▇▇▇▇▇▇ FEDERAL BANK
-------------------------------
Employment Agreement with
▇▇▇▇▇▇ ▇. RAY
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT ("Agreement") is
entered into as of the 4th day of February, 2002, by and between ▇▇▇▇▇▇
FEDERAL BANK (THE "EMPLOYER"), WHICH IS A FEDERALLY CHARTERED STOCK SAVINGS AND
LOAN ASSOCIATION WITH PRINCIPAL OFFICES AT TUCKER, GEORGIA, and ▇▇▇▇▇▇ ▇. RAY,
an individual resident of Georgia (the "Employee").
BACKGROUND
A. The Employee has been a key Employee of the Employer, and has
been employed by the Employer as its CHIEF FINANCIAL OFFICER & CHIEF OPERATING
OFFICER, and is experienced in all phases of the business of the Employer.
B. The Employee and Employer have previously entered into the
Employment Agreement ("Prior Agreement") that was effective on March 3, 1997.
C. The parties now desire to adopt a new Employment Agreement to
outline the terms of the Employee's employment with the Employer, and to
supersede the Prior Agreement.
D. This Agreement, and the supersession of the Prior Agreement,
is made in consideration of the mutual covenants contained herein.
AGREEMENT
1. Definitions.
As used in this Agreement, the following terms shall have the
meanings set forth below:
a. "Affiliate" means any person, firm, corporation,
partnership, association, or entity that, directly or indirectly or
through one or more intermediaries, controls, is controlled by, or is
under common control with the Employer. For purposes of this section
"control" means the ownership of more than fifty percent (50%) of the
stock of the entity (if it is a corporation) or of either the profits
or the equity interest (if the entity is a partnership).
b. "Area" means the counties of the State of Georgia in
which the Employer maintains bank branches as of the Employment
Agreement Date, which are DeKalb, ▇▇▇▇▇▇, Gwinnett, and ▇▇▇▇▇▇▇. If the
Term is extended by the Board pursuant to Section 4 below, the Board
shall simultaneously expand or contract the Area as of such extension
action to include additional counties in which the Employer has opened
branches and exclude counties in which all branches were closed or
otherwise removed.
c. "Board" means the Board of Directors of the Employer.
d. "Business of the Employer" means the business
conducted by the Employer, which is the business of financial services.
e. "Cause" means the occurrence of any of the following
events:
i) the Employee's material breach of the terms
of this Agreement, including, without limitation, the
Employee's failure to perform his duties and responsibilities
in the manner and to the extent required under this Agreement
or to follow the policies, procedures, and authorities
instituted and granted by the Board;
ii) conduct by the Employee that amounts to
fraud, dishonesty, or willful misconduct in the performance of
his duties and responsibilities hereunder, or is a breach of
fiduciary duty, including a breach involving personal profit;
iii) the Employee's knowing and material
misrepresentation to the Board in relation to a matter within
the scope of the Employee's duties and responsibilities for
the Employer;
iv) the Employee's arrest for, charge in
relation to (by criminal information, indictment, or
otherwise), or conviction during the Term of this Agreement of
a felony or any other crime involving dishonesty, breach of
trust, or moral turpitude.
For purposes of this paragraph, no act or failure to act by
the Employee shall be considered to be willful unless he acted
or failed to act with an absence of good faith and a
reasonable belief that his action or failure to act was in the
best interests of the Employer.
f. "Change in Control" means any one of the following
events in relation to the Employer or any Affiliate of the Employer
that owns more than fifty percent (50%) of the Employer (either of
which shall be referred to below as the "Company"):
i) the acquisition by any person or persons
acting in concert of the then outstanding voting securities of
the Company, if, after the transaction, the acquiring person
(or persons) owns, controls or holds with power to vote more
than twenty-five percent (25%) of any class of voting
securities of the Company; provided, however, that no
acquisition of voting securities by the Employee or by the
Eagle Bancshares, Inc. 401(k) Savings and Employee Stock
Ownership Plan shall constitute a Change in Control;
ii) within any twenty-four (24) month period
(beginning on or after the Effective Date) the persons who
were directors of the Company immediately before
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the beginning of such period (the "Incumbent Directors") shall
cease to constitute at least a majority of the board of the
Company. For purposes of this subsection, any director who was
not a director as of the Effective Date shall be deemed to be
an Incumbent Director if that director were elected
subsequently to the board of the Company by, on the
recommendation of, or with the approval of at least two-thirds
of the directors who then qualified as Incumbent Directors.
Furthermore, no director whose initial assumption of office is
in connection with an actual or threatened election contest
relating to the election of directors shall be deemed to be an
Incumbent Director;
iii) a reorganization, merger, or consolidation,
with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger, or
consolidation do not immediately thereafter own more than
fifty percent (50%) of the combined voting power entitled to
vote in the election of directors of the reorganized, merged,
or consolidated company's then outstanding voting securities;
or
iv) the sale, transfer, or assignment of all or
substantially all of the assets of the Company and its
subsidiaries to any third party.
Notwithstanding the foregoing, no Change in Control shall occur if the
transactions or occurrences described above involve only the Company,
Eagle Bancshares, Inc., and/or Affiliates of the Company or of Eagle
Bancshares, Inc.
g. "Code" means the Internal Revenue Code of 1986, as
amended.
h. "Compensation Committee" means the Compensation
Committee of Eagle Bancshares, Inc..
i. "Competing Business" means any person, firm,
corporation, joint venture or other business entity which is engaged in
the Business of the Employer (or any aspect thereof) within the Area.
j. "Confidential Information" means confidential data
and confidential information relating to the business of the Employer
(which does not rise to the status of a Trade Secret) which is or has
been disclosed to the Employee or of which the Employee became aware as
a consequence of or through Employee's relationship to the Employer and
which has value to the Employer and is not generally known to its
competitors. Confidential Information shall not include any data or
information that has been voluntarily disclosed to the public by the
Employer (except where such public disclosure has been made by the
Employee without authorization) or that has been independently
developed and disclosed by others, or that otherwise enters the public
domain through lawful means.
k. "Disability" means the inability of the Employee to
perform his duties hereunder due to a physical, mental, or emotional
impairment, as determined by an independent qualified physician (who
may be engaged by the Employer), and results in the Employee becoming
eligible for long-term disability benefits under the Employer's
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long-term disability plan (or, if the Employer has no such plan in
effect with regard to the Employee, which impairs the Employee's
ability to substantially perform his duties under this Agreement for a
period of at least one hundred eighty (180) consecutive days). This
definition is intended to apply only to the applicable provisions of
this Agreement, and is not intended by the Parties to constitute an
interpretation or analysis of any issue that might arise under the
disability provisions of the Americans with Disabilities Act or any
similar law.
l. "Effective Date" means NOVEMBER 6, 2001.
m. "Expiration Date" means the date on which the Term
(and all renewals or extension of the Term) expires.
n. "Good Reason" means the occurrence of any of the
following events which is not corrected by the Employer within thirty
(30) days after the Employee's written notice to the Employer of the
same:
i) the nature of Employee's duties or the scope
of his responsibilities are substantially modified or his
authority or responsibilities in connection with his
Employment are materially reduced without the Employee's
written consent;
ii) if the Employee is a member of the Board on
the Effective Date or any renewal date under Section 4.a, the
Employee is not reelected to the Board;
iii) the Employer changes the location of the
Employee's place of employment to more than fifty (50) miles
from its present location; or
iv) a material breach of the Agreement by the
Employer, including, but not limited to, the material
reduction of the Employee's Base Annual Compensation under
Subsection 5.a. or a material reduction in the total Employee
Benefits provided under Subsection 5.d without the adjustment
to compensation outlined in Subsection 5.d.ii).
o. "Protected Period" means the period that begins on
the date six (6) months before a Change in Control and ends on the
later of: (a) the second annual anniversary of the Change in Control;
or (b) the Expiration Date.
p. "Term" is defined in Section 4.
q. "Termination Date" means the date which corresponds
to the first to occur of:
i) the death, Disability, or Retirement of the
Employee;
ii) the Expiration Date; or
iii) the date on which the Employee or the
Employer terminates this Agreement for any reason pursuant to
Section 8 below.
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r. "Trade Secrets" means information, without regard to
form, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans,
product plans or lists of actual or potential customers or suppliers
which is not commonly known by or available to the public and (i)
derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other
persons who can obtain economic value from its disclosure or use and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.
s. "Work" means a copyrightable work of authorship,
including without limitation, any technical descriptions for products,
user's guides, illustrations, advertising materials, computer programs
(including the contents of read only memories) and any contribution to
such materials.
2. Employment. The Employer hereby employs the Employee
and Employee hereby accepts employment by the Employer during the Term and upon
the terms and conditions contained in this Agreement.
3. Office and Duties
a. Employee is employed as the CHIEF FINANCIAL OFFICER &
CHIEF OPERATING OFFICER of the Employer. The Employee shall perform
such duties as are customarily performed by one holding these positions
and shall additionally render such other services and duties as may be
reasonably assigned to him from time to time by the Employer,
consistent with his positions. Such positions and duties may be
modified during the Term so long as such modification does not
constitute "Good Reason" under Section 1.n.i above.
b. Employee shall discharge his duties at the offices of
the Employer in Tucker, Georgia or at such other locations as shall be
determined from time to time by the Employer, and shall engage in such
travel as may be necessary to perform such duties described in
Subparagraph a. above. The Employer shall provide the Employee with the
working facilities customary for similar executives and necessary for
him to perform his duties.
c. During the Term, the Employee shall report directly
to the CHAIRMAN (his "Supervisor) or such successor Supervisor as may
be appointed by the Board, and shall perform his services in accordance
with the reasonable standards as the Supervisor and/or the Board may
establish from time to time.
d. All services hereunder shall be rendered by the
Employee to the best of his ability in a competent, efficient and
businesslike manner. Throughout the term of this Agreement, the
Employee shall devote substantially all of his working time (not less
than an average of 40 hours per week), energy, skill, loyalty, and best
efforts to his duties hereunder in a manner that will faithfully and
diligently further the business and interests of the Employer.
4. Term of Employment.
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a. The term of employment under this Agreement (the
"Term") shall commence on the Effective Date and shall terminate,
unless renewed, on APRIL 3, 2004. Notwithstanding the foregoing, on or
before each APRIL 3RD, the Board may extend the Term by an additional
year, unless the Employee advises the Board in writing within 30 days
of the Board's notifying him of its extension action that he does not
want the extension to be effective.
b. Upon the expiration of the Term without renewal or
extension (i.e., the Expiration Date), the duties and obligations of
both the Employer and the Employee shall terminate, except with respect
to the covenants under Section 7 below.
5. Employee Compensation and Benefits.
a. Base Annual Salary.
i) Initial Base Annual Salary. For all services
rendered by Employee to Employer under this Agreement,
Employer shall pay to Employee during the Term an initial Base
Annual Salary of $167,000. The Base Annual Salary shall be
payable in cash in the same frequency as is customary for the
Employer's employees.
ii) Adjustments to Base Annual Salary. During
the Term, not less frequently than annually, the Compensation
Committee (or such alternate committee as may be designated by
the Board) shall review the Base Annual Salary of the
Employee, as well as the performance of the Employee in
reference to his duties, authority, and services rendered. The
Board may then, in its sole discretion, decide to increase the
Employee's Base Annual Salary. Such review shall be in
accordance with the then current procedures of the Employer
regarding the salaries and performance of its officers.
iii) Except for the compensation and other
benefits provided in this Section 5, the Base Salary shall be
Employee's sole compensation for the services rendered
hereunder during the Term.
b. Fringe Benefits
The Employee shall be eligible to participate in any
fringe benefit programs or arrangements that are or may become
available to the Employer's similarly situated management employees or
officers, including by way of example: such stock option or incentive
compensation programs that are commensurate with the responsibilities
and functions to be performed by the Employee under this Agreement.
c. Employee Benefits.
i) Throughout the Term, the Employee shall be
entitled to participate in and receive the benefits of any
employee benefit plans potentially applicable to management
employees and officers of the Employer, in accordance with the
Employer's normal policies in effect from time to time.
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ii) Nothing in this Agreement precludes the
Employer from amending or terminating any of the plans or
programs applicable to the Employee if such amendment or
termination is applicable to substantially all similarly
situated management employees or officers.
d. Vacation and Sick Leave.
During the Term, the Employee shall be entitled to
absent himself voluntarily without loss of pay from performance of his
employment with the Employer for vacation and for valid and legitimate
health-related reasons. Such absences shall be administered in
accordance with the vacation and/or sick leave practices of the
Employer in relation to its officers.
6. Expenses. The Employee shall be reimbursed by the Employer for
all reasonable expenses incurred by him in furtherance of the performance of his
duties hereunder, in accordance with the expense reimbursement policies adopted
by the Employer from time to time and with sufficient record of such expenses to
comply with Internal Revenue Service Regulations. The Board may, in its
discretion, authorize the payment of an expense allowance to the Employee for
one or more categories of anticipated expenses.
7. Employee's Covenants.
a. To the extent and subject to the limitations provided
in the following subsections of this Section 7 (whichever may be
applicable) the Employee hereby covenants as follows:
i) Loyalty. During the Term, and except for
illnesses, reasonable vacation periods, and reasonable leaves
of absence, the Employee shall devote all his full business
time, attention, skill, and efforts to the faithful
performance of his duties hereunder. During the Term, the
Employee shall not engage in any business or activity contrary
to the business affairs or interests of the Employer.
Notwithstanding the foregoing, the Employee may engage in
activities relating to service on boards of directors of, and
hold any other offices or positions in, companies or
organizations, so long as such activities do not interfere
with the Employee's responsibilities to the Employer, nor
conflict with any interest with the Employer or any of its
subsidiaries or affiliates, or unfavorably affect the
performance of the Employees' duties pursuant to this
Agreement, or will not violate any applicable statute or
regulation AND are approved in advance by the Board.
ii) Covenant Not to Compete.
(1) Upon termination of the Employee's
employment hereunder for any reason other than the
expiration of the Term without renewal, and for a
period of six (6) months thereafter, the Employee
will not directly or indirectly, either as a
principal, agent, employee, employer, stockholder,
co-partner or in any other individual or
representative capacity whatsoever, engage anywhere
in the Area in a Competing
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Business in the capacity of an employee having duties
and responsibilities similar to the duties and
responsibilities of the Employee under the terms of
this Agreement, except with the Employer's written
consent.
(2) Notwithstanding anything herein to
the contrary, the Employee's small investment (less
than two percent (2%) of the issued and outstanding
shares or solely as a passive investor) in a
Competing Business that is publicly traded shall not
be deemed a violation of this Agreement. In addition,
nothing contained in this Section shall be deemed to
prevent or limit the Employee's right to invest in
the capital stock or other securities of any business
that is not a Competing Business.
iii) Covenant of Nonsolicitation of Customers and
Depositors. Upon termination of the Employee's employment
hereunder and for a period of six (6) months thereafter, the
Employee will not directly or indirectly, either as a
principal, agent, employee, employer, stockholder, co-partner
or in any other individual or representative capacity
whatsoever, solicit, or assist any other person in so
soliciting, any depositors or customers of the Employer or its
Affiliates to make deposits in, borrow money from, or become
customers of any other financial institution conducting a
Competing Business, limited to such depositors or customers
with whom Employee has had material contact during the Term.
iv) Covenant of Nonsolicitation of Employees.
Upon termination of the Employee's employment hereunder and
for a period of six (6) months thereafter, the Employee will
not directly or indirectly, either as a principal, agent,
employee, employer, stockholder, co-partner or in any other
individual or representative capacity whatsoever, induce any
employees to terminate their employment with Employer its
Affiliates.
v) Covenant of Nondisparagement. The Employee
covenants that he shall refrain from making any negative,
derogatory, harassing, or disparaging statements concerning
the Employer, its officers and personnel, and its products or
services.
vi) Covenant of Nondisclosure of Confidential
Information. During the Term of Employee's employment
hereunder and thereafter, and except as required by any court,
supervisory authority, or administrative agency or as may be
otherwise required by applicable law, the Employee shall not,
without the written consent of the Board of Directors of the
Employer or a person authorized thereby, disclose to any
person (other than his personal attorney, or an employee of
the Employer or an Affiliate, or a person to whom disclosure
is reasonably necessary or appropriate in connection with the
performance by the Employee of his duties as an employee of
the Employer) or utilize in conducting a business, any
confidential information obtained by him while in the employ
of Employer, unless such information has become a matter of
public knowledge at the time of such disclosure.
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b. Enforceability.
i) The covenants contained in this Section
shall be construed and interpreted in any judicial proceeding,
including arbitration, to permit their enforcement to the
maximum extent permitted by law. The Employee agrees that the
restraints imposed herein are necessary for the reasonable and
proper protection of Employer and its Affiliates, and that
each and every one of the restraints is reasonable in respect
to activities restricted, length of time, and geographic area.
If any of the covenants stated in this Section 7 is too broad
in space or time to be enforceable, the parties request and
agree that it may be reduced to such lesser breadth as may be
necessary to make it enforceable.
ii) If the Employee breaches any of the
covenants of this Section, any remaining payments due to the
Employee shall be forfeited, and the Employer will be
discharged from further performance under this Agreement.
Furthermore, the Employee indemnifies the Employer for costs
and losses caused by his breach of the covenants of this
Section, and the Employer may seek such legal or equitable
remedies as are available in relation to this breach.
iii) The Employee acknowledges that damages at
law would not be a measurable or adequate remedy for breach of
the covenants contained in this Section and, accordingly,
Employee agrees to submit to the equitable jurisdiction of any
court of competent jurisdiction in connection with any action
to enjoin the Employee from violating any such covenants.
iv) The covenants in this Section shall be
construed as independent of one another and as an agreement
independent of any other agreement between the parties.
v) The existence of any claim or cause of
action of the Employee against the Employer, whether
predicated upon this Agreement or otherwise, shall not
constitute a defense to enforcement by the Employer of these
covenants.
8. Discharge and Termination. Any termination described in this
Section 8 shall not affect the Employee's obligations under the covenants of
Section 7.
a. Termination by Death. The Employee's employment under
this Agreement shall terminate upon his death during the term of this
Agreement.
i) The Employer shall pay an amount equal to
the Base Annual Salary that the Employee accrued through the
date of death, plus an additional amount equal to the Base
Annual Salary that would have been otherwise payable to the
Employee (based on the rate of Base Annual Salary in effect on
the date of death) for the period beginning on the date of
death and ending on the last day of the month following the
month in which the Employee's death occurred. Such payment
shall be made through direct deposit to the Employee's bank
account (if such direct deposit procedure was authorized by
the
9
Employee prior to his death for his normal payroll amounts)
or, if no such procedure was authorized by the Employee, to
the Employee's estate. The payment shall be made as soon as
administratively possible following the Employee's death.
ii) No further payments under Subparagraphs
5.a., 5.b., or 5.d. shall be payable by the Employer.
iii) The Employee's death shall not terminate or
otherwise affect his rights (or the rights of his estate) to
amounts payable or accrued as of the date of death under the
terms of any Fringe Benefit Programs reflected under
Subparagraph 5.b. or payable or accrued under the terms of the
Employee Benefit Plans reflected under Subparagraph 5.c., or
to the reimbursement of accrued expenses under Paragraph 6,
except as outlined in such plans or programs.
iv) Notwithstanding the foregoing, if the
Employee dies during the Protected Period after a Change in
Control has occurred, any payments that would have been
payable to the Employee under subparagraph 8.f. below will be
payable to the Employee's estate.
b. Termination by Disability
i) If an Employee becomes Disabled during the
Term, the Employer will continue to pay to the Employee the
Base Annual Salary outlined in Section 5.a. above until such
time as the Employee becomes eligible for payments under any
Disability Plan sponsored by the Employer (or, if sooner, the
Expiration Date). At such time, the Employer may terminate the
Employee's employment hereunder.
ii) If the Employer terminates the Employee's
employment under this Section:
(1) No further payments under
Subparagraphs 5.a., 5.b., or 5.d. shall be payable by
the Employer.
(2) The Employee's Disability shall not
terminate or otherwise affect his rights to amounts
payable or accrued under the terms of any Fringe
Benefit Programs reflected under Subparagraph 5.b. or
payable or accrued under the terms of the Employee
Benefit Plans reflected under Subparagraph 5.c., or
to the reimbursement of accrued expenses under
Paragraph 6, except as outlined in such plans or
programs.
iii) During the period the Employee is receiving
payments under this Agreement, as either regular Compensation
or as Disability payments, and as long as he is physically and
mentally able to do so, the Employee will furnish information
and assistance to the Employer and, from time to time until
the Employee's employment is terminated hereunder, will make
himself available to the Employer to undertake assignments
consistent with his prior position with the Employer and his
physical and mental health. The Employee is responsible for
reporting directly to the Board during this period of
Disability. If the Employer
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fails to make a payment or provide a benefit required as part
of this Agreement, the Employee's obligation to provide
information and assistance will end.
iv) If the Employee becomes Disabled after a
Change in Control and during the Protected Period, the
benefits payable under this Section 8.b shall not apply, and
the payments to the Employee shall be governed by Subsection
8.f. below.
c. Termination by Expiration. Upon the Expiration Date
without renewal or extension, this Agreement shall terminate, and all
duties of the Employer and Employee shall be discharged, with the
exception of the covenants of Section 7, under which the Employee will
continue to be bound. The Termination hereunder shall not terminate or
otherwise affect the Employee's rights to amounts payable or accrued
under the terms of any Fringe Benefit Programs reflected under
Subparagraph 5.b. or payable or accrued under the terms of the Employee
Benefit Plans reflected under Subparagraph 5.c., or to the
reimbursement of accrued expenses under Paragraph 6, except as outlined
in such plans or programs. Payments to the Employee upon a Termination
by Expiration during the Protected Period will be governed by
Subsection 8.f. below.
d. Termination by the Employee
i) Retirement. The Employee may elect, with not
less than six (6) months prior written notice to the Board, to
retire from employment under the Agreement beginning on any
date after he attains age 59 1/2, provided that the Employee
continues his employment with the Employer until his
retirement date. Upon such retirement, both the Employer and
the Employee shall be discharged from further performance
under this Agreement, except:
(1) The Employee will continue to be
bound by the covenants of Section 7;
(2) All payments of the Employee's Base
Annual Salary that have accrued through the
Termination Date shall be paid to the Employee on the
payroll date following the Termination Date; and
(3) The Employee's retirement shall not
terminate or otherwise affect his rights to amounts
payable or accrued under the terms of any Fringe
Benefit Programs reflected under Subparagraph 5.b. or
payable or accrued under the terms of the Employee
Benefit Plans reflected under Subparagraph 5.c., or
to the reimbursement of accrued expenses under
Paragraph 6, except as outlined in such plans or
programs.
(4) If the Employee retires during the
Protected Period, payments under this Subsection
8.d.i) shall not apply, and payments to the Employee
shall be governed by Subsection 8.f. below.
ii) For Good Reason. If the Employee terminates
employment with the Employer for Good Reason, then:
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(1) The Employee shall have no further
obligations under Sections 2 and 3 of this Agreement;
(2) Any amount of the Employee's Base
Annual Salary that has accrued through the
Termination Date shall be paid to the Employee on the
payroll date following the Termination Date, plus (in
the form of periodic payments through the Expiration
Date or, at the Employee's option, in the form of a
lump sum payment within ten days after the Employee's
Termination Date) his Base Annual Salary from the
Employee's Termination Date through the later of: (a)
the Expiration Date; or (b) twelve (12) months from
the Termination Date; and
(3) The Employer shall pay to the
Employee at the same time and in the same manner as
the payment under subparagraph (2) above an
additional amount equal to twenty-five percent (25%)
of the payment under subparagraph (2). Such
additional payment is intended to compensate the
Employee for the loss of benefits under the Employee
Benefit Plans caused by his termination of employment
as of the Termination Date. No further benefits shall
accrue to the Employee under Section 5.d. after the
Termination Date, other than those that had accrued
through the Termination Date and are payable under
the terms of such Plans, or those that are required
by law (including, but not limited to, rights to
continuation of health coverage under the
Consolidated Omnibus. Budget Reconciliation Act of
1985 ("COBRA")).
(4) The Employee's termination shall
not terminate or otherwise affect his rights to
amounts payable or accrued under the terms of any
Fringe Benefit Programs reflected under Subparagraph
5.b. or payable or accrued under the terms of the
Employee Benefit Plans reflected under Subparagraph
5.c., or to the reimbursement of accrued expenses
under Paragraph 6, except as outlined in such plans
or programs.
(5) If the Employee's Termination for
Good Reason occurs during the Protected Period, this
Subsection 8.d.ii) shall not apply, and payments to
the Employee shall be governed by Subsection 8.f.
below.
iii) For Any Other Reason. If the Employee
terminates his employment with the Employer for any reason
other than Retirement or Good Reason, then:
(1) All payments of Base Annual Salary
that have accrued through the Termination Date shall
be paid to the Employee on the payroll date following
the Termination Date;
(2) No further payments under
Subparagraphs 5.a., 5.b., or 5.d. shall be payable by
the Employer;
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(3) The Employee's termination shall
not terminate or otherwise affect his rights to
amounts payable or accrued under the terms of any
Fringe Benefit Programs reflected under Subparagraph
5.b. or payable or accrued under the terms of the
Employee Benefit Plans reflected under Subparagraph
5.c., or to the reimbursement of accrued expenses
under Paragraph 6, except as outlined in such plans
or programs.
e. Termination by Employer
i) For Cause.
(1) Upon a majority vote of the members
of the Compensation Committee and the Board that an
event has occurred under which the Employee's
employment under this Agreement is terminable for
Cause (a "Cause Event"), the Compensation Committee
shall issue a written notice to the Employee that he
is being terminated for Cause.
(2) The Compensation Committee and the
Board have the sole discretion to determine whether
an Employee's conduct constitutes Cause. If the
Employee is a member of the Compensation Committee or
the Board, whichever is determining whether there is
a Cause Event, the decision to terminate the
Employee's employment for Cause shall be made by a
majority of the members of the Compensation Committee
or Board, without counting the vote of the Employee.
(3) Upon Termination for Cause, the
Employer shall pay compensation and benefits as
discussed under Section 8.d.iii) above. Employee will
be obligated to indemnify the Employer in an amount
equal to all damages suffered by the Employer, if
any, resulting from the Cause of Employee's
termination.
ii) Termination Without Cause. The Employer may
discharge the Employee at any time without Cause and, in that
event, the rights and obligations of the Employee and the
Employer shall be as set forth in Section 8.d.ii) (unless such
termination constitutes a Change in Control Termination under
this Agreement, in which case the provisions of Subsection
8.f. apply).
f. Change in Control Termination
i) Trigger Events for Change in Control
Benefit. The Employee shall be eligible for the Change in
Control Benefit set forth in Subsection (ii) hereof if:
(1) The Employee voluntarily terminates
employment for any reason during the 30-day period
beginning on the date on which a Change in Control
occurs;
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(2) The Employee voluntarily terminates
employment for any reason during the thirty (30) day
period beginning on the one-year anniversary of the
date on which a Change in Control occurs;
(3) The Employee voluntarily terminates
employment within ninety (90) days of an event that
both occurs during the Protected Period and
constitutes Good Reason;
(4) The Employer or its successor(s) in
interest terminate the Employee's employment during
the Protected Period without his written consent and
for any reason other than for Cause; or
(5) The Employee dies or becomes
Disabled after a Change in Control during the
Protected Period.
ii) Amount of Change in Control Benefit. Upon
the occurrence of a Trigger Event, the Employer shall pay the
Employee a severance payment equal to :
(1) three (3) times the total of:
(A) the amount of Base Salary,
as defined under Section 5.a. above (and as
in effect as of the day before the Change in
Control), plus
(B) the average of any
short-term incentive compensation earned by
the Employee (including any amount of such
compensation that the Employee elected to
defer to any qualified or nonqualified
deferred compensation plan) in the three (3)
calendar years preceding the calendar year
in which the Change in Control occurred;
plus
(2) the amount of any target short-term
incentive compensation for the year of the Change in
Control (as determined under any such program in
effect and applicable to the Employee for the year of
the Change in Control), times a fraction, the
numerator of which is the number of months in the
fiscal year of Eagle Bancshares, Inc. prior to the
Change in Control (including the month of the change
in Control if it was effective as of the fifteenth
(15th) day of the month or later), and the
denominator of which is twelve (12).
iii) Other Amounts Payable on Change in Control.
(1) In addition to this Change in
Control Benefit, the Employee is entitled to amounts
payable equal to those described in Section 8.d.iii).
(2) In order to compensate the Employee
for the loss of benefits under the Employee Benefit
Plans caused by his termination of
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employment in connection with the Change in Control,
for each calendar year during the Protected Period
following the Change in Control, the Employer will
pay to the Employee an additional amount equal to
twenty-five percent (25%) of the Employee's Base
Annual Salary as of the day before the Change in
Control. This amount shall be payable on each January
31st after the Change in Control and during the
Protected Period. Notwithstanding the foregoing, the
Employee may elect to have the total of all the
payments under this Subsection 8.f.iii) paid to him
in one lump sum on the January 31st following the
Change in Control date.
iv) Form of Payment of Change in Control
Benefit. The Change in Control Benefit shall be paid in one
lump sum within ten (10) days of the later of (A) the date of
the Change in Control; or (B) the Employee's last day of
employment with the Employer.
v) Modification of Change in Control Benefit
for Excess Parachute Payments. If:
(1) the amount of the Change in Control
Benefit is determined by the External Auditor to be a
"parachute payment" under Code Section 280G(b)(2);
and
(2) the External Auditor determines
that the Change in Control Benefit, when added to any
other amounts paid by the Employer to the Employee in
relation to a Change in Control, would result in the
imposition of a tax on the Change in Control Benefit
under Code Section 4999,
the Employer will pay an additional "gross-up" amount equal to
the sum of the excise tax due under Code Section 4999 in
relation to the Change in Control Benefit, plus the income and
other taxes due in relation to the additional payment, as such
amount is determined by the External Auditor. For purposes of
this Section, the term "External Auditor" means the external
auditing firm that prepared the most recent audited financial
statements for Eagle Bancshares, Inc. prior to the Change in
Control.
g. Termination or Suspension Under Federal Law.
i) If the Employee is removed and/or
permanently prohibited from participating in the conduct of
the Employer's affairs by an order issued under Sections
8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act
("FDIA") (12 U.S.C. 1818(e)(4) or 8(g)(1)), the Employee's
employment will terminate as of the effective date of such
order, and the provisions of Subsection 8.e.i) shall apply.
ii) If the Employer is in default (as defined in
Section 3(x)(1) of the FDIA), the Employee's employment will
terminate as of such default, and the provisions of Subsection
8.e.i) shall apply.
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iii) If a notice served under Section 8(e)(3) or
Section 8(g)(1) of the FDIA suspends and/or temporarily
prohibits the Employee from participating in the conduct of
the Employer's affairs, the Employer's obligations under this
Agreement shall be suspended as of the date of such notice,
unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Employer may, at its discretion:
(1) Pay the Employee all or part of the
compensation withheld while its Agreement obligations
were suspended, and
(2) Reinstate (in whole or in part) any
of its obligations that were suspended.
iv) Any payments made to the Employee pursuant
to this Agreement or otherwise are subject to and conditioned
upon their compliance with both 12 U.S.C. Section 1828(k) and
any regulations promulgated thereunder and Regulatory Bulletin
27A, but only to the extent required thereunder on the date
any payment is required pursuant to this Agreement.
h. No Mitigation. The Employee is not required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise, and no such payment shall be
offset or reduced by the amount of any compensation or benefits
provided to the Employee in any subsequent employment. Notwithstanding
the foregoing, the payment of any compensation amounts under this
Section to the Employee after his Termination Date for any reason other
than Retirement or Death shall be conditioned on the Employee's
resignation as a member of the Board (and of the boards of directors of
any Affiliate).
9. Arbitration of Disputes. In the event of any dispute or claim
relating to or arising out of this Agreement, such dispute shall be fully,
finally and exclusively resolved by a panel of three neutral arbitrators to be
mutually agreed upon by the parties. Such arbitration will be decided under the
employment dispute resolution rules of the American Arbitration Association and
will be held in DeKalb County, Georgia. If the parties cannot agree upon such
arbitrators within twenty (20) days after submission of a party's request for
arbitration in writing, the arbitrators will be selected in accordance with the
procedures of the American Arbitration Association. The parties agree that the
existence, content and result of any arbitration proceeding shall be
confidential, except to the extent that the Employer determines it is required
to disclose such matters in accordance with applicable laws. EMPLOYEE IS
REQUIRED TO INITIAL HERE: /s/ SER EMPLOYER IS REQUIRED TO INITIAL HERE: /s/ CJS
10. Miscellaneous.
a. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Georgia
without regard to conflicts of law principles thereof.
b. Entire Agreement. This Agreement constitutes the
entire Agreement between Employee and Employer with respect to the
subject matter hereof and, as of the
16
Effective Date, shall supersede in their entirety any and all prior
oral or written agreements, understandings or arrangements between
Employee and Employer or its Affiliates relating to the terms of
Employee's employment, including without limitation the Employment
Agreement entered into by Employee and Employer dated June 1, 1997. All
such agreements, understandings and arrangements are terminated and are
of no force and effect as of the Effective Date. Employee hereby
expressly disclaims any rights under any prior agreements,
understandings and arrangements. This Agreement may not be amended or
terminated except by an agreement in writing signed by both parties or
pursuant to the terms of this Agreement.
c. Indemnification. The Employer agrees that its Bylaws
shall continue to provide for the indemnification of directors,
officers, employees, and agents of the Employer, including the
Employee, during the full Term.
d. Counterparts. This Agreement may be executed in one
or more counterparts, all of which, taken together, shall constitute
one and the same instrument.
e. Enforcement. The provisions of this Agreement shall
be deemed severable, and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. It is understood and agreed that no failure or delay
by Employer or Employee in exercising any right, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.
f. Assignment and Attachment.
i) By the Employer. This Agreement may not be
assigned by Employer, provided that this Agreement shall inure
to the benefit of and be binding upon any corporate or other
successor of the Employer, which shall acquire, directly or
indirectly, by merger, consolidation, purchase, or otherwise,
all or substantially all of the assets or stock of the
Employer.
ii) By the Employee. Since the Employer is
contracting for the unique and personal skills of the
Employee, the Employee shall be precluded from assigning or
delegating his rights or duties hereunder without first
obtaining the written consent of the Employer. However,
nothing in this paragraph shall preclude:
(1) The Employee from designating a
beneficiary to receive any benefit payable hereunder
upon his death; or
(2) The executors, administrators, or
other legal representatives of the Employee or his
estate from assigning any rights hereunder to the
person or persons entitled hereunder.
iii) Attachment. Except as required by law, no
right to receive payments under this Agreement shall be
subject to anticipation, commutation,
17
alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation or to exclusion, attachment, levy, or similar
process or assignment by operation of law, and any attempt,
voluntary or involuntary, to effect any such action shall be
null, void, and of no effect.
g. Amendments. No amendments, additions, or deletions to
this Agreement shall be binding unless made in writing and signed by
all of the parties, except as herein otherwise specifically provided.
h. Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
i. Binding Agreement. This Agreement shall be binding on
any successors or assigns of either party hereto.
j. Employment by Affiliates. For purposes of this
Agreement, employment of the Employee by any Affiliate shall be deemed
to be employment by the Employer hereunder, and a transfer of
employment of the Employee from one such Affiliate to another shall not
be deemed to be a termination of employment of the Employee by the
Employer or a cessation of the Term, it being the intention of the
parties hereto that employment of the Employee by any Affiliate shall
be treated as employment by the Employer and that the provisions of
this Agreement shall continue to be fully applicable following any such
transfer. References herein to the "Employer" shall mean any such
Affiliate that employs the Employee.
k. Notices. Any notice or other communication required
or permitted under this Agreement shall be effective only if it is in
writing and delivered in person or by nationally recognized overnight
courier service or deposited in the mails, postage prepaid, return
receipt requested, addressed as follows:
To Employer:
▇▇▇▇▇▇ Federal Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Human Resource Director
To Employee:
▇▇▇▇▇▇ ▇. RAY
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Notices given in person or by overnight courier service shall
be deemed given when delivered in person or when delivered to the
courier addressed to the address required by this Section, and notices
given by mail shall be deemed given three days after
18
deposit in the mails. Any party hereto may designate by written notice
to the other party in accordance herewith any other address to which
notices addressed to him shall be sent.
l. Policies and Procedures of the Employer: The Employee
has signed an acknowledgement that he has read, understands and has a
received a copy of the Employee Handbook containing the policies in
effect at the Employer. The Employee understands that he is expected to
fully and completely comply with all policies as established, and from
time to time amended by the Board of Directors of the Employee.
11. Certification by Employee. THE EMPLOYEE CERTIFIES THAT THE
EMPLOYEE HAS READ THE ENTIRE CONTENTS OF THIS AGREEMENT BEFORE THE EMPLOYEE
SIGNED THIS AGREEMENT; THAT THE EMPLOYEE WAS ENCOURAGED AND AFFORDED SUFFICIENT
OPPORTUNITY BY THE CORPORATION TO OBTAIN INDEPENDENT LEGAL ADVICE PRIOR TO THE
EMPLOYEE'S EXECUTION OF THIS AGREEMENT; THAT THE EMPLOYEE FULLY UNDERSTANDS ALL
THE TERMS, CONDITIONS AND PROVISIONS SET FORTH IN THIS AGREEMENT, PARTICULARLY
INCLUDING, BUT NOT LIMITED TO, THE EMPLOYEE'S FIDUCIARY AND CONFIDENTIAL
RELATIONSHIP WITH THE CORPORATION AND THE EMPLOYEE'S RESTRICTIVE COVENANTS AND
AGREEMENTS, AND THAT THE EMPLOYEE ACKNOWLEDGES THAT EACH SAID TERM, CONDITION
AND PROVISION IS NECESSARY TO PROTECT THE CORPORATION'S LEGITIMATE INTERESTS AND
IS FAIR AND REASONABLE INSOFAR AS IT PERTAINS TO THE EMPLOYEE; THAT THE EMPLOYEE
HAS RECEIVED A COPY OF THIS AGREEMENT AS SIGNED BY THE EMPLOYEE; AND THAT THE
EMPLOYEE BEING BOUND BY THIS AGREEMENT IS A CONDITION PRECEDENT TO THE
CORPORATION'S EXECUTION HEREOF.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"EMPLOYER"
▇▇▇▇▇▇ FEDERAL BANK
By: /s/ ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
----------------------------------
Name: ▇. ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Chairman
"EMPLOYEE"
▇▇▇▇▇▇ ▇. RAY
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------------
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