Exhibit 10.7(b)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIS AGREEMENT is entered into this 1st day of October, 2003, by and
between HCB Bancshares, Inc. (the "Company") and Charles T. Black (the
"Employee"), effective on the date (the "Effective Date") this agreement is
executed.
WHEREAS, the Employee has heretofore been employed by HEARTLAND Community
Bank (the "Bank") as its President and Chief Executive Officer, is experienced
in all phases of the business of the Bank, and has become the President and
Chief Executive Officer of the Company; and
WHEREAS, the Board of Directors (the "Board") of the Company believes it is
in the best interests of the Company to enter into this Agreement with the
Employee in order to assure continuity of management of the Bank and the
Company, and to reinforce and encourage the continued attention and dedication
of the Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship between the Company and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms.
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When used anywhere in this Agreement, the following terms shall have the
meaning set forth herein.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Bank, as the terms are defined in Section 424(e) and (f),
respectively, of the Code.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any initial public offering,
tender offer or exchange offer, merger or other business combination, sale of
assets or contested election, any combination of the foregoing transactions, or
any similar transaction, the persons who were non-employee directors of the
Company or the Bank before such transaction cease to constitute a majority of
the Board of Directors of the Company or the Bank or any successor to the
Company or the Bank;
(ii) the Company or the Bank transfers substantially all of its assets to
another corporation which is not an Affiliate of the Company;
(iii) the Company sells substantially all of the assets an Affiliate which
accounted for 50% or more of the controlled group's assets immediately prior to
such sale;
(iv) any "person" including a "group" is or becomes the "beneficial owner",
directly or indirectly, of securities of the Company or the Bank representing
twenty-five percent (25%) or more of the combined voting power of the Company or
the Bank's outstanding securities (with the terms in quotation marks having the
meaning set forth under the federal securities laws); or
(v) the Company or the Bank is merged or consolidated with another
corporation and, as a result of the merger or consolidation, less than seventy
percent (70%) of the outstanding voting securities of the surviving or resulting
corporation is owned in the aggregate by the former stockholders of the Company
or the Bank.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
occur solely by reason of a transaction in which the Bank converts to the stock
form of organization, or creates an independent holding company in connection
therewith.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and as interpreted through applicable rulings and regulations in
effect from time to time.
(d) "Code Sec. 280G Maximum" shall mean product of 2.99 and the Employee's
"base amount" as defined in Code Sec. 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which has 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 30 miles from his primary office as of the later
of the Effective Date and the most recent voluntary relocation by the Employee;
(ii) a material reduction in the Employee's base compensation under this
Agreement as the same may be increased from time to time; (iii) the failure by
the Bank or the Company to continue to provide the Employee with compensation
and benefits provided 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 or the Company
which would directly or indirectly reduce any of such benefits or deprive the
Employee of any material fringe benefit enjoyed by him under this Agreement;
(iv) the assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position; (v) a failure to
reelect the Employee to the Board of Directors of the Bank or the Company, if
the Employee has served on such Board at any time during the term of the
Agreement; (vi) a material diminution or reduction in the Employee's
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Bank or the Company; or (vii) a material
reduction in the secretarial or other administrative support of the Employee. In
addition,
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"Good Reason" shall mean an impairment of the Employee's health to the extent
that it makes continued performance of his duties hereunder hazardous to his
physical or mental health.
(f) "Just Cause" shall mean, in the good faith determination of the
Company's Board of Directors, 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.
The Employee shall have no right to receive compensation or other benefits for
any period after termination for Just Cause. No act, or failure to act, on the
Employee's part shall be considered "willful" unless he has acted, or failed to
act, with an absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Bank and the Company.
(h) "Protected Period" shall mean the period that begins on the date one
year before the Change in Control and ends on the closing date of the Change in
Control.
(i) "Trust" shall mean a grantor trust that is designed in accordance with
Revenue Procedure 92-64 and has a trustee independent of the Bank and the
Company.
2. Employment. The Employee is employed as the President and Chief
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Executive Officer of the Company. The Employee shall render such administrative
and management services for the Company 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 Company. The Employee's other duties shall
be such as the Board may from time to time reasonably direct, including normal
duties as an officer of the Company.
3. Consideration from Company: Joint and Several Liability. In lieu of
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paying the Employee a base salary during the term of this Agreement, the Company
hereby agrees that to the extent permitted by law, it shall be jointly and
severally liable with the Bank for the payment of all amounts due under the
employment agreement between the Bank and the Employee. Nevertheless, the Board
may in its discretion at any time during the term of this Agreement agree to pay
the Employee a base salary for the remaining term of this Agreement. If the
Board agrees to pay such salary, the Board shall thereafter review, not less
often than annually, the rate of the Employee's salary, and in its sole
discretion may decide to increase his salary.
4. Discretionary Bonuses. The Employee shall participate in an equitable
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manner with all other senior management employees of the Company in
discretionary bonuses that the Board may award from time to time to the
Company's senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses. Notwithstanding the foregoing,
following a Change in Control, the Employee shall
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receive discretionary bonuses that are made no less frequently than, and in
amounts not less than, the average annual discretionary bonuses paid to the
Employee during each of the three calendar years immediately preceding the year
in which such Change in Control occurs.
5. Participation in Retirement, Medical and Other Plans.
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(a) During the term of this Agreement, the Employee shall be eligible to
participate in the following benefit plans: group hospitalization, disability,
health, dental, sick leave, life insurance, travel and/or accident insurance,
auto allowance/auto lease, retirement, pension, and/or other present or future
qualified plans provided by the Company, generally which benefits, taken as a
whole, must be at least as favorable as those in effect on the Effective Date.
(b) The Employee shall be eligible to participate in any fringe benefits
which are or may become available to the Company's senior management employees,
including for example: any stock option or incentive compensation plans, 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 Company.
6. Term. The Company hereby employs the Employee, and the Employee hereby
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accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending 36 months thereafter (or such earlier date as is
determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective Date, 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. Only those members of the Board of
Directors who have no personal interest in this Employment Agreement shall
discuss and vote on the approval and subsequent review of this Agreement.
7. Loyalty; Noncompetition.
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(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, the 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 Company or any of its subsidiaries or affiliates,
or unfavorably affect the performance of the 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
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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 Company, or be
gainfully employed in any other position or job other than as provided above.
(b) Nothing contained in this Paragraph 7 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 Company, or, solely as a passive or
minority investor, in any business.
8. Standards. The Employee shall perform his duties under this Agreement in
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accordance with such reasonable standards as the Board may establish from time
to time. The Company will provide Employee with the working facilities and staff
customary for similar executives and necessary for him to perform his duties.
9. Vacation and Sick Leave. At such reasonable times as the Board shall in
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its discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, 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 Company.
(b) The Employee shall not receive any additional compensation from the
Company on account of his failure to take a vacation or sick leave, 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 with the Company for such additional periods of
time and for such valid and legitimate reasons as the Board may in its
discretion determine. 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 such 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.
10. Termination and Termination Pay. Subject to Section 12 hereof, the
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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
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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. (1) The Company may terminate the Employee's employment
after having established 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 Company's long-term disability plan (or, if the Company has
no such plan in effect, which impairs the Employee's ability to substantially
perform his duties under this Agreement for a period of 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 Employee's termination of employment
pursuant to this Section 10(b); provided that any benefits paid pursuant to the
Company's long- term disability plan will continue as provided in such plan.
(2) During any period that the Employee shall receive disability benefits
and to the extent that the Employee shall be physically and mentally able to do
so, he shall furnish such information, assistance and documents so as to assist
in the continued ongoing business of the Company and, if able, shall make
himself available to the Company to undertake reasonable assignments consistent
with his prior position and his physical and mental health. The Company shall
pay all reasonable expenses incident to the performance of any assignment given
to the Employee during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause.
(d) Without Just Cause; Constructive Discharge. The Board may, by written
notice to the Employee, immediately terminate his employment at any time for a
reason other than Just Cause, in which event the Employee shall be entitled to
receive the following compensation and benefits (unless such termination occurs
during the Protected Period, in which event the benefits and compensation
provided for in Section 12 shall apply):
(i) the salary provided pursuant to Section 3 hereof, up to the
expiration date of this Agreement including any renewal term (the
"Expiration Date"), plus said salary for an additional 12-month period,
(ii) a put option meeting the requirements set forth in subsection (f)
hereof, provided that the Employee shall not be entitled to such put option
if, on the date the Employee terminates employment, either the Employee
does not own
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any common stock of the Bank or an affiliated company, or such common stock
is "readily tradable" within the meaning of Code Sec. 401(a)(28)(C); and
(iii) at the Employee's election either (A) cash in an amount equal to
the cost to the Employee of obtaining all health, life, disability and
other benefits which the Employee would have been eligible to participate
in through the Expiration Date, based upon the benefit levels substantially
equal to those that the Company provided for the Employee at the date of
termination of employment or (B) continued participation under such Company
benefit plans through the Expiration Date, but only to the extent the
Employee continues to qualify for participation therein. All amounts
payable to the Employee shall be paid, at the option of the Employee,
either (I) in periodic payments through the Expiration Date, or (II) in one
lump sum within ten days of such termination.
(e) Good Reason. The Employee shall be entitled to receive the compensation
and benefits payable under subsection 10(d) hereof in the event that the
Employee voluntarily terminates employment within 90 days of an event that
constitutes Good Reason, (unless such voluntary termination occurs during the
Protected Period, in which event the benefits and compensation provided for in
Section 12 shall apply).
(f) A put option deliverable to the Employee pursuant to this Section 10(d)
shall, at a minimum, obligate the Company and any successor to purchase any
shares of its common stock and the common stock of any affiliated company that
the Employee owns on the date of terminating employment. The terms of such
purchase shall be set forth in a written instrument prepared and executed by the
Company, and shall require that (i) the purchase price be no less than the
appraised value of such stock, determined in accordance with Code Sec.
401(a)(28)(C) by an appraiser mutually agreed upon by the Employee and the
Company, as of the last day of the fiscal year in which the Employee's
employment terminates, and (ii) the Company make such payment as soon as
practicable after the Company receives said appraisal.
(g) Termination or Suspension Under Federal Law. 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.
(h) Voluntary Termination by Employee. Subject to Section 12 hereof, the
Employee may voluntarily terminate employment with the Company during the term
of this Agreement, upon at least 90 days' prior written notice to the Board of
Directors, in which case the Employee shall receive only his compensation,
vested rights and employee benefits up to the date of his termination (unless
such termination occurs pursuant to Section 10(d) hereof or within the Protected
Period, in Section 12(a) hereof, in which event the benefits and compensation
provided for in Sections 10(d) or 12, as applicable, shall apply).
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11. No Mitigation. The Employee shall not be required to mitigate the
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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.
12. Change in Control.
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(a) Trigger Events. The Employee shall be entitled to collect the severance
benefits set forth in Subsection (b) hereof in lieu of any benefits under
Section 10 hereof in the event that (i) a Change in Control occurs, or (ii) the
Company or its successor(s) in interest terminate the Employee's employment
without his written consent and for any reason other than Just Cause during the
Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled to
collect severance benefits pursuant to Section 12(a) hereof, the Company shall
pay (if not paid by the Bank pursuant to the employment agreement between the
Employee and the Bank) the Employee a severance benefit equal to the difference
between the Code Sec. 280G Maximum and the sum of any other "parachute payments"
as defined under Code Sec. 280G(b)(2) that the Employee receives on account of
the Change in Control.
Said sum shall be paid in one lump sum within ten days of the later of the
date of the Change in Control and the Employee's last day of employment with the
Bank or the Company, provided that the Employee may elect at any time on or
before becoming entitled to collect benefits hereunder, to have such benefits
paid in substantially equal installments over a period of up to 10 years. In the
event that the Employee, the Bank, and the Company jointly agree that the
Employee has collected an amount exceeding the Code Sec. 280G Maximum, the
parties may agree in writing that such excess shall be treated as a loan ab
initio which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
(c) Covenant Not to Complete. If the Employee voluntarily terminates
employment for any reason within thirty (30) days of the date of a Change in
Control or for Good Reason within twelve (12) months of the date of the Change
in Control, or is terminated without Just Cause within twelve (12) months of the
date of the Change in Control, the Company shall pay (if not paid by the Bank
pursuant to the employment agreement between the Employee and the Bank) the
Employee an amount equal to the Employee's annual base compensation in effect on
the date of the Change in Control. Such sum shall be paid in one lump sum within
ten (10) days of the Employee's last day of employment with the Bank or
successor thereto. In consideration of the payment to be made to him under this
Section 12(c), the Employee agrees as follows:
(i) The parties recognize that the Employee's reputation and business
and personal relationships are of significant benefit to the Company and
the Bank. The parties further recognize that the Company and the Bank are
in direct competition with certain banks and other similar institutions.
Therefore, the Employee agrees that for a period of twelve (12) months
following his
termination of employment he will not accept employment or serve in any
capacity with any bank, savings bank or savings and loan association the
deposits or accounts or shares of which are insured by the Federal Deposit
Insurance Corporation or credit union the deposits or accounts or shares of
which are insured by the National Credit Union Administration or any
holding company for such bank, savings bank, savings and loan association
or credit union or other entity controlling, controlled by or under common
control with such financial institution at a principal place of employment
within the following Arkansas counties: Ouachita, Union and Columbia.
(ii) For a period of one (1) year following his termination of
employment, the Employee will not solicit or induce any person who is an
employee of the Company or the Bank, or any entity controlling, controlled
by or under common control with the Company or the Bank, or any successor
to either, or any person who was such on the date of his termination of
employment, to become employed by any other person or entity, or approach
any such employee for such purpose or authorize or knowingly approve the
taking of such actions by other persons.
(iii) The Employee acknowledges that during the course of his
employment with the Company and the Bank he has and will continue to
receive, obtain or become aware of, and will have access to proprietary
information, lists and records of customers and trade secrets which are the
property of the Company or the Bank which are not known by competitors or
generally by the public ("Proprietary Information") and recognizes that
such Proprietary Information to be valuable and unique assets of the
Company or the Bank, as the case may be. For a period of three (3) years
following his termination of employment, the Employee agrees to hold the
Proprietary Information in the strictest confidence and agrees not to use
or disclose any Proprietary Information, directly or indirectly, at any
time for any purpose, or to use for the Employee's benefit or the benefit
of any person or entity (other than the Company or the Bank or an affiliate
of or successor to either), any Proprietary Information, and to use
Employee's best efforts to prevent such prohibited use or disclosure by any
other persons.
(iv) The Employee hereby acknowledges that his duties and
responsibilities under this Section 12(c) are unique and that irreparable
injury may result to the Company or the Bank or an affiliate of or
successor to either in the event of a breach of the terms and conditions of
this Section 12(c), which may be difficult to ascertain, and that the award
of damages would not be adequate relief to the Company or the Bank or
affiliate or successor. The Employee therefore agrees that in the event of
his breach of any of the terms or conditions of this Section 12(c), the
Company or the Bank or it successor shall have the right, without posting
any bond or other security, to preliminary and permanent injunctive relief
as well as damages and an equitable accounting of all earnings, profits and
other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies in law or equity
to
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which it may be entitled against the Employee. If at the time of the
enforcement of any provision of this Section 12(c) a court shall hold that
the period or scope of the provisions thereof are unreasonable under the
circumstances then existing, the parties hereby agree that the maximum
period or scope under the circumstances shall be substituted for the period
or scope stated in such provision.
13. Indemnification. The Company agrees that its Bylaws shall continue to
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provide for indemnification of directors, officers, employees and agents of the
Company, including the Employee, during the full term of this Agreement, and to
at all times provide adequate insurance for such purposes.
14. Reimbursement of Employee for Enforcement Proceedings. In the event
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that any dispute arises between the Employee and the Company as to the terms or
interpretation of this Agreement, whether instituted by formal legal proceedings
or otherwise, including any action that the Employee takes to defend against any
action taken by the Company, 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 obtains either a written
settlement or a final judgment by a court of competent jurisdiction
substantially in his favor. Such reimbursement shall be paid within ten days of
Employee's furnishing to the Company 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.
15. Federal Income Tax Withholding. The Company may withhold all federal
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and state income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law, government regulation or ruling.
16. Successors and Assigns.
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(a) Company. This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Company which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company.
(b) Employee. Since the Company 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 Company; provided, however, that nothing in this paragraph shall
preclude (i) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors, administrators, or
other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation or to exclusion,
attachment,
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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.
17. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
18. Applicable Law. Except to the extent preempted by Federal law, the laws
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of the State of Arkansas shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.
19. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. Entire Agreement. This Agreement, together with any understanding or
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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.
ATTEST: HCB BANCSHARES, INC.
/s/ Paula J. Bergstrom /s/ Vida H. Lampkin
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Secretary Its Chairman of the Board
WITNESS:
/s/ Paula J. Bergstrom /s/ Charles T. Black
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Charles T. Black