EXHIBIT 99.2
FIRST FEDERAL OF THE SOUTH
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(Effective as of October 1, 2004)
(XXX X. XXXXXXXX)
THIS AGREEMENT is entered into as of the 1st day of October, 2004 (the
"Effective Date"), by and between First Federal of the South, a federal savings
bank (the "Bank") and Xxx X. XxXxxxxx (the "Employee").
WHEREAS, the Employee has heretofore been employed by the Bank as
President and Chief Executive Officer and is experienced in all phases of the
business of the Bank; and
WHEREAS, the parties desire by this writing to establish and to set
forth the new employment relationship between the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is hereby employed as the Chief
Executive Officer and President of the Bank. The Employee shall render such
administrative and management services for the Bank as are currently rendered
and as are customarily performed by persons situated in a similar executive
capacity. The Employee shall also promote, by entertainment or otherwise, as
and to the extent permitted by law, the business of the Bank. The Employee's
other duties shall be such as the Board of Directors of the Bank ("Board") may
from time to time reasonably direct, including normal duties as an officer of
the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during
the term of this Agreement a salary at the rate of $150,000 per annum, payable
in cash not less frequently than monthly. The Board shall review, not less
often than annually, the rate of the Employee's salary, and in its sole
discretion may decide to increase his salary.
3. Performance Bonus. Beginning on the Effective Date, and in
addition to Employee's base salary, Employee shall be eligible to receive such
performance bonuses as may be determined in the sole discretion of the Board.
4. (a) Participation in Retirement, Medical and Other Plans. The
Employee shall participate in any plan that the Bank maintains for the benefit
of its employees if the plan relates to (i) pension, profit-sharing, or other
retirement benefits, (ii) medical insurance or the reimbursement of medical or
dependent care expenses, or (iii) other group benefits, including disability
and life insurance plans.
(b) Employee Benefits; Expenses. The Employee shall
participate in any fringe benefits which are or may become available to the
Bank's senior management
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employees, including for example: any stock option or incentive compensation
plans, club memberships, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Bank.
5. Term. The Bank hereby employs the Employee, and the Employee
hereby accepts such employment under this Agreement, for the period commencing
on the Effective Date and ending 24 months thereafter (or such earlier date as
is determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective Date, this Agreement and the Employee's
term of employment shall be extended for an additional one-year period beyond
the then effective expiration date, provided the Board determines in a duly
adopted resolution that the performance of the Employee has met the Board's
requirements and standards, and that this Agreement shall be extended.
6. Loyalty; Full Time and Attention.
(a) During the period of his employment hereunder 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;
provided, however, from time to time, Employee may serve on the boards of
directors of, and hold any other offices or positions in, companies or
organizations, which will not present any conflict of interest with the Bank or
any of its subsidiaries or affiliates, or unfavorably affect the performance of
Employee's duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. "Full business time" is hereby defined as
that amount of time usually devoted to like companies by similarly situated
executive officers. During the term of his employment under this Agreement, the
Employee shall not engage in any business or activity contrary to the business
affairs or interests of the Bank, or be gainfully employed in any other
position or job other than as provided above.
(b) Nothing contained in this Paragraph 6 shall be
deemed to prevent or limit the Employee's right to invest in the capital stock
or other securities of any business dissimilar from that of the Bank, or,
solely as a passive or minority investor, in any business.
7. Standards. The Employee shall perform his duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Bank will provide Employee with the working
facilities and staff customary for similar executives and necessary for him to
perform his duties.
8. Vacation and Sick Leave. The Employee shall be entitled,
without loss of pay, to absent himself voluntarily from the performance of his
duties under this Agreement in accordance with the terms set forth below, all
such voluntary absences to count as vacation time; provided that:
(a) The Employee shall be entitled to an annual vacation
in accordance with the policies that the Board periodically establishes for
senior management employees of the Bank.
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(b) The Employee shall not receive any additional
compensation from the Bank on account of his failure to take a vacation, and
the Employee shall not accumulate unused vacation from one fiscal year to the
next, except in either case to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the
Employee shall be entitled without loss of pay, to absent himself voluntarily
from the performance of his employment obligations with the Bank for such
additional periods of time and for such valid and legitimate reasons as the
Board may in its discretion approve. Further, the Board may grant to the
Employee a leave or leaves of absence, with or without pay, at such time or
times and upon such terms and conditions as the Board in its discretion may
determine.
(d) In addition, the Employee shall be entitled to an
annual sick leave benefit as established by the Board.
9. Termination and Termination Pay. Subject to the provisions of
Section 11 hereof, the Employee's employment hereunder may be terminated under
the following circumstances:
(a) Death. The Employee's employment under this
Agreement shall terminate upon his death during the term of this Agreement, in
which event the Employee's estate shall be entitled to receive the compensation
due the Employee through the last day of the calendar month in which his death
occurred.
(b) Disability. The Bank may terminate the Employee's
employment after having established, through a determination by the Board, the
Employee's Disability. For purposes of this Agreement, "Disability" means a
physical or mental infirmity which impairs the Employee's ability to
substantially perform his duties under this Agreement and which results in the
Employee becoming eligible for long-term disability benefits under the Bank's
long-term disability plan (or, if the Bank has no such plan in effect, which
impairs the Employee's ability to substantially perform his duties under this
Agreement for a period of one hundred eighty (180) consecutive days). The
Employee shall be entitled to the compensation and benefits provided for under
this Agreement for (i) any period during the term of this Agreement and prior
to the establishment of the Employee's Disability during which the Employee is
unable to work due to the physical or mental infirmity, or (ii) any period of
Disability which is prior to the Executive's termination of employment pursuant
to this Section 9(b).
(c) For Cause. The Board may, by written notice to the
Employee, immediately terminate his employment at any time, for Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Cause. Termination for "Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause unless there
shall have been delivered to the Employee a copy of a resolution duly adopted
by the affirmative
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vote of not less than a majority of the entire membership of the Board
(excluding the Employee if a member of the Board) at a meeting of the Board
called and held for the purpose (after reasonable notice to the Employee and an
opportunity for the Employee to be heard before the Board), finding that in the
good faith opinion of the Board the Employee was guilty of conduct set forth
above in the second sentence of this Subsection (c) and specifying the
particulars thereof in detail.
(d) Without Cause. Subject to the provisions of Section
11 hereof, the Board may, by written notice to the Employee, immediately
terminate his employment at any time for any reason; provided that if such
termination is for any reason other than pursuant to Sections 9 (a) (b) or (c)
above, the Employee shall be entitled to receive the following compensation and
benefits: (i) the base compensation provided pursuant to Section 2 hereof for a
12-month period, and (ii) the average annual compensation less the base
compensation for the 12-month period, based upon the benefit levels
substantially equal to those that the Bank provided for the Employee at the
date of termination of employment. Said sum shall be paid, at the option of the
Employee, either (I) in periodic payments over the remaining term of this
Agreement, as if the Employee's employment had not been terminated, or (II) in
one lump sum within ten (10) days of such termination. The Employee's "average
annual compensation" shall be the average of the total annual "compensation"
acquired by the Employee during each of the five (5) fiscal years (or the
number of full fiscal years of employment, if the Employee's employment is less
than five (5) years at the termination thereof) immediately preceding the date
of termination. The term "compensation" shall mean any payment of money or
provision of any other thing of value in consideration of employment,
including, without limitation, base compensation health, life and disability
benefits, bonuses, pension and profit sharing plan, director fees or committee
fees, fringe benefits and deferred compensation accruals.
(e) Voluntary Termination by Employee. Subject to the
provisions of Section 11 hereof, the Employee may voluntarily terminate
employment with the Bank during the term of this Agreement, upon at least 60
days' prior written notice to the Board of Directors, in which case the
Employee shall receive only his compensation, vested rights and employee
benefits accrued up to the date of his termination.
10. No Mitigation. The Employee shall not be 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.
11. Change in Control.
(a) Notwithstanding any provision herein to the
contrary, if the Employee's employment under this Agreement is terminated by
the Bank, without the Employee's prior written consent and for a reason other
than for Cause, death or disability in connection with or within the period
that is twelve (12) months before to twenty-four (24) months after any change
in control of the Bank or SouthFirst Bancshares, Inc. (the "Corporation"), the
Employee shall be paid an amount equal to the difference between (i) the
product of 2.99 times his "base amount" as defined in Section 28OG(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code") and regulations
promulgated thereunder, and (ii) the sum of any other "parachute payments" (as
defined under Section 28OG(b)(2) of the
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Code) that the Employee receives on account of the change in control and
payments received under paragraph 9(d) if any. Said sum shall be paid in one
lump sum within ten (10) days of such termination. The term "change in control"
shall mean (1) an increase in the ownership of, or the holding of, or the power
to vote, by any person, or by any persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934), the Bank's or
Corporation's voting stock, to an amount which is more than 25% of the issued
and outstanding shares thereof, (2) a change in the ownership of, or possession
of, the ability to control the election of a majority of the Bank's or
Corporation's directors, (3) a change in the ownership of, or possession of,
the ability to exercise a controlling influence over the management or policies
of the Bank or the Corporation, by any person, or by any persons acting as a
"group" within the meaning of Section 13(d) of the Securities Exchange Act of
1934 (except in the case of (1), (2) and (3) hereof, ownership or control of
the Bank, or its board of directors, by the Corporation itself shall not
constitute a "change in control"), or (4) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Corporation or the Bank (the "Company Board") (the "Continuing
Directors") cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for election as a
member of the Company Board was approved by a vote of at least two-thirds of
the Continuing Directors then in office shall be considered a Continuing
Director. For the purposes of defining "change in control" the signing of a
letter of intent that would result in any of the foregoing items (1) through
(4), shall constitute a change in control. The term "person" means an
individual (other than the Employee), individuals acting in concert or as a
"group", or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.
(b) Notwithstanding any other provision of this
Agreement to the contrary, the Employee may voluntarily terminate his
employment under this Agreement within twelve (12) months following a change in
control of the Bank or the Corporation, and the Employee shall thereupon be
entitled to receive the payment described in Section 11(a) of this Agreement,
upon the occurrence of any of the following events, or within ninety (90) days
thereafter, which have not been consented to in advance by the Employee in
writing: (i) the requirement that the Employee move his personal residence, or
perform his principal executive functions, more than thirty-five (35) miles
from his primary office as of the date of the change in control; (ii) a
material reduction in the Employee's base compensation as in effect on the date
of the change in control, as the same may be increased from time to time; (iii)
the failure by the Bank to continue to provide the Employee with compensation
and benefits provided for under this Agreement, as the same may be increased
from time to time, or with benefits substantially similar to those provided to
him under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank which
would directly or indirectly reduce any of such benefits or deprive the
Employee of any material fringe benefit enjoyed by him at the time of the
change in control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position as referenced at Section 1; (v) a failure to elect or reelect the
Employee to the Board of Directors of the Bank if the Employee is serving on
such Board on the date of the change in control; or (vi) a material diminution
or reduction in the Employee's responsibilities or authority (including
reporting responsibilities) in connection with his employment with the Bank.
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(c) Notwithstanding any other provision of this
Agreement or the employment agreement between the Employee and the Corporation
(the "SouthFirst Contract") to the contrary, the Employee may voluntarily
terminate his employment under this Agreement within twelve (12) months
following a change in control of the Corporation or the Bank, and the Employee
shall thereupon be entitled to receive the payment described in Section 11(a)
of this Agreement.
(d) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(e) In the event that any dispute arises between the
Employee and the Bank as to the terms or interpretation of this Agreement,
including this Section 11, the parties shall follow the dispute resolution
procedure specified in Section 14. The Employee shall be reimbursed for all
costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that the Employee shall have obtained
a final judgment by the arbitrator in favor of the Employee. Such reimbursement
shall be paid within ten (10) days of Employee's furnishing to the Bank written
evidence, which may be in the form, among other things, of a canceled check or
receipt, of any costs or expenses incurred by the Employee.
(f) Any and all amounts paid to Employee under Section 9
and/or Section 11 of the SouthFirst Contract shall be deemed to be paid in
satisfaction of, and shall therefore offset, any amounts to be paid to Employee
pursuant to Section 9 hereunder or pursuant to this Section 11, to the extent
that any amounts paid under Section 9 and/or 11 of the SouthFirst Contract are
attributable to, or related to, the base salary, or other compensation and
amounts, paid to Employee under this Agreement.
12. Requirements of Applicable Regulations of OTS
(a) The Bank's board of directors may terminate the
Employee's employment at any time, but any termination by the Bank's board of
directors, other than termination for cause, shall not prejudice the Employee's
right to compensation or other benefits under this Agreement. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for cause (as defined in Section 9(c) hereof).
(b) If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by a notice
served under section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12
U.S.C. 1818 (e)(3) and (g)(1)), the Bank's obligations under this Agreement
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Employee all or part of the compensation withheld while
its obligations were suspended, and (ii) reinstate (in whole or in part) any of
its obligations which were suspended.
(c) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1818 (e)(4) or (g)(1)), all obligations of
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the Bank under this 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 Bank is in default (as defined in section
3(x)(1) of the Federal Deposit Insurance Act), all obligations under this
Agreement shall terminate as of the date of default, but this Section 12(d)
shall not affect any vested rights of the parties.
(e) All obligations under this Agreement shall be
terminated, except to the extent determined that the continuation of this
Agreement is necessary of the continued operation of the Bank:
(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 Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in 13(c) of the Federal Deposit Insurance Act; or
(ii) By the Director or his or her designee, at
the time the Director or his or her designee approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition.
Any rights of the Employee that have already vested, however, shall
not be affected by such action.
(f) Should any provision of this Agreement give rise to
a discrepancy or conflict with respect to any applicable law or regulation,
then the applicable law or regulation shall control the relevant construction
and operation of this Agreement.
13. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Bank which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.
(b) since the Bank 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 Bank.
14. Alternative Dispute Resolution. THE PARTIES TO THIS AGREEMENT
HEREBY EXPRESS THAT ALL DISPUTES, CONTROVERSIES OR CLAIMS OF ANY KIND AND
NATURE BETWEEN THE PARTIES HERETO, ARISING OUT OF OR IN ANY WAY RELATED TO THE
WITHIN AGREEMENT, ITS INTERPRETATION, PERFORMANCE OR BREACH, SHALL BE RESOLVED
EXCLUSIVELY BY THE FOLLOWING ALTERNATIVE DISPUTE RESOLUTION MECHANISMS:
(a) Negotiation -- The parties hereto shall first engage
in a good faith effort to negotiate any such controversy or claim by
communications between them. Said
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Negotiations may be oral or written. To the extent that they are oral, they
should be confirmed in writing.
(b) Should the above-stated negotiations be
unsuccessful, the parties shall engage in mediation pursuant to the American
Arbitration Association Commercial Mediation Rules, or such other mediation
rule as the parties may otherwise agree to choose.
(c) Should the above-stated mediation be unsuccessful,
the parties shall agree to arbitrate any such controversy or claim with the
express understanding that this Agreement is affected by interstate commerce in
that the goods and services which are the subject matter of this Agreement,
pass through interstate commerce. Said arbitration shall be conducted pursuant
to the American Arbitration Association Commercial Arbitration Rules (the
"Arbitration Rules") or such other arbitration rule as the parties may
otherwise agree to choose.
(d) The cost of the above-stated mediation shall be
borne equally between the parties. The cost of the above-stated arbitration
shall be borne by the party against whom an award is issued and in favor of the
prevailing party. In either event, each party shall bear the cost of its own
attorney's fees and costs.
THE PARTIES UNDERSTAND AND AGREE (i) THAT EACH OF THEM IS WAIVING
RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO A JURY TRIAL; (ii)
THAT PRE-ARBITRATION DISCOVERY IN ARBITRATION PROCEEDINGS IS GENERALLY MORE
LIMITED THAN AND DIFFERENT FROM COURT PROCEEDINGS; AND (iii) THAT THE
ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING, AND (iv) EITHER PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULINGS BY THE ARBITRATORS, IS STRICTLY LIMITED.
The venue for mediation and/or arbitration under this paragraph shall
be in the City of Birmingham, State of Alabama.
15. Amendments. No amendments or additions to this Agreement
shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided.
16. Applicable Law. Except to the extent preempted by Federal
law, the laws of the State of Delaware shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.
17. Severability. 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.
18. Entire Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.
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ATTEST: FIRST FEDERAL OF THE SOUTH
--------------------------- BY:
Secretary -----------------------------------
Xxxxx X. XxXxxxxx III
Chairman of the Board of Directors
ATTEST: FIRST FEDERAL OF THE SOUTH
--------------------------- BY:
Secretary -----------------------------------
Xxxxxx X. Xxxxxxxx
Executive Vice President
WITNESS:
--------------------------- ---------------------------------------
Xxx X. XxXxxxxx ("Employee")
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