EXHIBIT 10.4
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS CHANGE OF CONTROL EMPLOYMENT AGREEMENT (the "Agreement") is entered
into this ____ day of _________, 199_, by and among FirstFed Financial Corp., a
Delaware corporation (the "Company" or "FFC"), First Federal Bank of
California, a federal savings bank (the "Bank" or "FFB"), and ______________
(the "Employee").
A. The Employee currently holds the position of _____________________ of
the Bank, which is a wholly-owned subsidiary of the Company. The Employee is a
highly experienced and knowledgeable executive whose creativity, expertise and
efforts have been instrumental in the development of the business of the
Company, the Bank and its subsidiaries.
B. The Board of Directors of the Company (the "FFC Board") and the Board
of Directors of the Bank (the "FFB Board") have determined that it is in the
best interests of the Company and its shareholders, and the Bank and its
subsidiaries, to assure that the Bank will have the continued dedication of the
Employee, notwithstanding the possibility, threat, or occurrence of a Change of
Control (as defined below) of the Company. The FFC and FFB Boards believe it is
imperative to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control, to encourage the Employee's full attention and dedication to the
Company and the Bank currently and in the event of any threatened or pending
Change of Control, and to provide the Employee with compensation arrangements
upon a Change of Control which provide the Employee with individual financial
security competitive with those of other corporations.
C. In order to accomplish these objectives, the FFC and FFB Boards have
caused the Company and the Bank to enter into this Agreement with respect to the
Employee's employment with the Bank.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
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(a) The "Effective Date" shall be the first date during the "Change of
Control Period" (as defined in Section l (b) hereof) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if
the Employee's employment with the Bank is terminated prior to the date on which
a Change of Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii) otherwise arose in
connection with, or in anticipation of, a Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination.
(b) The "Change of Control Period" is the period commencing on the date
hereof and ending on the earlier to occur of (i) the second anniversary of the
date hereof or (ii) the first day of the month next following the Employee's
normal retirement date ("Normal Retirement Date") as established pursuant to the
Bank's then existing retirement policy as set forth in its Personnel Policy
Manual or any successor retirement policy or plan (the "Retirement Plan");
provided, however, that such period may be extended or renewed upon FFB Board
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resolution and approval.
2. Change of Control. For the purpose of this Agreement, a "Change of
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Control" shall mean:
(a) An acquisition (other than from the Company) by any person, entity or
group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act"), (excluding, for this purpose, the
Company or any employee benefit plan of the Company which acquires beneficial
ownership of voting securities of the Company) of beneficial ownership, (within
the meaning of Rule 13d-
▇
-▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇) of 15% or more of either (i) the then
outstanding shares of the Company's common stock or (ii) the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(b) Individuals who, as of the date hereof, constitute the FFC Board (as of
the date hereof the "Incumbent Board") cease for any reason to constitute at
least a majority of the FFC Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent
Board; or
(c) Approval by the stockholders of the Company of a reorganization,
merger, consolidation, (other than a reorganization, merger or consolidation in
which persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than 50% of the combined voting power entitled to vote generally in the election
of directors of the reorganized, merged or consolidated company's then
outstanding voting securities), or a liquidation or dissolution of the Company
or of the sale of all or substantially all of the assets of the Company.
3. Employment Period. The Bank hereby agrees to continue the Employee in its
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employ, and the Employee hereby agrees to remain in the employ of the Bank, for
the period commencing on the Effective Date and ending on the earlier to occur
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of (a) the second anniversary of such date or (b) the first day of the month
coinciding with or next following the Employee's Normal Retirement Date (the
"Employment Period").
4. Terms of Employment.
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(a) Position and Duties.
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(i) During the Employment Period, the Employee's position (including
status, offices, titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective Date. Additionally, the
Employee's services shall be performed at the location where the Employee was
employed immediately preceding the Effective Date or any office or location less
than thirty-five (35) miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Bank and, to the extent necessary to discharge the
responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Employee's responsibilities as an employee of the Bank in accordance with this
Agreement. It is expressly understood and agreed that to the extent that any
such activities have been conducted by the Employee prior to the
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Effective Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Date
shall not thereafter be deemed to interfere with the performance of the
Employee's responsibilities to the Bank.
(b) Compensation.
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(i) Base Salary. During the Employment Period the Employee shall
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receive a base salary ("Base Salary") at a monthly rate equal to the average
monthly base salary paid or payable to the Employee by the Bank during the
previous five years immediately preceding the month in which the Effective Date
occurs. Such Base Salary shall be payable not less often than monthly. During
the Employment Period, the Base Salary shall be reviewed at least annually and
shall be increased at any time and from time to time as shall be substantially
consistent with increases in base salary awarded in the ordinary course of
business to other senior executive employees of the Bank. Any increase in Base
Salary shall not serve to limit or reduce any other obligation to the Employee
under this Agreement. Base Salary shall not be reduced after any such increase.
(ii) Annual Bonus. In addition to Base Salary, the Employee shall be
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awarded, for each fiscal year during the Employment Period for which a bonus is
paid to any senior officers of the Bank, an annual bonus (an "Annual Bonus") in
cash equal to or greater than the average bonus payable to the Employee from
the Bank under the terms of the Bank's bonus program in effect immediately prior
to the Effective Date, or, if more favorable to the Employee, as provided at any
time thereafter with respect to other senior officers of the Bank. Such Annual
Bonus shall be payable not later than 90 days after the end of the fiscal year.
(iii) Incentive, Savings and Retirement Plans. In addition to Base
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Salary and Annual Bonus payable as hereinabove provided, the Employee shall be
entitled to participate during the Employment Period in all incentive, savings
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and retirement plans, practices, policies and programs applicable to other
senior executive employees of the Bank (including employee benefit plans, in
each case providing benefits which are the economic equivalent to those in
effect or as subsequently amended). Such plans, practices, policies and
programs, in the aggregate, shall provide the Employee with compensation,
benefits and reward opportunities at least as favorable as the most favorable of
such compensation, benefits and reward opportunities provided by the Bank for
the Employee under such plans, practices, policies and programs as in effect at
any time during the 90-day period immediately preceding the Effective Date or,
if more favorable to the Employee, as provided at any time thereafter with
respect to other senior executive employees of the Bank.
(iv) Welfare Benefit Plans. During the Employment Period, the
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Employee and the Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs), at least as favorable as the most favorable of such plans,
practices, policies and programs in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Employee
and/or the Employee's family, as in effect at any time thereafter with respect
to other senior executive employees of the Bank.
(v) Expenses. During the Employment Period, the Employee shall be
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entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Employee in accordance with the most favorable policies, practices and
procedures of the Bank in effect at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Employee,
as in effect at any time thereafter with respect to other senior executive
employees of the Bank.
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(vi) Fringe Benefits. During the Employment Period, the Employee
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shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Bank in effect at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Employee, as in effect at any time thereafter with respect to other
senior executive employees of the Bank
(vii) Office and Support Staff. During the Employment Period, the
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Employee shall be entitled to a private office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, and
such other facilities, amenities and services at least equal to the most
favorable of the foregoing provided to the Employee by the Bank at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee, as provided at any time thereafter with respect to
other senior executive employees of the Bank.
(viii) Vacation. During the Employment Period, the Employee shall
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be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Bank as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as in effect at any time thereafter with respect to other senior
executive employees of the Bank.
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5. Termination.
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(a) Death or Disability. This Agreement shall terminate automatically upon
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the Employee's death. If the Bank determines in good faith that the Disability
of the Employee has occurred (pursuant to the definition of "Disability" set
forth below), it may give to the Employee written notice of its intention to
terminate the Employee's employment. In such event, the Employee's employment
with the Bank shall terminate effective on the 30th day after receipt of such
notice by the Employee (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Employee shall not have returned to full-
time performance of the Employee's duties. For purposes of this Agreement,
"Disability" means disability which, at least 26 weeks after its commencement,
is determined to be total and permanent by a physician selected by the Bank or
its insurers and acceptable to the Employee or the Employee's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Bank may terminate the Employee's employment for "Cause."
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For purposes of this Agreement, "Cause" means: (i) an act or acts of personal
dishonesty taken by the Employee and intended to result in substantial personal
enrichment of the Employee at the expense of the Company or its subsidiaries,
(ii) repeated violations by the Employee of the Employee's obligations under
Section 4(a) of this Agreement, which are demonstrably willful and deliberate on
the Employee's part and which are not remedied in a reasonable period of time
after receipt of written notice from the Bank or, (iii) the conviction of the
Employee of a felony.
(c) Good Reason. The Employee's employment may be terminated by the
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Employee for Good Reason. For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Employee of any duties inconsistent in any
respect with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of
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this Agreement, or any other action by the Bank which results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Bank promptly after receipt of notice thereof given by
the Employee;
(ii) any failure by the Bank to comply with any of the provisions of
Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the Bank
promptly after receipt of notice thereof given by the Employee;
(iii) the Bank's requiring the Employee to be based at any office or
location other than that described in Section 4(a)(i) hereof, except for travel
reasonably required in the performance of the Employee's responsibilities;
(iv) any purported termination by the Bank of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Bank to comply with and satisfy Section 11(c)
of this Agreement. For purposes of this Section 5(c), any determination of "Good
Reason" made by the Employee shall be conclusive if made in good faith.
Notwithstanding anything in this Agreement to the contrary, a termination by the
Employee for any reason during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a termination for Good
Reason for all purposes of this Agreement ("Window Period.")
(d) Notice of Termination. Any termination by the Bank for Cause or by the
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Employee for Good Reason shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 12(b) of this Agreement.
For purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon; (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for
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termination of the Employee's employment under the provision so indicated; and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen (15) days after the giving of such notice). The failure by the
Employee to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the
Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his or her rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of receipt
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of the Notice of Termination or any later date specified-therein, as the case
may be; provided, however, that (i) if the Employee's employment is terminated
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by the Bank other than for Cause or Disability, the Date of Termination shall be
the date on which the Bank notifies the Employee of such termination; and (ii)
if the Employee's employment is terminated by reason of death or Disability, the
Date of Termination shall be the date of death of the Employee or the Disability
Effective Date, as the case may be.
6. Obligations of the Bank upon Termination.
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(a) Death. If the Employee's employment is terminated by reason of the
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Employee's death, this Agreement shall terminate without further obligations to
the Employee's legal representatives under this Agreement, other than those
obligations accrued or earned and vested (if applicable) by the Employee as of
the Date of Termination, including, for this purpose: (i) the Employee's full
Base Salary through the Date of Termination at the rate in effect on the Date of
Termination or if higher, at the highest rate in effect at any time from the 90-
day period preceding the Effective Date through the Date of Termination (the
"Highest Base Salary); (ii) the product of the Annual Bonus paid to the Employee
for the last full fiscal year and a
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fraction, the numerator of which is the number of days in the current fiscal
year through the Date of Termination, and the denominator of which is 365; and
(iii) any compensation previously deferred by the Employee (together with any
accrued interest thereon) and not yet paid by the Bank and any accrued vacation
pay not yet paid by the Bank (such amounts specified in clauses (i), (ii) and
(iii) are hereinafter referred to as "Accrued Obligations"). All such Accrued
Obligations shall be paid to the Employee's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
Notwithstanding anything in this Agreement to the contrary, the Employee's
family shall be entitled to receive benefits at least equal to the most
favorable benefits provided by the Bank to surviving families of employees of
the Bank under such plans, programs, practices and policies relating to family
death benefits, if any, in accordance with the most favorable plans, programs,
practices and policies of the Bank in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Employee and/or the Employee's family, as in effect on the date of the
Employee's death with respect to other senior executive employees of the Bank
and their families.
(b) Disability. If the Employee's employment is terminated by reason of
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the Employee's Disability, this Agreement shall terminate without further
obligations to the Employee, other than those obligations accrued or earned and
vested (if applicable) by the Employee as of the Date of Termination, including
for this purpose, all Accrued Obligations. All such Accrued Obligations shall
be paid to the Employee in a lump sum in cash within 30 days of the Date of
Termination. Notwithstanding anything in this Agreement to the contrary, the
Employee shall be entitled after the Disability Effective Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Bank to disabled employees and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, in accordance with the most favorable plans, programs,
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practices and policies of the Bank in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Employee and/or the Employee's family, as in effect at any time thereafter with
respect to other senior executive employees of the Bank and their families.
(c) Cause; Other than for Good Reason. If the Employee's employment shall
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be terminated for Cause, this Agreement shall terminate without further
obligations to the Employee other than the obligation to pay to the Employee the
full Base Salary through the Date of Termination. If the Employee terminates
employment other than for Good Reason, this Agreement shall terminate without
further obligations to the Employee, other than those obligations accrued or
earned and vested (if applicable) by the Employee through the Date of
Termination, including for this purpose, all Accrued Obligations. All such
Accrued Obligations shall be paid to the Employee in a lump sum in cash within
30 days of the Date of Termination.
(d) Good Reason; Other Than for Cause or Disability. If, during the
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Employment Period, the Bank shall terminate the Employee's employment other than
for Cause, Disability, or death or if the Employee shall terminate his or her
employment during the Window Period for Good Reason:
(i) the Bank shall pay to the Employee in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts:
A. to the extent not theretofore paid, the Employee's Base
Salary through the Date of Termination; and
B. a proportionate Annual Bonus based on the Employee's Annual
Bonus for the last three fiscal years, where the numerator in such calculation
is the number of days in the current fiscal year through the Date of Termination
and the denominator of which is 365; and
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C. the product of an amount equal to six months of the
Employee's Base Salary plus any Bonus the Employee is entitled to under the
Agreement; and
D. in the case of compensation previously deferred by the
Employee, all amounts previously deferred, together with any accrued interest
thereon and not yet paid by the Bank, any accrued vacation pay not yet paid by
the Bank, any other Accrued Obligations; and
E. the Employee shall be entitled to receive a lump-sum
retirement benefit equal to the difference between (a) the actuarial equivalent
of the benefit under the Retirement Plan the Employee would receive if he or she
remained employed by the Bank at the compensation level provided for in Sections
4(b)(i) and 4(b)(ii) of this Agreement for the remainder of the Employment
Period and (b) the actuarial equivalent of his or her benefit, if any, under the
Retirement Plan; and
F. for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Bank shall
continue benefits to the Employee and/or the Employee's family at least equal to
those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(iv) of this Agreement
if the Employee's employment had not been terminated, including health insurance
and life insurance, in accordance with the most favorable plans, practices,
programs or policies of the Bank during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Employee, as in effect at any
time thereafter with respect to other senior executive employees and their
families and for purposes of eligibility for retiree benefits pursuant to such
plans, practices, programs and policies, the Employee shall be considered to
have remained employed until the end of the Employment Period and to have
retired on the last day of such period.
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7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
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limit the Employee's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices, provided by the Bank
and for which the Employee may qualify, nor shall anything herein limit or
otherwise affect such rights as the Employee may have under any stock option or
other agreements with the Bank or any of its subsidiaries. Amounts which are
vested benefits or which the Employee is otherwise entitled to receive under any
plan, policy, practice or program of the Bank or any of its subsidiaries at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program.
8. Full Settlement. The Bank's obligation to make the payments provided for
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in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Bank may have against the Employee or others. In no
event shall the Employee be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Employee under any of
the provisions of this Agreement. The Bank agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Employee may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the Bank
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Employee about the amount of any payment
pursuant to Section 9 of this Agreement), plus in each case interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Internal
Revenue Code of 1986, as amended (the "Code").
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9. Certain Additional Payments by the Bank.
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(a) Notwithstanding anything in this Agreement to the contrary, in the
event it shall be determined that any payment or distribution by the Bank to or
for the benefit of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a
"Payment"), would be subject to the excise-tax imposed by Section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Employee shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Employee of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, the Employee retains an amount of the Gross -Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations required
to be made under this Section 9, including whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, shall be made by the Bank's
firm of independent auditors (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Bank and the Employee within 15
business days of the Date of Termination, if applicable, or such earlier time as
is requested by the Bank. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 9(b), shall be paid to the Employee within 5 days of
the receipt of the Accounting Firm's determination. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, it shall furnish the
Employee with an opinion that he or she has substantial authority not to report
any Excise Tax on his or her federal income tax return. Any determination by
the Accounting Firm shall be binding upon the Bank and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm
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hereunder, it is possible that Gross-Up Payments which will not have been made
by the Bank should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Bank exhausts
its remedies pursuant to Section 9(c) and the Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Bank to or for the benefit of the Employee.
(c) The Employee shall notify the Bank in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Bank of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee knows of such
claim and shall apprise the Bank of the nature of such claim and the date on
which such claim is requested to be paid. The Employee shall not pay such claim
prior to the expiration of the thirty-day period following the date on which it
gives such notice to the Bank (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Bank notifies
the Employee in writing prior to the expiration of such period that it desires
to contest such claim, the Employee shall:
(i) give the Bank any information reasonably requested by the Bank
relating to such claim,
(ii) take such action in connection with contesting such claim as the
Bank shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Bank,
(iii) cooperate with the Bank in good faith in order effectively to
contest such claim,
(iv) permit the Bank to participate in any proceedings relating to
such claim; provided, however, that the Bank shall bear and pay directly all
costs and
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expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Bank shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and ▇▇▇ for a refund or contest the claim in
any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, any court of initial
jurisdiction and any one or more appellate courts, as the Bank shall determine;
provided, however, that if the Bank directs the Employee to pay such claim and
▇▇▇ for a refund, the Bank shall advance the amount of such payment to the
Employee, on an interest-free basis and shall indemnify and hold the Employee
harmless, on an after-tax basis, from any Excise Tax or income tax, including
interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Employee with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Bank's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Employee
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the Bank
pursuant to Section 9(c), the Employee becomes entitled to receive any refund
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with respect to such claim, the Employee shall (subject to the Bank's complying
with the requirements of Section 9(c)) promptly pay to the Bank the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Bank pursuant to Section 9(c), a determination is made that the
Employee shall not be entitled to any refund with respect to such claim and the
Bank does not notify the Employee in writing of its intent to contest such
denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
10. Compliance with Safety and Soundness Standards. Notwithstanding
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anything contained herein to the contrary, in no event shall the total
compensation paid out upon the departure of an employee be in excess of that
considered safe and sound at the time of such payment, taking into consideration
all applicable laws, regulations, or other regulatory guidance including but not
limited to Office of Thrift Supervision Regulatory Bulletin 27a or any similar
or successor regulatory pronouncement.
11. Confidential Information. The Employee shall hold in a fiduciary capacity
------------------------
for the benefit of the Bank all secret or confidential information, knowledge or
data relating to the Bank or any of its subsidiaries, and their respective
businesses, which shall have been obtained by the Employee during the Employee's
employment by the Bank and which shall not be or become public knowledge (other
than by acts by the Employee or his representatives in violation of this
Agreement). After termination of the Employee's employment with the Bank, the
Employee shall not, without the prior written consent of the Bank, communicate
or divulge any such information,
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knowledge or data to anyone other than the Bank and those designated by it. In
no event shall an asserted violation of the provisions of this Section 10
constitute a basis for deferring or withholding any amounts otherwise payable to
the Employee under this Agreement.
12. Successors.
-----------
(a) This Agreement is personal to the Employee and without the prior
written consent of the Bank shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
13. Miscellaneous.
-------------
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect. This Agreement may not be amended or modified
otherwise than
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by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Employee:
-------------------
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to the Company:
------------------
FirstFed Financial Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Bank may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e) The Employee's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
20
(f) This Agreement contains the entire understanding of the Company and the
Employee with respect to the subject matter hereof.
(g) The Employee and the Bank acknowledge that the employment of the
Employee by the Bank is "at will", and, prior to the Effective Date, may be
terminated by either the Employee or the Bank at any time. Upon a termination of
the Employee's employment or upon the Employee's ceasing to be an officer of the
Bank, in each case, prior to the Effective Date, there shall be no further
rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
"Employee"
__________________________________
Name:
FirstFed Financial Corp. Attest:
By:__________________________ By:___________________________
Name:________________________ Name:_________________________
Title:_________________________ Title:________________________
21
First Federal Bank of California Attest:
By:__________________________ By:___________________________
Name:________________________ Name:_________________________
Title:_______________________ Title:________________________
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