in the nature of the compensation made by the Holding
Company or its Subsidiaries (or for the benefit of) Executive pursuant to this
Agreement or otherwise, the Holding Company shall pay to the Executive an amount
determined under the following formula:
6
An amount equal to: (E x P) + X
WHERE:
X = E x P
----------------------
1 - [(FI x (1 - SLI)) + SLI + E + M + PO]
E = the rate at which the excise tax is assessed
under Section 4999 of the Code;
P = the amount with respect to which such excise
tax is assessed, determined without regard to
this Section 6;
FI = the highest marginal rate of federal income,
employment, and other taxes (other than taxes
imposed under Section 4999 of the Code)
applicable to Executive for the taxable year in
question (including any effective increase in
Executive's tax rate attributable to the
disallowance of any deduction); and
SLI = the sum of the highest marginal rates of
income and payroll tax applicable to Executive
under applicable state and local laws for the
taxable year in question (including any
effective increase in Executive's tax rate
attributable to the disallowance of any
deduction); and
M = highest marginal rate of Medicare tax; and
PO = adjustment for phase out of or loss of
deduction, personal exemption or other similar
items.
(a) With respect to any payment in the nature of compensation
that is made to (or for the benefit of) Executive under the terms of this
Section 6 or otherwise and on which an excise tax under Section 4999 of the Code
may or will be assessed, the payment determined under Section 6 shall be made to
Executive on the earliest of (i) the date the Holding Company is required to
withhold such tax, (ii) the date the tax is required to be paid by Executive, or
(iii) at the time of the Change in Control. It is the intention of the parties
that the Holding Company provide Executive with a full tax gross-up under the
provisions of this Section 6, so that on a net after-tax basis, the result to
Executive shall be the same as if the excise tax under Section 4999 (or any
successor provisions) of the Code had not been imposed. The tax gross-up may be
adjusted if alternative minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the amount determined as "P", above (such greater amount being hereafter
referred to as the "Determinative Excess Parachute Payment"), then the Holding
Company's independent
7
accountants shall determine the amount (the "Adjustment Amount"), the Holding
Company must pay to Executive, in order to put Executive (or the Holding
Company, as the case may be) in the same position as Executive (or the Holding
Company, as the case may be) would have been if the amount determined as "P"
above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or
benefits under this Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Holding Company as described above. The
Holding Company shall indemnify and hold Executive harmless from any and all
losses, costs and expenses (including without limitation, reasonable attorney's
fees, interest, fines and penalties) which Executive incurs as a result of so
reporting such information. Executive shall promptly notify the Holding Company
in writing whenever Executive receives notice of the Institution of a judicial
or administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Holding Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the Holding
Company may have in connection therewith without prior consent to the Holding
Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by an affirmative vote of not less than a majority of
the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. During the period beginning on the date
of the Notice of Termination for Cause pursuant to Section 8 of this Agreement
through the Date of Termination, stock options granted to Executive under any
stock option plan shall not be exercisable nor shall any unvested awards granted
to Executive under any
8
stock benefit plan of the Holding Company or its Subsidiaries vest. At the Date
of Termination, such stock options and any such unvested stock awards shall
become null and void and shall not be exercisable by or delivered to Executive
at any time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the
Notice of Termination (which, in the case of a Termination for Cause, shall not
be less than thirty (30) days from the date such Notice of Termination is
given).
(c) If, within thirty (30) days after any Notice of Termination
is given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Holding Company will continue to pay Executive his full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, Base Salary) and continue him as a participant in all compensation, benefit
and insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
9
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder
pursuant to Section 4 of this Agreement, Executive agrees not to compete with
the Holding Company or its Subsidiaries for a period of one (1) year following
such termination in any city, town or county in which the Executive's normal
business office is located and the Holding Company or any of its Subsidiaries
has an office or has filed an application for regulatory approval to establish
an office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board. Executive agrees
that during such period and within said cities, towns and counties, Executive
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 Holding Company or its Subsidiaries.
The parties hereto, recognizing that irreparable injury will result to the
Holding Company or its Subsidiaries, its business and property in the event of
Executive's breach of this subsection 10(a) agree that in the event of any such
breach by Executive, the Holding Company or its Subsidiaries, will be entitled,
in addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 7 of this Agreement, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Holding
Company or its Subsidiaries, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood. Nothing herein
will be construed as prohibiting the Holding Company or its Subsidiaries from
pursuing any other remedies available to the Holding Company or its Subsidiaries
for such breach or threatened breach, including the recovery of damages from
Executive.
(b) Executive recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Holding Company
and its Subsidiaries as it may exist from time to time, is a valuable, special
and unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. In the event of a
breach or threatened breach by the Executive of the provisions of this Section,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, 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 Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
10
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Holding Company subject to
Section 11(b) of this Agreement.
(b) Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Institution, such compensation payments and benefits paid by the
Institution will be subtracted from any amount due simultaneously to Executive
under similar provisions of this Agreement. Payments pursuant to this Agreement
and the Institution Agreement shall be allocated in proportion to the level of
activity and the time expended on such activities by the Executive as determined
by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any predecessor of the Holding Company and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) 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 execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the
benefit of, Executive and the Holding Company and their respective successors
and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate
11
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future as to any act other than that
specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Institution, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive
under this Agreement.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
12
20. INDEMNIFICATION.
(a) The Holding Company shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware 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 Holding 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 be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and 12
C.F.R. Part 359 and any rules or regulations promulgated thereunder.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no
such succession or assignment had taken place.
13
SIGNATURES
IN WITNESS WHEREOF, FirstSpartan Financial Corp. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 20th day of March, 2000.
ATTEST: FIRSTSPARTAN FINANCIAL CORP.
/s/ R. Xxxxx Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------ --------------------
R. XXXXX XXXXXXX XXXXX X. XXXXXXX
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ R. Xxxxx Xxxxxxx By: /s/ J. Xxxxxxx Xxxxxxxx
------------------------ -----------------------
R. XXXXX XXXXXXX J. XXXXXXX XXXXXXXX
Senior Vice President
14
EXHIBIT 10 (d)
FIRSTSPARTAN FINANCIAL CORP.
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of March 15, 2000, by
and between FirstSpartan Financial Corp. (the "Holding Company"), a corporation
organized under the laws of Delaware with its principal offices at 000 Xxxx Xxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx, 00000, First Federal Bank and R. Xxxxx
Xxxxxxx ("Executive"). Any reference to "Institution" herein shall mean First
Federal Bank or any successor thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees
to serve as Treasurer, Secretary and Chief Financial Officer of the Holding
Company. The Executive shall render administrative and management services to
the Holding Company such as are customarily performed by persons in a similar
executive capacity. During said period, Executive also agrees to serve, if
elected or appointed, as an officer or director of any subsidiary of
the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement
shall be deemed to have commenced as of the date first above written and shall
continue for a period of thirty-six (36) full calendar months thereafter.
Commencing on the date of the execution of this Agreement, the term of this
Agreement shall be extended for one day each day until such time as the board of
directors of the Holding Company (the "Board") or Executive elects not to extend
the term of the Agreement by giving written notice to the other party in
accordance with Section 8 of this Agreement, in which case the term of this
Agreement shall be fixed and shall end on the third anniversary of the date of
such written notice.
(b) During the period of Executive's employment hereunder, except
for periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder, including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in community, professional and
civic organizations; provided,
1
however, that, with the approval of the Board, as evidenced by a resolution of
such Board, from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, will not present any conflict of
interest with the Holding Company or its Subsidiaries, or materially affect the
performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Executive's employment with the Holding Company may be terminated by the Holding
Company or Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement. However, Executive shall not perform, in any
respect, directly or indirectly, during the pendency of his temporary or
permanent suspension or termination from the Institution, duties and
responsibilities formerly performed at the Institution as part of his duties and
responsibilities as Treasurer, Secretary and Chief Financial Officer of the
Holding Company.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall
constitute consideration paid by the Holding Company in exchange for the duties
described in Section 1 of this Agreement. The Holding Company shall pay
Executive, as compensation, a salary of not less than $104,799 ("Base Salary").
Base Salary shall include any amounts of compensation deferred by Executive
under any tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement maintained by the Holding Company or its Subsidiaries.
Base Salary shall be payable in accordance with the Holding Company's payroll
practices. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by the
Board or by a Committee of the Board delegated such responsibility by the Board.
The Committee or the Board may increase Executive's Base Salary at anytime. Any
increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided in this Section 3(a), the
Holding Company shall also provide Executive, at no premium cost to Executive,
with all such other benefits as provided uniformly to permanent full-time
employees of the Holding Company and its Subsidiaries. In addition, Executive
shall be entitled to incentive compensation and bonuses as provided for under
any plan or arrangement of the Holding Company or its Subsidiaries in which
Executive is eligible to participate.
(b) Executive shall be entitled to participate in any employee
benefit plans, arrangements and perquisites substantially equivalent to those in
which Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, or in which he begins to
participate in the future, and the Holding Company and its Subsidiaries will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would materially adversely affect Executive's
rights or benefits thereunder, except to the extent that such changes are made
applicable to all Holding Company and Institution employees eligible to
participate in such plans, arrangements and perquisites on a non-discriminatory
basis. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive shall be entitled to participate in or receive
benefits under all plans relating to stock options, restricted
2
stock awards, stock purchases, pension, thrift, supplemental retirement,
profit-sharing, employee stock ownership, group life insurance, medical and
other health and welfare coverage, education, cash or stock bonuses that are now
or hereafter made available by the Holding Company or its Subsidiaries to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive shall be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company and its Subsidiaries in
which Executive is eligible to participate. Nothing paid to Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which the Executive is entitled under this Agreement.
(c) The Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred in the performance of Executive's obligations under
this Agreement and may provide such additional compensation in such form and
such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as defined
below) during Executive's term of employment under this Agreement, the
provisions of this Section 4 shall apply. As used in this Agreement, an "Event
of Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) of this
Agreement, or for Termination for Cause, as defined in Section 7 of this
Agreement; or Retirement (as defined in paragraph (e) of this Section 4); (ii)
Executive's resignation from the Holding Company's employ, upon, any (A) failure
to elect or reelect or to appoint or reappoint Executive as Treasurer, Secretary
and Chief Financial Officer, unless Executive so consents, (B) a material change
in Executive's function, duties, or responsibilities with the Holding Company or
its Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, unless Executive so consents, (C) a
relocation of Executive's principal place of employment by more than 25 miles
from its location at the effective date of this Agreement, unless Executive so
consents, (D) a material reduction in the benefits and perquisites to the
Executive from those being provided as of the effective date of this Agreement,
unless Executive so consents, (E) a liquidation or dissolution of the Holding
Company or the Institution, or (F) breach of this Agreement by the Holding
Company. Upon the occurrence of any event described in clauses (A), (B), (C),
(D), (E) or (F), above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than sixty (60)
days prior written notice given within six full calendar months after the event
giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date
of Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, the amount
of the remaining payments and benefits Executive would have earned if he had
continued his employment with the Holding Company during the remaining unexpired
term of this
3
Agreement, based on Executive's Base Salary and benefits provided at the Date of
Termination, as set forth in Sections 3(a) and (b) of this Agreement, and the
amount still due Executive under any paragraphs of Section 3 of this Agreement
for services rendered through the Date of Termination. At the election of the
Executive, which election is to be made prior to an Event of Termination, such
payments shall be made in a lump sum. In the event that no election is made,
payment to the Executive will be made on a monthly basis in approximately equal
installments during the remaining term of the Agreement. Such payments shall not
be reduced in the event the Executive obtains other employment following
termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive
will be entitled to receive benefits due him under or contributed by the Holding
Company or its Subsidiaries on his behalf pursuant to any retirement, incentive,
profit sharing, employee stock ownership, bonus, performance, disability or
other employee benefit plan maintained by the Holding Company or its
Subsidiaries to the extent such benefits are not otherwise paid to Executive
under a separate provision of this Agreement.
(d) To the extent that the Holding Company or its Subsidiaries
continue to offer any life, medical, health, disability or dental insurance plan
or arrangement in which Executive participates in on the last day of his
employment (each being a "Welfare Plan"), after an Event of Termination (as
herein defined), Executive and his dependents shall continue participating in
such Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries do not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) Termination of Executive based on "Retirement" shall mean
termination in accordance with the Holding Company's or the Institution's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive upon
Retirement, Executive shall be entitled to all benefits under any retirement
plan of the Holding Company or its Subsidiaries and other plans to which
Executive is a party or a participant in accordance with the terms of the plan
or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Institution shall mean an event of a nature that: (i)
would be required to be reported in response to Item 1(a) of the current report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations
4
promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the date hereof (provided, that in applying the definition of
change in control as set forth under the rules and regulations of the OTS, the
Board shall substitute its judgment for that of the OTS); or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Institution or the Holding Company representing 20% or more of the Institution's
or the Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Institution purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If any of the events described in Section 5(a) of this
Agreement constituting a Change in Control have occurred, or the Board has
determined that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5
upon his termination of employment on or after the date the Change in Control
occurs due to (i) Executive's dismissal at any time during the term of this
Agreement, (ii) Executive's voluntary resignation for any reason on or within a
sixty (60) day period following the date a Change in Control has occurred or
(iii) Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, reduction in the annual compensation or
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or Termination for Cause (as
defined herein), at any time during the term of this Agreement.
(c) Upon Executive's entitlement to benefits pursuant to Section
5(b) of this Agreement, the Holding Company shall pay Executive, or in the event
of his subsequent death, his beneficiary
5
or beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to three (3) times Executive's average
annual compensation for the most recently completed five (5) calendar years. In
determining Executive's average annual compensation, annual compensation shall
include Base Salary and any other taxable income, including but not limited to
amounts related to the granting, vesting or exercise of restricted stock or
stock option awards, commissions, bonuses, severance payments, retirement
benefits, director or committee fees and fringe benefits paid or to be paid to
Executive or paid for Executive's benefit during any such year, as well as
pension, profit sharing plan, employee stock ownership and other retirement
contributions or benefits (whether or not taxable) made or accrued on behalf of
Executive for such year. At the election of Executive, which election is to be
made prior to a Change in Control, such payment shall be made in a lump sum
(without discount for early payment) on or immediately following the Date of
Termination (which may be the date a Change in Control occurs) or paid in equal
monthly installments during the thirty-six (36) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining thirty-six (36) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by
Executive's termination of employment, Executive will be entitled to receive
benefits due him under or contributed by the Holding Company or its Subsidiaries
on his behalf pursuant to any retirement, incentive, profit sharing, employee
stock ownership, bonus, performance, disability or other employee benefit plan
or other arrangement maintained by the Institution or the Holding Company on
Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Holding Company will
cause to be continued life, medical and disability coverage substantially
identical to the coverage maintained by the Holding Company or its Subsidiaries
for Executive and any of his dependents covered under such plans prior to the
Change in Control. Such coverage and payments shall cease upon the expiration of
thirty-six (36) full calendar months following the Date of Termination. In the
event Executive's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and his dependents with
benefits substantially similar to those Executive and his dependents would
otherwise have been entitled to receive under such plans and programs from which
their continued participation is barred or provide their economic equivalent.
6. CHANGE OF CONTROL RELATED PROVISIONS.
Notwithstanding Section 5 of this Agreement, for any taxable year
in which the Executive shall be liable, as determined for the payment of an
excise tax under Section 4999 of the Code (or any successor provision thereto),
with respect to any payment in the nature of the compensation made by the
Holding Company or its Subsidiaries (or for the benefit of) Executive pursuant
to this Agreement or otherwise, the Holding Company shall pay to the Executive
an amount determined under the following formula:
6
An amount equal to: (E x P) + X
WHERE:
X = E x P
----------------------
1 - [(FI x (1 - SLI)) + SLI + E + M + PO]
E = the rate at which the excise tax is assessed
under Section 4999 of the Code;
P = the amount with respect to which such excise
tax is assessed, determined without regard to
this Section 6;
FI = the highest marginal rate of federal income,
employment, and other taxes (other than taxes
imposed under Section 4999 of the Code)
applicable to Executive for the taxable year in
question (including any effective increase in
Executive's tax rate attributable to the
disallowance of any deduction); and
SLI = the sum of the highest marginal rates of
income and payroll tax applicable to Executive
under applicable state and local laws for the
taxable year in question (including any
effective increase in Executive's tax rate
attributable to the disallowance of any
deduction); and
M = highest marginal rate of Medicare tax; and
PO = adjustment for phase out of or loss of
deduction, personal exemption or other similar
items.
(a) With respect to any payment in the nature of compensation
that is made to (or for the benefit of) Executive under the terms of this
Section 6 or otherwise and on which an excise tax under Section 4999 of the Code
may or will be assessed, the payment determined under Section 6 shall be made to
Executive on the earliest of (i) the date the Holding Company is required to
withhold such tax, (ii) the date the tax is required to be paid by Executive, or
(iii) at the time of the Change in Control. It is the intention of the parties
that the Holding Company provide Executive with a full tax gross-up under the
provisions of this Section 6, so that on a net after-tax basis, the result to
Executive shall be the same as if the excise tax under Section 4999 (or any
successor provisions) of the Code had not been imposed. The tax gross-up may be
adjusted if alternative minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the amount determined as "P", above (such greater amount being hereafter
referred to as the "Determinative Excess Parachute Payment"), then the Holding
Company's independent
7
accountants shall determine the amount (the "Adjustment Amount"), the Holding
Company must pay to Executive, in order to put Executive (or the Holding
Company, as the case may be) in the same position as Executive (or the Holding
Company, as the case may be) would have been if the amount determined as "P"
above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or
benefits under this Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Holding Company as described above. The
Holding Company shall indemnify and hold Executive harmless from any and all
losses, costs and expenses (including without limitation, reasonable attorney's
fees, interest, fines and penalties) which Executive incurs as a result of so
reporting such information. Executive shall promptly notify the Holding Company
in writing whenever Executive receives notice of the Institution of a judicial
or administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Holding Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the Holding
Company may have in connection therewith without prior consent to the Holding
Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by an affirmative vote of not less than a majority of
the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. During the period beginning on the date
of the Notice of Termination for Cause pursuant to Section 8 of this Agreement
through the Date of Termination, stock options granted to Executive under any
stock option plan shall not be exercisable nor shall any unvested awards granted
to Executive under any
8
stock benefit plan of the Holding Company or its Subsidiaries vest. At the Date
of Termination, such stock options and any such unvested stock awards shall
become null and void and shall not be exercisable by or delivered to Executive
at any time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the
Notice of Termination (which, in the case of a Termination for Cause, shall not
be less than thirty (30) days from the date such Notice of Termination is
given).
(c) If, within thirty (30) days after any Notice of Termination
is given, the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, except upon the
occurrence of a Change in Control and voluntary termination by the Executive in
which case the Date of Termination shall be the date specified in the Notice,
the Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Holding Company will continue to pay Executive his full compensation in effect
when the notice giving rise to the dispute was given (including, but not limited
to, Base Salary) and continue him as a participant in all compensation, benefit
and insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
9
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder
pursuant to Section 4 of this Agreement, Executive agrees not to compete with
the Holding Company or its Subsidiaries for a period of one (1) year following
such termination in any city, town or county in which the Executive's normal
business office is located and the Holding Company or any of its Subsidiaries
has an office or has filed an application for regulatory approval to establish
an office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board. Executive agrees
that during such period and within said cities, towns and counties, Executive
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 Holding Company or its Subsidiaries.
The parties hereto, recognizing that irreparable injury will result to the
Holding Company or its Subsidiaries, its business and property in the event of
Executive's breach of this subsection 10(a) agree that in the event of any such
breach by Executive, the Holding Company or its Subsidiaries, will be entitled,
in addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 7 of this Agreement, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Holding
Company or its Subsidiaries, and that the enforcement of a remedy by way of
injunction will not prevent Executive from earning a livelihood. Nothing herein
will be construed as prohibiting the Holding Company or its Subsidiaries from
pursuing any other remedies available to the Holding Company or its Subsidiaries
for such breach or threatened breach, including the recovery of damages from
Executive.
(b) Executive recognizes and acknowledges that the knowledge of
the business activities and plans for business activities of the Holding Company
and its Subsidiaries as it may exist from time to time, is a valuable, special
and unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. In the event of a
breach or threatened breach by the Executive of the provisions of this Section,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, 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 Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
10
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid
in cash or check from the general funds of the Holding Company subject to
Section 11(b) of this Agreement.
(b) Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Institution, such compensation payments and benefits paid by the
Institution will be subtracted from any amount due simultaneously to Executive
under similar provisions of this Agreement. Payments pursuant to this Agreement
and the Institution Agreement shall be allocated in proportion to the level of
activity and the time expended on such activities by the Executive as determined
by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any predecessor of the Holding Company and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) 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 execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the
benefit of, Executive and the Holding Company and their respective successors
and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate
11
only as to the specific term or condition waived and shall not constitute a
waiver of such term or condition for the future as to any act other than that
specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part
of any provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware
regardless of the laws that might otherwise govern under applicable principles
of conflicts of law.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Institution, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
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20. INDEMNIFICATION.
(a) The Holding Company shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware 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 Holding 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 be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and 12
C.F.R. Part 359 and any rules or regulations promulgated thereunder.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, FirstSpartan Financial Corp. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 20th day of March, 2000.
ATTEST: FIRSTSPARTAN FINANCIAL CORP.
/s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------- --------------------
XXXXXX X. XXXX XXXXX X. XXXXXXX
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Xxxxxx Xxxxx By: /s/ R. Xxxxx Xxxxxxx
----------------------------- --------------------
XXXXXX XXXXX R. XXXXX XXXXXXX
Treasurer, Secretary and Chief
Financial Officer
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