EXHIBIT 10.2
Proposed Form of Severance Agreement with Certain Senior Officers
FORM OF SEVERANCE AGREEMENT FOR CERTAIN SENIOR OFFICERS
This AGREEMENT is made effective as of ___________________, 1997 by and
between FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF SPARTANBURG (the
"Association"); FIRSTSPARTAN FINANCIAL CORP. ("Company"); and
___________________ (the "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; and
WHEREAS, Executive serves in the position of ______________ of the
Association, 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 the
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) of
the Association 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 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 the 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 35 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) an offeror other than the Company purchases
shares of the common stock of the Company or the Association pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or
the Association representing 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 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 the 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. The
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 the Executive's employment other than for Termination
for Cause, the Association shall be obligated to pay the 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 ____ times the Executive's
"base amount," within the meaning of (section ▇▇▇▇)280G(b)(3) of the Internal
Revenue Code of 1986 ("Code") Such amount shall be paid to the 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 the Executive's voluntary or involuntary termination of employment, other
than for Termination for Cause, the Association shall cause to be continued
life, medical, dental and disability coverage substantially identical to the
coverage maintained by the Association for the Executive prior to his severance.
Such coverage and payments shall cease upon expiration of _______________ months
from the date of the Executive's termination.
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(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 would be deemed to include an "excess parachute
payment" under (section ▇▇▇▇)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 ss.280G(b)(3) of the Code or (ii)
Executive shall receive the amount payable under Section 5(c) as the sole
benefit payable under this Section 3.
(d) Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12
U.S.C.(section ▇▇▇▇)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.
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.
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7. Required Provisions
(a) The Association may terminate the 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 the 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 the 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 the 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 or the Resolution
Trust 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 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.
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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.
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.
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14. Signatures
IN WITNESS WHEREOF, the Company and the Association have caused this
Agreement to be executed by a duly authorized officer, and Executive has signed
this Agreement, all on the day and date first above written.
ATTEST: FIRST FEDERAL SAVINGS AND LOAN
ASSOCIATION OF SPARTANBURG
_______________________________ BY:___________________________
ATTEST: FIRSTSPARTAN FINANCIAL CORP.
_______________________________ BY:___________________________
WITNESS:
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Executive
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