Exhibit 10.2
FORM OF SEVERANCE AGREEMENT FOR SENIOR OFFICERS
This AGREEMENT is made effective as of ___________________, 1998 by and
between HERITAGE FEDERAL SAVINGS & LOAN ASSOCIATION (the "ASSOCIATION");
HERITAGE BANCORP, INC. ("COMPANY"), a Delaware corporation; and ________________
("EXECUTIVE").
WHEREAS, the ASSOCIATION recognizes the substantial contribution EXECUTIVE
has made to the ASSOCIATION and wishes to protect his position therewith for the
period provided in this Agreement in the event of a Change in Control (as
defined herein); and
WHEREAS, EXECUTIVE serves in the position of ________________________, a
position of substantial responsibility;
NOW, THEREFORE, in consideration of the foregoing and upon the other terms
and conditions hereinafter provided, the parties hereto agree as follows:
1. Term Of Agreement
The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of ____________________ (__)
full calendar months thereafter. Commencing on the first anniversary date of
this Agreement and continuing at each anniversary date thereafter, the Board of
Directors of the ASSOCIATION ("Board") may extend the Agreement for an
additional year. The Board will conduct a performance evaluation of EXECUTIVE
for purposes of determining whether to extend the Agreement, and the results
thereof shall be included in the minutes of the Board's meeting.
2. Payments To EXECUTIVE Upon Change In Control.
(a) Upon the occurrence of a Change in Control (as herein defined) followed
within twelve (12) months of the effective date of the Change in Control by the
voluntary or involuntary termination of EXECUTIVE's employment, other than for
Cause, as defined in Section 2(c) hereof, the provisions of Section 3 shall
apply. For purposes of this Agreement, "voluntary termination" shall be limited
to the circumstances in which EXECUTIVE elects to voluntarily terminate his
employment within twelve (12) months of the effective date of a Change in
Control following any demotion, loss of title, office or significant authority,
reduction in his annual compensation or benefits (other than a reduction
affecting the Bank's personnel generally), or relocation of his principal place
of employment by more than 25 miles from its location immediately prior to the
Change in Control.
(b) A "Change in Control" of the COMPANY or the ASSOCIATION shall be deemed
to occur if and when (a) there occurs a change in control of the ASSOCIATION or
the COMPANY within the meaning of the Home Owners Loan Act of 1933 and 12 C.F.R.
Part 574, (b) any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the COMPANY or the ASSOCIATION representing twenty-five percent
(25%) or more of the combined voting power
of the COMPANY's or the ASSOCIATION's then outstanding securities, (c) the
membership of the board of directors of the COMPANY or the ASSOCIATION changes
as the result of a contested election, such that individuals who were directors
at the beginning of any twenty-four (24) month period (whether commencing before
or after the date of adoption of this Agreement) do not constitute a majority of
the Board at the end of such period, or (d) shareholders of the COMPANY or the
ASSOCIATION approve a merger, consolidation, sale or disposition of all or
substantially all of the COMPANY's or the ASSOCIATION's assets, or a plan of
partial or complete liquidation.
(c) EXECUTIVE shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon Termination for Cause. The term "Termination
for Cause" shall mean termination because of EXECUTIVE's intentional failure to
perform stated duties, personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, willful violation of any
law, rule, regulation (other than traffic violations or similar offenses) or
final cease and desist order, or any material breach of any material provision
of this Agreement. In determining incompetence, the acts or omissions shall be
measured against standards generally prevailing in the savings institution
industry. 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 copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths 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.
3. Termination
(a) Upon the occurrence of a Change in Control, followed within twelve (12)
months of the effective date of a Change in Control by the voluntary or
involuntary termination of EXECUTIVE's employment other than Termination for
Cause, the ASSOCIATION 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, as severance pay, a sum equal to two (2) times Executive's annual
compensation. For purposes of this Agreement, "annual compensation" shall mean
and include all wages, salary, bonus, and other compensation, if any, paid
(including accrued amounts) by the Company or the Bank as consideration for the
Participant's service during the twelve (12) month period ending on the last day
of the month preceding the effective date of a Change in Control, which is or
would be includable in the gross income of the Participant receiving the same
for federal income tax purposes. Such amount shall be paid to EXECUTIVE in a
lump sum no later than thirty (30) days after the date of his termination.
(b) Upon the occurrence of a Change in Control of the ASSOCIATION followed
within twelve (12) months of the effective date of a Change in Control by
EXECUTIVE's voluntary or involuntary termination of employment, other than
Termination for Cause, the
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ASSOCIATION shall cause to be continued life, medical, dental and disability
coverage substantially identical to the coverage maintained by the ASSOCIATION
for EXECUTIVE prior to his severance. Such coverage and payments shall cease
upon expiration of twenty-four (24) months from the date of EXECUTIVE's
termination.
(c) Notwithstanding the preceding paragraphs of this Section 3, in the
event that the aggregate payments or benefits to be made or afforded to
EXECUTIVE under this Section, together with any other payments or benefits
received or to be received by EXECUTIVE in connection with a Change in Control,
would be deemed to include an "excess parachute payment" under (S) 280G of
the Code, then, at the election of EXECUTIVE, (i) such payments or benefits
shall be payable or provided to EXECUTIVE over the minimum period necessary to
reduce the present value of such payments or benefits to an amount which is one
dollar ($1.00) less than three (3) times EXECUTIVE's "base amount" under (S)
280G(b)(3) of the Code or (ii) the payments or benefits to be provided under
this Section 3 shall be reduced to the extent necessary to avoid treatment as an
excess parachute payment with the allocation of the reduction among such
payments and benefits to be determined by EXECUTIVE.
(d) Any payments made to EXECUTIVE pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C. (S)
1828(k) and any regulations promulgated thereunder.
4. Effect On Prior Agreements And Existing Benefit Plans
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior agreement between the ASSOCIATION and EXECUTIVE, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to 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.
5. 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, the COMPANY, the ASSOCIATION and their respective successors and
assigns.
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6. 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 by an 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 only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
7. Required Provisions
(a) The ASSOCIATION may terminate EXECUTIVE's employment at any time, but
any termination by the ASSOCIATION, other than Termination for Cause, shall not
prejudice EXECUTIVE's right to compensation or other benefits under this
Agreement. EXECUTIVE shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 2(c)
herein.
(b) If EXECUTIVE is suspended and/or temporarily prohibited from
participating in the conduct of the ASSOCIATION's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(3) and (g)(1)), the ASSOCIATION's obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
ASSOCIATION may, in its discretion, (i) pay EXECUTIVE all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate (in whole or in part) any of its obligations that were suspended.
(c) If EXECUTIVE is removed and/or permanently prohibited from
participating in the conduct of the ASSOCIATION's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)),
all obligations of the ASSOCIATION under the Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(d) If the ASSOCIATION is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) All obligations under this Agreement may be terminated: (i) by the
Director of the Office of Thrift Supervision (the "Director") or his or her
designee at the time the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the ASSOCIATION under the
authority contained in Section 13(c) of the FDIA and (ii) by the Director, or
his or her designee at the time the Director or such designee approves a
supervisory
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merger to resolve problems related to operation of the ASSOCIATION or when the
ASSOCIATION is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
8. 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.
9. 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.
10. Governing Law
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of South Carolina, unless
preempted by Federal law as now or hereafter in effect.
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 employee within fifty
(50) miles from the location of the ASSOCIATION, in accordance with the rules of
the American Arbitration Association then in effect.
11. Source of Payments
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the ASSOCIATION. The COMPANY, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to EXECUTIVE and, if such payments are not timely paid or provided by
the ASSOCIATION, such amounts and benefits shall be paid or provided by the
COMPANY.
12. 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 ASSOCIATION if EXECUTIVE is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
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13. Successor To The ASSOCIATION or the COMPANY
The ASSOCIATION and the 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 ASSOCIATION or the
COMPANY, expressly and unconditionally to assume and agree to perform the
ASSOCIATION's or the COMPANY's obligations under this Agreement, in the same
manner and to the same extent that the ASSOCIATION or the COMPANY would be
required to perform if no such succession or assignment had taken place.
14. Signatures
IN WITNESS WHEREOF, the ASSOCIATION and the COMPANY have caused this
Agreement to be executed and their seal to be affixed hereunto by a duly
authorized officer, and EXECUTIVE has signed this Agreement, all on the ____ day
of _____________, 1998.
ATTEST: HERITAGE FEDERAL SAVINGS &
LOAN ASSOCIATION
BY:
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[SEAL]
ATTEST: HERITAGE BANCORP, INC.
BY:
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[SEAL]
WITNESS:
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EXECUTIVE
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