TRANSITIONAL EMPLOYMENT AGREEMENT
This
Agreement is made as of the 26th day of January, 1999, by and between First
Oak
Brook Bancshares, Inc., a Delaware corporation (the "Employer") and the
undersigned officer (the "Executive").
WITNESSETH:
WHEREAS,
the Executive is being hired by the Employer's subsidiary, Oak Brook Bank;
and
WHEREAS,
the Employer wishes to assure both itself and the Executive of continuity of
management in the event of any actual Change in Control (as defined in Paragraph
2) of the Employer on the terms and conditions set forth herein;
and
WHEREAS,
the Executive desires to provide such services and continuity; and
WHEREAS,
to achieve this purpose, the Board of Directors of the Employer considered
and
approved this Agreement to be entered into with the Executive as being in the
best interests of the Employer and its stockholders;
NOW,
THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties hereto agree as follows:
1. Term.
This
Agreement shall become effective upon the occurrence of a Change in Control
(as
defined in Paragraph 2, below) (hereinafter called the "Effective Date of this
Agreement") and shall remain in effect for a term continuing until the end
of
the twelfth (12th) calendar month following the month in which the Effective
Date of this Agreement occurs; provided, however, that, anything in this
Agreement to the contrary notwithstanding, if a Change in Control occurs and
if
the Executive's employment with the Employer was terminated within six (6)
months prior to the date on which the Change in Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment
(a)
was at the request of a third party who was taking steps reasonably calculated
to effect a Change in Control or (b) otherwise arose in connection with or
anticipation of a Change in Control, then for all purposes of this Agreement
the
"Effective Date of this Agreement" shall mean the date immediately prior to
the
date of such termination of employment,
2. Change
in Control.
For the
purposes of this Agreement, a "Change in Control" sha11 be deemed to have
occurred if:
a) |
Any
“person” is or becomes the “beneficial owner” directly or indirectly of
securities of the Employer representing more than fifty percent (50%)
of
the combined voting power of the Employer's then outstanding securities
entitled to vote generally in the election of directors (the "Voting
Stock"); or
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b) |
Continuing
Directors cease for any reason to constitute at least a majority
of the
entire Board of Directors of the Employer;
or
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c) |
The
consummation of a business combination involving the Employer (or
any
direct or indirect subsidiary of the Employer) occurs, unless after
such a
business combination (i) the shareholders of the Employer immediately
prior to the business combination continue to own, directly or indirectly,
more than fifty percent (50%) of the combined voting power of the
then
outstanding voting securities entitled to vote generally in the election
of directors of the new (or continuing) entity immediately after
the
business combination, and (ii) at least a majority of the members
of the
board of directors of the entity resulting from the business combination
were Continuing Directors at the time of the execution of the initial
agreement, or of the action of the Board, providing for such business
combination; or
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d) |
A
complete liquidation or dissolution of the Employer or consummation
of the
sale or other disposition of all or substantially all of the assets
of the
Company.
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For
purposes of foregoing, “person” and “beneficial owner” shall be as defined in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended,
and
the regulations thereunder. A Change in Control shall not be deemed to have
occurred under subparagraph (a) above, if the beneficial owner is a corporation
owned directly or indirectly by the shareholders of the Employer in
substantially the same proportions as their ownership of the Voting Stock,
an
employee benefit plan of the Employer or any subsidiary of the Employer, or
any
person who, as of January 26, 1999, is the beneficial owner of more than fifty
percent (50%) of the Voting Stock. For purposes of subparagraph (b), an
individual will be a “Continuing Director” if he or she is a director of the
Employer on January 26, 1999, or becomes a director of the Employer thereafter,
provided the individual was elected, or was nominated for an election to occur
at a meeting of stockholders, by a majority of the Continuing Directors still
in
office; provided, however, that in no event shall an individual be considered
a
Continuing Director if the individual was designated for election or nomination
by a person who has entered into an agreement with the Employer to effect an
acquisition described in subparagraph (a) or a business combination described
in
subparagraph (c). For purposes of subparagraph (c), a business combination
shall
mean a merger or consolidation, or an issuance of securities by the Employer
in
connection with a merger or consolidation, involving the Employer (or any direct
or indirect subsidiary of the Employer).
3. Employment.
The
Employer hereby agrees to continue or to cause one of its affiliates to continue
the Executive in its employ for a period of twelve (12) months commencing on
the
Effective Date of this Agreement (the “Employment Period”) with title, duties
and responsibilities comparable to those of the Employer's or Oak Brook Bank's
senior bank officers immediately prior to the Effective Date of this Agreement,
as the same may from time to time be assigned or reassigned to the Executive
by
the Board of Directors of the Employer or such affiliate which employs
Executive.
4. Compensation.
During
the Employment Period, the Executive shall receive an annual salary at a rate
which is not less than her rate of annual salary immediately prior to the
Effective Date of this Agreement.
5. Termination
During Employment Period.
(a) For
purposes of
this
Agreement, the
term
"termination" shall mean (i) termination by the
Employer
of the employment of the Executive with the Employer and all of its affiliates
for any reason other than death, disability or "cause"
(as
defined below), or (ii) resignation of the Executive for "constructive
discharge" (as defined below).
(b) The
term
"constructive discharge" shall mean the Executive's resignation from the
Employer and all of its affiliates upon any one of the following:
(i) the
failure of the Employer to pay the annual salary contemplated by Paragraph
4 of
this Agreement;
(ii) there
shall have occurred a material diminution in the Executive's
duties
and responsibilities from those in effect prior to the Effective Date of this
Agreement; and/or
(iii) the
Employer changes the Executive's (A) primary employment location to a place
that
is more than 35 miles from Executive's primary employment location as of the
Effective Date of the Agreement and/or (B) regularly scheduled work hours
significantly from such hours as of the Effective Date of the
Agreement,
(c) The
term
"cause" means (i) felony conviction resulting from an act or acts of
dishonesty
or breach of trust, other than a felony predicated upon the Executive's
vicarious liability or
(ii)
the Executive's continued and willful failure to substantially perform her
duties under this Agreement.
For purposes of this paragraph,
no act or failure to act on the Executive's part
will
be
considered "willful" unless done, or omitted to be done, by her not in good
faith and without reasonable
belief that her action or omission was in the interests of the Employer and
its
affiliates
or not
opposed to the interests of the Employer and its affiliates,
6. Confidentiality.
The
Executive agrees
that during
and after the Employment Period, she
shall
retain in confidence any confidential information known to her concerning the
Employer
and its
affiliates and their respective businesses for as long as such information
is
not publicly disclosed.
7. Termination
Benefits,
In the
event of a termination of the Executive during the Employment Period, the
Employer shall provide or shall cause one or more of its affiliates to provide,
and the Executive shall, upon execution of a Release and Severance Agreement
in
the form attached hereto as Appendix A, shall be entitled to receive the
following:
(a) The
Executive shall, notwithstanding such termination, be entitled to continue
to
receive salary payments for twelve (12) months from the date of termination
(which twelve month period shall be treated hereunder as a continuation of
Employment Period) based on the rate of annual salary in effect pursuant to
Paragraph 4 of this Agreement, provided that the payments pursuant to this
Paragraph 7(a) shall be subject to reduction in accordance with Paragraph
8(a).
(b) Payment
of all accrued but deferred bonuses as of the Effective Date of this Agreement,
or if later, the date of termination, which payments shall be made in
installments on such dates and in such amounts as such bonuses would have been
paid notwithstanding such termination.
(c) The
Executive (and, if applicable, Executive's dependents) shall be entitled to
maintain group medical and dental coverage under the continuation coverage
provisions of such plans ("COBRA Coverage"), which entitlement shall,
notwithstanding any other provisions of the group plan to the contrary, be
subject to termination only in the event of the failure of the Executive or
the
dependent to timely pay the appropriate premium for such coverage, provided,
that the Employer shall pay on behalf of the Executive (and, if applicable,
the
Executive's dependents) the appropriate premium for the first 12 months of
such
coverage, and, provided further that such coverage shall be secondary to any
group coverage (including Medicare or any government-sponsored or mandated
program) subsequently obtained or covering the Executive or
dependent.
The
Executive agrees that if she is terminated and receives the benefits set forth
in this paragraph 7, she will not recruit or solicit any employees of the
Employer or the Employer's subsidiaries to leave the employment of the Employer
or the Employer's subsidiaries nor shall she solicit any customers of the
Employer or the Employer's subsidiaries to cease doing business with the
Employer or the Employer's subsidiaries during the Employment
Period,
8. Reduction
of Payments Due to Excise Tax.
(a)
If it
is determined (in the reasonable opinion of independent public accountants
then
regularly retained by the Employer in consultation with tax counsel acceptable
to Executive), that any amount payable to Executive by the Employer under this
Agreement or any other plan, program or arrangement under which Executive
participates or is a party would constitute an "Excess Parachute Payment" within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
from time to time (the "Code"), subject to the excise tax imposed by Section
4999 of the Code, as amended from time to time (the "Excise Tax"), then the
amounts payable to the Executive shall be reduced to the extent necessary so
that no portion of such amounts payable to the Executive is subject to the
Excise Tax. The determination of the amount of reduction, if any, in the mounts
payable to the Executive under Paragraphs 7(a) and 7(b) under Paragraphs 7(a)
and 7(b) shad be made in good faith by the Employer's Compensation Committee
after consultation with the independent public accountants then regularly
retained by the Employer and tax counsel acceptable to the Executive, and a
written statement setting forth the calculation thereof shall be provided to
the
Executive. If amounts payable to the Executive are to be reduced pursuant to
this Paragraph 8(a), the Employer's Compensation Committee, after consultation
with the Executive, shall determine the payments to be so reduced.
(b) In
the
event it is determined that the Excise Tax may be imposed on the Executive
prior
to any reductions pursuant to the preceding Paragraph 8(a), the Employer and
the
Executive agree to take such actions as they may, in good faith, agree to take
to avoid any such reduction,
(c) The
Employer shall withhold from any amounts paid under this Agreement the amount
of
any applicable federal, state, or local taxes then required to be withheld.
Computations under this Paragraph 8 shall be made by the independent public
accountants then regularly retained by the Employer in consultation with tax
counsel acceptable to Executive. The Employer shall pay all accountants' and
tax
counsel's fees and expenses,
9. No
Obligation to Mitigate Damages.
The
Executive shall not be obligated to seek other employment in mitigation of
amounts payable or arrangements made under the provisions of this Agreement
and
the obtaining of any such other employment shall in no event effect any
reduction of the Employer's obligations under this Agreement.
10. Enforcement;
Arbitration.
(a)
In
the event the Employer shall fail to pay any amounts due to Executive or any
successor under this Agreement or any plan, program or arrangement referred
to
herein as they come due, the Employer agrees to pay interest on such amounts
at
the prime rate of interest as from time to time published in The
Wall Street Journal
(Midwest
Edition) until
paid.
(b) Each
of
the Employer and the Executive or any successor shall have the right and option
to elect to have any dispute or controversy arising under or in connection
with
this Agreement, or any plan, program or arrangement referred to herein, or
any
breach thereof, settled exclusively by arbitration, conducted before an
arbitrator in accordance with rules of the American Arbitration Association
then
in effect. Judgment may be entered on the award of the arbitrator in any court
having jurisdiction. Any such arbitration shall be held in Chicago,
Illinois.
(c) The
Employer shall pay all reasonable legal fees, costs of litigation, and other
reasonable expenses incurred by the Executive or any successor who is successful
pursuant to Legal judgment, arbitration or settlement in a challenge resulting
from the Employer's refusal to pay any amounts due under this Agreement or
any
plan, program or arrangement referred to herein to which it is determined that
the Executive or successor is entitled, or as a result of the Employer's
contesting the validity, enforceability or interpretation of this Agreement
or
any such plan, program or arrangement.
(d) As
a
condition precedent to the commencement of any action under this Agreement
or
any plan, program or arrangement referred to herein, each of the Employer or
the
Executive or any successor agree to provide written notice (“initial notice”) at
least fifteen (15) business days prior to initiating any such action wherein
such party shall (i) agree to submit such dispute to non-binding mediation
to be
held in Chicago, Illinois at JAMS/Endispute (or a similar organization) within
30 days of such notice and (ii) indicate whether such party is invoking
arbitration pursuant to Paragraph 10(b) above, The party receiving such notice
shall agree to submit
to
such
mediation and, if the initial notice did not include an election invoking
arbitration, then the receiving party may by written notice within ten (10)
business days following receipt of the initial notice elect to invoke
arbitration pursuant to said Paragraph 10(b).
11. Payment
in the Event of Death.
Upon the
death of the Executive prior to a termination, any payment due and owing by
the
Employer to Executive under this Agreement shall be made to such beneficiary
as
Executive may designate in writing, or failing such designation, the executor
of
her estate. Upon the death of the Executive after a termination has occurred,
then the beneficiary designated by the Executive or, if no beneficiary has
been
designated, his executor shall be entitled. to a lump sum death benefit equal
to
the present value of the payments that were retraining to be paid under
Paragraph 7(a) as of the date of death. Such lump sum present value payment
shall be determined using an interest rate per a rum equal to the prime rate
of
interest as published in The
Wall Street Journal (Midwest Edition)
on the first business day of the month in which the executive's death
occurred and shall be paid within 30 days of the date of death. Such payments
shall be in addition to the amount of the bonus payment, if any, which may
thereafter be due under Paragraph 7(b), any other death benefits provided by
the
Employer or under any plan, program or arrangement maintained by the
Employer,
12. Notices.
Any
notices, requests, demands and other communications provided for
by
this Agreement shall be
sufficient if in writing and if sent by registered or certified mail to the
Executive at the last address he has filed in writing the Employer or, in the
case of the Employer, at its principal executive offices.
13. Non-Alienation.
The
Executive shall not have any right to pledge, hypothecate, anticipate or in
any
way create a lien upon any amounts provided under this Agreement; and no
benefits payable hereunder shall be assignable in anticipation of payment either
by voluntary or involuntary acts, or by operation of law, except by will or
the
laws of descent and distribution.
14. Governing
Law.
The
provisions of this Agreement shall be construed in accordance with the laws
of
the State of Illinois.
15. Amendment.
This
Agreement may be amended or canceled by mutual agreement of the parties in
writing (which, with respect to the Employer in the case of an amendment prior
to the Effective Date of the Agreement, shall have been approved by resolution
of the Board of Directors of the Employer) without the consent of any other
person and, so long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the subject
matter hereof.
16. Binding
Effect; Successors.
Except
as otherwise provided herein, this Agreement shall be binding upon and inure
to
the benefit of the Employer and any successor of the Employer and to the benefit
of Executive's executors, administrators, legal representatives, heirs and
legatees. The Employer shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, expressly and
unconditionally to assume and agree to perform the Employer's obligations under
this Agreement, whereupon such successor or assignee shall become the Employer
hereunder.
17.
Severability.
In the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.
IN
WITNESS WHEREOF,
the
Executive has hereunto set her hand and, pursuant to the authorization from
its
Board of Directors, the Employer has caused this Agreement to be executed in
its
name on its behalf, and its corporate seal to be hereunto affixed and attested
by its Secretary, all as of the day and year first above written.
FIRST
OAK
BROOK BANCSHARES, INC.
By: | By: | ||
Its: President | Employee | ||
ATTEST: