Exhibit 10(c)
FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made this 24TH day of November 2003, by
and among COASTAL FINANCIAL CORPORATION, a Delaware corporation ("the Company"),
COASTAL FEDERAL BANK, a wholly owned subsidiary of the Company (the "Bank"), and
Phillip G. Stalvey (the "Executive").
WITNESSETH
WHEREAS, the Company and the Bank desire to retain the services of the
Executive as Executive Vice President of the Company and the Bank;
WHEREAS, the Company and the Bank have previously entered into an
employment agreement with the Executive;
WHEREAS, the Executive and the respective Boards of Directors of the Bank
and the Company desire to enter into an updated and revised agreement setting
forth the terms and conditions of the continuing employment of the Executive and
the related rights and obligations of each of the parties;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. Employment. The Executive is employed as the Executive Vice President
of the Company and the Bank and Banking Group Leader of the Bank, reporting
directly to their respective Boards. The Executive shall have responsibility for
the general management and control of the business and affairs of the Company,
the Bank, and their respective subsidiaries, and shall perform all duties and
shall have all powers which are commonly incident to the offices of Executive
Vice President, or which, consistent with those offices, are delegated to him by
the respective Boards.
2. Location and Facilities. The Executive will be furnished with the
working facilities and staff customary for executive officers with the title and
duties set forth in Section 1 and as are necessary for him to perform his
duties. The location of such facilities and staff shall be at the principal
administrative offices of the Company and the Bank, or at such other site or
sites customary for such offices.
3. Term.
a. The term of this Agreement shall be (i) the initial term,
consisting of the period commencing on the date of this
Agreement (the "Effective Date") and ending on the third
anniversary of the Effective Date, plus (ii) any and all
extensions of the initial term made pursuant to this Section
3.
b. Commencing on the Effective Date and on each day thereafter,
the term under this Agreement shall be renewed automatically
for an additional one
(1) day period beyond the then effective expiration date
without action by any party, provided that neither the
Company, on the one hand, nor Executive, on the other, shall
have given at least sixty (60) days written notice of its or
his desire that the term not be renewed. In the case such
notice is given by one party to the other, the term of this
Agreement shall become fixed and shall end on the third
anniversary of the date of written notice.
4. Base Salary.
a. The Bank agrees to pay the Executive during the term of this
Agreement a base salary at the rate of $181,500.00 per annum,
payable in accordance with the Bank's customary payroll
practices.
b. The Board of the Bank shall review annually the rate of the
Executive's base salary based upon factors they deem relevant,
and may maintain or increase his salary, provided that no such
action shall reduce the rate of salary below the rate in
effect on the Effective Date.
c. In the absence of action by the Board of the Bank, the
Executive shall continue to receive salary at the per annum
rate specified on the Effective Date or, if another rate has
been established under the provisions of this Section 4, the
rate last properly established by action of the Board of the
Bank under the provisions of this Section 4.
5. Bonuses. The Executive shall be entitled to participate in any
discretionary bonus or other incentive compensation programs that the Board of
the Company or the Bank may establish from time to time for the benefit of the
officers or employees of the Company or the Bank.
6. Benefit Plans. The Executive shall be entitled to participate in such
life insurance, medical, dental, pension, profit sharing, and retirement plans,
stock compensation plans and other programs and arrangements as may be approved
from time to time by the Company or the Bank for the benefit of their respective
employees.
7. Vacation and Leave.
a. The Executive shall be entitled to vacations and other leave
in accordance with Bank policy for senior executives, or
otherwise as approved by the Board, but in any event, not less
than four (4) weeks vacation per calendar year.
b. In addition to paid vacations and other leave, the Executive
shall be entitled, without loss of pay, to absent himself
voluntarily from the performance of his employment for such
additional periods of time and for such valid and legitimate
reasons as the Board of the Company and the
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Bank may in their discretion determine. Further, the Board of
the Company or the Bank may grant to the Executive a leave or
leaves of absence, with or without pay, at such time or times
and upon such terms and conditions as such Boards in their
discretion may determine.
8. Expense Payments and Reimbursements. The Executive shall be
reimbursed for all reasonable out-of-pocket business expenses that he shall
incur in connection with his services under this Agreement upon
substantiation of such expenses in accordance with applicable policies of
the Company or the Bank.
9. Loyalty.
a. During the term of this Agreement the Executive: (i) shall
devote all his time, attention, skill, and efforts to the
faithful performance of his duties hereunder; provided,
however, that from time to time, the Executive may serve on
the boards of directors of, and hold any other offices or
positions in, companies or organizations which will not
present any conflicts of interest with the Company or the Bank
or any of their subsidiaries or affiliates, unfavorably affect
the performance of Executive's duties pursuant to this
Agreement, or violate any applicable statute or regulation and
(ii) shall not engage in any business or activity contrary to
the business affairs or interests of the Company or the Bank.
b. Nothing contained in this Agreement shall prevent or limit the
Executive's right to invest in the capital stock or other
securities of any business dissimilar from that of the Company
and the Bank, or, solely as a passive, minority investor, in
any business.
c. The Executive agrees to maintain the confidentiality of any
and all information concerning the operation or financial
status of the Company and the Bank; the names or addresses of
any of its borrowers, depositors and other customers; any
information concerning or obtained from such customers; and
any other information concerning the Company and the Bank to
which he may be exposed during the course of his employment.
The Executive further agrees that, unless required by law or
specifically permitted by the Board in writing, he will not
disclose to any person or entity, either during or subsequent
to his employment, any of the above-mentioned information
which is not generally known to the public, nor shall he
employ such information in any way other than for the benefit
of the Company and the Bank.
10. Termination and Termination Pay. Subject to Section 11 of this
Agreement, the Executive's employment under this Agreement may be
terminated in the following circumstances:
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a. Death. The Executive's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in
which event the Executive's estate shall be entitled to
receive the compensation due to the Executive through the last
day of the calendar month in which his death occurred.
b. Retirement. This Agreement shall be terminated upon the
retirement of the Executive under the retirement benefit plan
or plans in which he participates pursuant to Section 6 of
this Agreement or otherwise. For all other purposes, the
Executive's termination of employment at retirement shall be
treated in the same manner as if he voluntarily terminated
employment pursuant to Section 10(f).
c. Disability.
i. The Company, the Bank, or the Executive may terminate
the Executive's employment after having established the
Executive's Disability. For purposes of this Agreement,
"Disability" means a physical or mental infirmity that
impairs the Executive's ability to substantially perform
his duties under this Agreement and that results in the
Executive's becoming eligible for long-term disability
benefits under the Company's or the Bank's long-term
disability plan (or, if the Company or the Bank has no
such plan in effect, that impairs the Executive's
ability to substantially perform his duties under this
Agreement for a period of one hundred eighty (180)
consecutive days). The Boards of the Company and the
Bank shall determine whether or not the Executive is and
continues to be permanently disabled for purposes of
this Agreement in good faith, based upon competent
medical advice and other factors that they reasonably
believe to be relevant. As a condition to any benefits,
such Board may require the Executive to submit to such
physical or mental evaluations and tests as it deems
reasonably appropriate.
ii. In the event of such Disability, the Executive's
obligation to perform services under this Agreement will
terminate. In the event of such termination, the
Executive shall continue to receive seventy-five (75)
percent of his monthly base salary (at the annual rate
in effect on his date of termination) through the
earlier of the date of the Executive's death, the date
he attains age 65 or the date which is three (3) years
after the Executive's termination date. Such payments
shall be reduced by the amount of any short- or
long-term disability benefits payable to the Executive
under any other disability program sponsored by the
Company or the Bank. In addition, during any period of
the Executive's Disability in which he is receiving
payments under this paragraph, the Executive and his
dependents shall, to the greatest extent possible,
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continue to be covered under all benefit plans
(including, without limitation, retirement plans and
medical, dental and life insurance plans) of the Company
and the Bank in which Executive participated prior to
his Disability on the same terms as if Executive were
actively employed by the Company and the Bank.
d. Just Cause.
i. The Board of the Company or the Bank may, by written
notice to the Executive in the form and manner specified
in this paragraph, immediately terminate his employment
with the Company or the Bank, respectively, at any time,
for Just Cause. The Executive shall have no right to
receive compensation or other benefits for any period
after termination for Just Cause except for vested
benefits. Termination for "Just Cause" shall mean
termination because of, in the good faith determination
of the Company's or the Bank's Board, the Executive's:
(1) Personal dishonesty;
(2) Incompetence;
(3) Willful misconduct;
(4) Breach of fiduciary duty involving personal
profit;
(5) Intentional failure to perform duties under this
Agreement;
(6) Willful violation of any law, rule or regulation
(other than traffic violations or similar
offenses) that reflects adversely on the
reputation of the Bank, any felony conviction, any
violation of law involving moral turpitude, or any
violation of a final cease-and-desist order; or
(7) Material breach by the Executive of any provision
of this Agreement.
ii Notwithstanding the foregoing, the Executive shall not
be deemed to have been terminated for Just Cause by the
Company or the Bank unless there shall have been
delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than
three-fourths (3/4) of the entire membership of the
Board of the Company or the Bank at a meeting of such
Board called and held for the purpose (after reasonable
notice to the Executive and an opportunity for the
Executive to be heard before the Board with counsel),
finding that in the good faith opinion of such Board the
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Executive was guilty of conduct described above and
specifying the particulars thereof.
e. Certain Regulatory Events.
i. If the Executive is removed and/or permanently
prohibited from participating in the conduct of the
Bank's affairs by an order issued under Sections 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. ss.ss. 1818(e)(4) and (g)(1)), all
obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but
vested rights of the parties shall not be affected.
ii. If the Bank is in default (as defined in Section 3(x)(1)
of FDIA), all obligations of the Bank under this
Agreement shall terminate as of the date of default, but
vested rights of the parties shall not be affected.
iii. If a notice served under Sections 8(e)(3) or (g)(1) of
the FDIA (12 U.S.C. Sections 1818(e)(3) and (g)(1))
suspends and/or temporarily prohibits the Executive from
participating in the conduct of the Bank's affairs, the
Bank's obligations under this Agreement shall be
suspended as of the date of such service, unless stayed
by appropriate proceedings. If the charges in the notice
are dismissed, the Bank shall, (x) pay the Executive all
or part of the compensation withheld while its contract
obligations were suspended, and (y) reinstate (in whole
or in part) any of its obligations which were suspended.
f. Voluntary Termination by Executive. In addition to his other
rights to terminate under this Agreement, the Executive may
voluntarily terminate employment with the Bank and the Company
during the term of this Agreement upon at least sixty (60)
days prior written notice to each Board, in which case the
Executive shall receive only his compensation, vested rights
and employee benefits up to the date of his termination.
g. Without Just Cause or With Good Reason.
i. In addition to termination pursuant to Sections 10(a)
through 10(f), (x) the Board of the Company or the Bank,
respectively, may, by written notice to the Executive,
immediately terminate his employment with the Company or
the Bank, respectively, at any time for a reason other
than Just Cause (a termination "Without Just Cause") and
(y) the Executive may, by written notice to the Boards
of the Company and the Bank, immediately terminate this
Agreement at any time within ninety (90) days following
an event
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constituting "Good Reason" as defined below (a
termination "With Good Reason").
ii. Subject to Section 11 hereof, in the event of
termination under this Section 10(g), the Executive
shall be entitled to receive his base salary for the
remaining term of the Agreement, including any renewals
or extensions thereof (determined at the highest annual
rate of base salary in effect pursuant to Section 4 of
this Agreement for any of the twelve (12) months
immediately preceding the date of such termination),
plus annual cash bonuses for each year (prorated in the
event of partial years) remaining under such term
(determined by reference to the highest annual cash
bonus received by the Executive in any of the three (3)
calendar years preceding the termination). The sum due
under this Section 10(g) shall be paid in one lump sum
within ten (10) calendar days of such termination. Also,
in such event, the Executive shall, for the remaining
term of the Agreement, receive the benefits he would
have received during the remaining term of the Agreement
under any tax-qualified or non-tax-qualified retirement
programs in which the Executive participated prior to
his termination (with the amount of the benefits
determined by reference to the benefits received by the
Executive under such programs during the twelve (12)
months preceding his termination or, if applicable, the
accruals made on the Executive's behalf under such
programs) and continue to participate in any benefit
plans of the Company and the Bank that provide health
(including medical and dental), life or disability
insurance, or similar coverage upon terms no less
favorable than the most favorable terms provided to
senior executives of the Bank during such period. In the
event that the Company or the Bank is unable to provide
such coverage by reason of the Executive no longer being
an employee, the Company and the Bank shall provide the
Executive with comparable coverage on an individual
policy basis or, if individual coverage is not
available, provide a cash payment equivalent to the
value of such coverage.
iii. "Good Reason" shall exist if, without Executive's
express written consent, the Company or the Bank
materially breach any of their respective obligations
under this Agreement. Without limitation, such a
material breach shall be deemed to occur upon any of the
following:
(1) A material reduction in the Executive's
responsibilities or authority, or a requirement
that the Executive report to any person or group
other than the Boards of the Company and the Bank
(or any other effective reduction in reporting
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responsibilities) in connection with his
employment with the Company or the Bank;
(2) Assignment to the Executive of duties of a
non-executive nature or duties for which he is not
reasonably equipped by his skills and experience;
(3) A reduction in salary or benefits contrary to the
terms of this Agreement, or, following a Change in
Control as defined in Section 11 of this
Agreement, any reduction in salary or material
reduction in benefits below the amounts to which
he was entitled prior to the Change in Control;
(4) Termination of incentive and benefit plans,
programs or arrangements, or reduction of the
Executive's participation to such an extent as to
materially reduce their aggregate value below
their aggregate value as of the Effective Date; or
(5) A requirement that the Executive relocate his
principal business office or his principal place
of residence outside of the area consisting of a
thirty five (35) mile radius from the current main
office and any branch of the Bank, or the
assignment to the Executive of duties that would
reasonably require such a relocation.
iv. Notwithstanding the foregoing, a reduction or
elimination of the Executive's participation or benefits
under one or more benefit plans maintained by the
Company or the Bank as part of a good faith, overall
reduction or elimination of such plan or plans or
benefits thereunder applicable to all participants in a
manner that does not discriminate against the Executive
(except as such discrimination may be necessary to
comply with law) shall not constitute an event of Good
Reason or a material breach of this Agreement, provided
that benefits of the type or to the general extent as
those offered under such plans prior to such reduction
or elimination are not available to other officers of
the Company or the Bank or any company that controls
either of them under a plan or plans in or under which
the Executive is not entitled to participate.
v. Notwithstanding anything in this Agreement to the
contrary, during the period beginning three (3) months
prior to the announcement by the Bank or the Company of
an event constituting a Change in Control (as defined in
Section 11(a)) and ending twelve (12) months following
the effective date of a
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Change in Control, the Executive may voluntarily
terminate his employment under this Agreement for any
reason and such termination shall constitute termination
With Good Reason.
h. Continuing Covenant Not to Compete or Interfere with
Relationships. Regardless of anything herein to the contrary,
following a termination by the Company, the Bank or the
Executive pursuant to Section 10(g) and continuing until the
first anniversary of the effective date of such termination,
the Executive shall not serve as an officer, director or
employee of any bank holding company, bank, savings
association, savings and loan holding company, or mortgage
company which offers products or services competing with those
offered by the Company or the Bank from any office in any
city, town or county where Bank maintains an office as of the
date of the Executive's termination and shall not interfere
with the relationship of the Company or the Bank and any of
its employees, agents, or representatives.
11. Termination in Connection with a Change in Control.
a. For purposes of this Agreement, a "Change in Control" shall be
deemed to occur on the earliest of
i. The acquisition by any entity, person or group (other
than the acquisition by a tax-qualified retirement plan
sponsored by the Company or the Bank) of beneficial
ownership, as that term is defined in Rule 13d-3 under
the Securities Exchange Act of 1934, of more than 25% of
the outstanding capital stock of the Company or the Bank
entitled to vote for the election of directors ("Voting
Stock");
ii. The commencement by any entity, person, or group (other
than the Company or the Bank, a subsidiary of the
Company or the Bank, or a tax-qualified retirement plan
sponsored by the Company or the Bank) of a tender offer
or an exchange offer for more than 25% of the
outstanding Voting Stock of the Company or the Bank;
iii. The effective time of (x) a merger or consolidation of
the Company or the Bank with one or more other
corporations as a result of which the holders of the
outstanding Voting Stock of the Company or the Bank
immediately prior to such merger exercise voting control
over less than 51 % of the Voting Stock of the surviving
or resulting corporation, or (y) a transfer of
substantially all of the property of the Company or the
Bank other than to an entity of which the Company or the
Bank owns at least 51% of the Voting Stock; and
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iv. At such time that, during any period of two (2)
consecutive years, individuals who at the beginning of
such period constitute the Board of the Company or the
Bank (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 Board was approved by a vote of at
least two-thirds (_) of the Continuing Directors then in
office shall be considered a Continuing Director.
b. If within the period beginning three (3) months prior to the
announcement by the Bank or the Company of an event
constituting a Change in Control and ending twelve (12) months
following the effective date of a Change in Control, (i) the
Company or the Bank shall terminate the Executive's employment
Without Just Cause, or (ii) the Executive shall voluntarily
terminate his employment With Good Reason, the Company or the
Bank shall, within ten (10) calendar days of the termination
of the Executive's employment, make a lump-sum cash payment to
him equal to three (3) times the sum of the Executive's (x)
current base salary (determined at the highest annual rate of
base salary in effect pursuant to Section 4 of this Agreement
for any of the twelve (12) months immediately preceding the
effective date of the Change in Control or, if higher, the
rate in effect on the Executive's termination date) and (y)
the highest cash bonus paid to the Executive or accrued on the
Executive's behalf with respect to any of the three (3) most
recently completed fiscal years of the Bank preceding the
effective date of the Change in Control. This cash payment
shall be made in lieu of any payment also required under
Section 10(g) of this Agreement because of a termination in
such period. The Executive's rights under Section 10(g) are
not otherwise affected by this Section 11. Also, in such
event, the Executive shall, for a thirty-six (36) month period
following his termination of employment, receive the benefits
he would have received over such period under any
tax-qualified or non-tax-qualified retirement programs in
which the Executive participated prior to his termination
(with the amount of the benefits determined by reference to
the benefits received by the Executive under such programs
during the twelve (12) months preceding the Change in Control
or, if applicable, the accruals made on the Executive's behalf
during such period) and continue to participate in any benefit
plans of the Company and the Bank that provide health
(including medical and dental), life or disability insurance,
or similar coverage upon terms no less favorable than the most
favorable terms provided to senior executives of the Bank
during such period. In the event that the Company or the Bank
is unable to provide such coverage by reason of the Executive
no longer being an employee, the Company and the Bank shall
provide the Executive with comparable coverage on an
individual policy or, if individual coverage is not available,
provide a cash payment equivalent to the value of such
coverage.
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12. Indemnification and Liability Insurance.
a. Indemnification. The Company and the Bank agree to indemnify
the Executive (and his heirs, executors, and administrators),
and to advance expenses related thereto, to the fullest extent
permitted under applicable law and regulations against any and
all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit, or
proceeding in which he may be involved by reason of his having
been a director or Executive of the Company or the Bank or any
of their subsidiaries (whether or not he continues to be a
director or Executive at the time of incurring any such
expenses or liabilities) such expenses and liabilities to
include, but not be limited to, judgments, court costs, and
attorney's fees and the cost of reasonable settlements, such
settlements to be approved by the Board of the Company or the
Bank, if such action is brought against the Executive in his
capacity as an Executive or director of the Company or the
Bank or any of their subsidiaries. Indemnification for expense
shall not extend to matters for which the Executive has been
terminated for Just Cause. Nothing contained herein shall be
deemed to provide indemnification prohibited by applicable law
or regulation. Notwithstanding anything herein to the
contrary, the obligations of this Section 12 shall survive the
term of this Agreement by a period of six (6) years.
b. Insurance. During the period in which indemnification of the
Executive is required under this Section, the Company or the
Bank shall provide the Executive (and his heirs, executors,
and administrators) with coverage under a directors' and
Executives' liability policy at the expense of the Company or
the Bank, at least equivalent to such coverage provided to
directors and senior Executives of the Company or the Bank,
whichever is more favorable to the Executive.
13. Reimbursement of Executive's Expenses to Enforce this Agreement. The
Company or the Bank shall reimburse the Executive for all out-of-pocket
expenses, including, without limitation, reasonable attorney's fees, incurred by
the Executive in connection with successful enforcement by the Executive of the
obligations of the Company or the Bank to the Executive under this Agreement.
Successful enforcement shall mean the grant of an award of money or the
requirement that the Company or the Bank take some action specified by this
Agreement (i) as a result of court order; or (ii) otherwise by the Company or
the Bank following an initial failure of the Company or the Bank to pay such
money or take such action promptly after written demand therefor from the
Executive stating the reason that such money or action was due under this
Agreement at or prior to the time of such demand.
14. Adjustment of Certain Payments and Benefits.
a. Tax Indemnification. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the
event it shall be
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determined that any payment, benefit or distribution made or
provided by the Company or the Bank to or for the benefit of
the Executive (whether made or provided pursuant to the terms
of this Agreement or otherwise) (each referred to herein as a
"Payment"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") or any interest or penalties are incurred by the
Executive with respect to such excise tax (the excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Executive
shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
b. Determination of Gross-Up Payment. Subject to the provisions
of Section 14(c), all determinations required to be made under
this Section 14, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payments and the
assumptions to be utilized in arriving at such determination,
shall be made by a certified public accounting firm reasonably
acceptable to the Company as may be designated by the
Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company, the Bank and the
Executive within fifteen (15) business days of the receipt of
notice from the Executive that there have been Payments, or
such earlier time as is requested by the Company and the Bank.
All fees and expenses of the Accounting Firm shall be borne
solely by the Company and the Bank. Any Gross-Up Payment, as
determined pursuant to this Section 14, shall be paid by the
Company to the Executive within five days of (i) the later of
the due date for the payments of any Excise Tax, and (ii) the
receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the
Company and the Executive. 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 hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company and the Bank should have been made
("Underpayment"), consistent with the calculations required to
be made hereunder. In the event that the Company and the Bank
exhaust their remedies pursuant to Section 14(c) and the
Executive 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 Company to or for the benefit of
the Executive.
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c. Treatment of Claims. The Executive shall notify the Company
and the Bank in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the
Company and the Bank of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no
later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the
Company and the Bank of the nature of such claims and the date
on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the thirty
(30) day period following the date on which it gives such
notice to the Company and the Bank (or such shorter period
ending on the date that any payment of taxes with respect to
such claim is due). If the Company and the Bank notify the
Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
i. give the Company and the Bank any information reasonably
request by the Company and the Bank relating such claim,
ii. take such action in connection with contesting such
claim as the Company and 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
Company and the Bank,
iii. cooperate with the Company and the Bank in good faith in
order effectively to contest such claim, and
iv. permit the Company and the Bank to participate in any
proceedings relating to such claim; provided, however,
that the Company and the Bank shall bear and pay
directly all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest and indemnity and hold the Executive 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 14(c), the Company
and the Bank shall control all proceedings taken in
connection with such contest and, at their 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 their
sole option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the
Company and the Bank shall determine;
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provided, however, that if the Company and the Bank
direct the Executive to pay such claim and sue for a
refund, the Company and the Bank shall advance the
amount of such payment to the Executive, on an
interest-free 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.
Furthermore, the Company's and 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
Executive shall be entitled to settle or contest, as the
case may be, any other issues raised by the Internal
Revenue Service or any other taxing authority.
d. Adjustments to the Gross-Up Payment. If, after the receipt by
the Executive of an amount advanced by the Company pursuant to
Section 14(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of
Section 14(c)) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon
after applicable taxes). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to
Section 14(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim
and such denial of refund occurs prior to the expiration of
thirty (30) 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 the Gross-Up Payment.
15. Injunctive Relief. If there is a breach or threatened breach of
Section 10(h) of his Agreement or the prohibitions upon disclosure contained in
Section 9(c) of this Agreement, the Company or the Bank and the Executive agree
that there is no adequate remedy at law for such breach, and that the Company
and the Bank each shall be entitled to injunctive relief restraining the
Executive from such breach or threatened breach, but such relief shall not be
the exclusive remedy hereunder for such breach. The parties hereto likewise
agree that the Executive, without limitation, shall be entitled to injunctive
relief to enforce the obligations of the Company and the Bank under Section 11
of this Agreement.
16. Successors and Assigns.
a. This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Company or 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 Company or the Bank.
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b. Since the Bank and the Company are contracting for the unique
and personal skills of the Executive, the Executive shall be
precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the
Bank and the Company.
17. No Mitigation. The Executive 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 Executive as a result of any subsequent
employment.
18. Notices. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed as follows, or to such other address as shall have been
designated in writing by the addressee:
a. If to the Company or the Bank:
Copy to: Corporate Secretary
Coastal Financial Corporation
2619 Oak Street
Myrtle Beach, S.C. 29577
b. If to the Executive:
Mr. Phillip G. Stalvey
4826 Keel Court
Myrtle Beach, S.C. 29579
19. Joint and Several Liability; Payments by the Company and the Bank. To
the extent permitted by law, except as otherwise provided herein, the Company
and the Bank shall be jointly and severally liable for the payment of all
amounts due under this Agreement. The Company hereby agrees that it shall be
jointly and severally liable with the Bank for the payment of all amounts due
under this Agreement and shall guarantee the performance of the Bank's
obligations thereunder, provided that the Company shall not be required by this
Agreement to pay to the Executive a salary or any bonuses or any other cash
payments, except in the event that the Bank does not fulfill the obligations to
the Executive hereunder for such payments.
20. No Plan Created by this Agreement. The Executive, the Company and the
Bank expressly declare and agree that this Agreement was negotiated among them
and that no provision or provisions of this Agreement are intended to, or shall
be deemed to, create any plan for purposes of the Employee Retirement Income
Security Act or any other law or regulation, and the Company, the Bank and the
Executive each expressly waives any right to assert the contrary. Any assertion
in any judicial or administrative filing, hearing, or process by or on behalf of
the Executive or the Company or the Bank that such a plan was so created by this
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Agreement shall be deemed a material breach of this Agreement by the party
making such an assertion.
21. 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.
22. 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.
23. 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.
24. Headings. Headings contained herein are for convenience of reference
only.
25. Entire Agreement. This Agreement, together with any understandings or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof, other than written agreements with respect to specific plans, programs
or arrangements described in Sections 5 and 6. This Agreement supercedes and
replaces in its entirety the Agreement dated October 21, 1997, as amended,
between the Company, the Bank and the Executive.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set forth above.
Attest: COASTAL FINANCIAL CORPORATION
/s/ Susan J. Cooke By: /s/ J.T. Clemmons
- -------------------------------- -----------------------------------------
Susan J. Cooke J.T. Clemmons
Title: Chairman
/s/ Sandra R. Zanfini
- --------------------------------
Sandra R. Zanfini
Attest: COASTAL FEDERAL BANK
/s/ Susan J. Cooke By:/s/ J.T. Clemmons
- -------------------------------- -----------------------------------------
Susan J. Cooke J.T. Clemmons
Title: Chairman
/s/ Sandra R. Zanfini
- --------------------------------
Sandra R. Zanfini
Witness:
/s/ Carolyn A. Cremen /s/ Phillip G. Stalvey
- -------------------------------- -----------------------------------------
Carolyn A. Cremen EXECUTIVE Phillip G. Stalvey
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