EXHIBIT 10.4
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") is made and
entered into as of this _______ day of __________________, 1997, by and between
Peoples Federal savings and Loan Association of Xxxxxx (hereinafter referred to
as the "Association" whether in mutual or stock form), and Xxxxxx Xxxxx (the
"Employee").
WHEREAS, the Employee is currently serving as Assistant Vice President of
Financial Services of the Association; and
WHEREAS, the Association has adopted a plan of conversion whereby the
Association will convert to capital stock form as the subsidiary of
Peoples-Xxxxxx Financial Corporation (the "Holding Company"), subject to the
approval of the Association's members and the Office of Thrift Supervision (the
"Conversion"); and
WHEREAS, the board of directors of the Association ("Board of Directors")
recognizes that, as is the case with publicly held corporations generally, the
possibility of a change in control of the Holding Company and/or the Association
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of key
management personnel to the detriment of the Association, the Holding Company
and their respective stockholders; and
WHEREAS, the Board of Directors believes it is in the best interests of the
Association to enter into this Agreement with the Employee in order to assure
continuity of management of the Association and to reinforce and encourage the
continued attention and dedication of the Employee to the Employee's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Holding Company or
the Association, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution
of this Agreement with the Employee to take effect as stated in Section 2
hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means the occurrence of any of the
following events: (1) an event of a nature that (i) is a change in control of
the Association or the Holding Company within the meaning of the Home Owners'
Loan Act of 1933 and 12 C.F.R. Part 574 as in effect on the date hereof; or (ii)
would be required to be reported in response to Item 1 of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); (2) any person (as the
term is used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly of securities of the Association or the Holding Company representing
20% or more of the Association's or the Holding Company's outstanding
securities; (3) individuals who are members of the board of directors of the
Association or the Holding Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by the nominating committee serving under an Incumbent
Board, shall be considered a member of the Incumbent Board; or (4) a
reorganization, merger, consolidation, sale of all or substantially all of the
assets of the Association or the Holding Company or a similar transaction in
which the Association or the Holding Company is not the resulting entity. The
term "Change in Control" shall not include an acquisition of securities by an
employee benefit plan of the Association or the Holding Company or the
acquisition of securities of the Association by the Holding Company in
connection with the Conversion.
(b) The term "Commencement Date" means the date of completion of the
Conversion.
(c) The term "Date of Termination" means the earlier of (1) the date upon
which the Association gives notice to the Employee of the termination of the
Employee's employment with the Association or (2) the date upon which the
Employee ceases to serve as an employee of the Association.
(d) The term "Involuntarily Termination" means termination of the
employment of Employee without the Employee's express written consent, and
shall, subject to the last sentence in this paragraph, include a material
diminution of or interference with the Employee's duties, responsibilities and
benefits as Assistant Vice President of Financial Services of the Association,
including (without limitation) any of the following actions unless consented to
in writing by the Employee: (1) a change in the principal workplace of the
Employee to a location outside of a 30 mile radius from the Association's
headquarters office as of the date hereof; (2) a material demotion of the
Employee; (3) a material reduction in the number or seniority of other
Association personnel reporting to the Employee or a material reduction in the
frequency with which, or in the nature of the matters with respect to which,
such personnel are to report to the Employee, other than as part of a
Association- or Holding Company-wide reduction in staff; (4) a material adverse
change in the Employee's salary, other than as part of an overall program
applied uniformly and with equitable effect to all members of the senior
management of the Association or the Holding Company; and (5) a material
permanent increase in the required hours of work or the workload of the
Employee. The term "Involuntary Termination" does not include Termination for
Cause or termination of employment due to retirement, death, disability or
suspension or temporary or permanent prohibition from participation in the
conduct of the Association's affairs under Section 8 of the Federal Deposit
Insurance Act ("FDIA").
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Employee because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of a 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.
2. Term. The term of this Agreement shall be a period of one year commencing on
the Commencement Date, subject to earlier termination as provided herein.
Beginning on the first
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anniversary of the Commencement Date, and on each anniversary thereafter, the
term of this Agreement shall be extended for a period of one year in addition to
the then-remaining term, provided that, prior to such anniversary, the Board of
Directors of the Association explicitly reviews and approves the extension.
Reference herein to the term of this Agreement shall refer to both such initial
term and such extended terms.
3. Severance Benefits; Regulatory Provisions.
(a) Involuntary Termination in Connection With a Change in Control. In the
event of Involuntary Termination in connection with or within 12 months after a
Change in Control which occurs during the term of this Agreement, the
Association shall, subject to Section 4 of this Agreement, (1) pay to the
Employee in a lump sum in cash within 25 business days after the Date of
Termination an amount equal to 100% of the Employee's "base amount" as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code");
and (2) provide to the Employee during the remaining term of this Agreement
following the Date of Termination, such health insurance benefits as the
Association maintained for the Employee at the Date of Termination on terms as
favorable to the Employee as applied at the Date of Termination.
(b) Temporary Suspension or Prohibition. If the Employee is suspended
and/or temporarily prohibited from participating in the conduct of the
Association's affairs by a notice served under Section 8(e)(3) or (g)(1) of the
FDIA, 12 U.S.C. ss. 1818(e)(3) and (g)(1), the Association's obligations under
this Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion (i) pay the Employee all or part of the
compensation withheld while its obligations under this Agreement were suspended
and (ii) reinstate in whole or in part any of its obligations which were
suspended.
(c) Permanent Suspension or Prohibition. If the Employee is removed and/or
permanently prohibited from participating in the conduct of the Association's
affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12
U.S.C. ss. 1818(e)(4) and (g)(1), all obligations of the Association under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
(d) Default of the Association. If the Association is in default (as
defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement
shall terminate as of the date of default, but this provision shall not affect
any vested rights of the contracting parties.
(e) Termination by Regulators. All obligations under this Agreement shall
be terminated, except to the extent determined that continuation of this
Agreement is necessary for the continued operation of the Association: (1) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Association under the
authority contained in Section 13(c) of the FDIA; or (2) by the Director or his
or her designee, at the time the Director or his or her designee approves a
supervisory merger to resolve problems related to operation of the Association
or when the Association is determined
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by the Director to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by any such
action.
4. Certain Reduction of Payments by the Association.
(a) Notwithstanding any other provision of this Agreement, if the value and
amounts of benefits under this Agreement, together with any other amounts and
the value of benefits received or to be received by the Employee in connection
with a Change in Control would cause any amount to be nondeductible by the
Association or the Holding Company for federal income tax purposes pursuant to
Section 280G of the Code, then amounts and benefits under this Agreement shall
be reduced (not less than zero) to the extent necessary so as to maximize
amounts and the value of benefits to the Employee without causing any amount to
become nondeductible by the Association or the Holding Company pursuant to or by
reason of such Section 280G. The Employee shall determine the allocation of such
reduction among payments and benefits to the Employee.
(b) 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.
ss. 1828(k) and any regulations promulgated thereunder.
5. No Mitigation. The Employee shall not be required to mitigate the amount of
any salary or other payment or benefit provided for in this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by the
Employee as the result of employment by another employer, by retirement benefits
after the date of termination or otherwise.
6. Attorneys and/or Fees. If the Employee is purportedly Terminated for Cause
and the Association denies payments and/or benefits under Section 3(a) of this
Agreement on the basis that the Employee experienced Termination for Cause
rather than Involuntary Termination, but it is determined by a court of
competent jurisdiction or by an arbitrator pursuant to Section 13 that cause as
contemplated by Section 2(e) of this Agreement did not exist for termination of
the Employee's employment, or if in any event it is determined by any such court
or arbitrator that the Association has failed to make timely payment of any
amounts or provision of any benefits owed to the Employee under this Agreement,
the Employee shall be entitled to reimbursement for all reasonable costs,
including attorneys' fees, incurred in challenging such termination of
employment or collecting such amounts or benefits. Such reimbursement shall be
in addition to all rights to which the Employee is otherwise entitled under this
Agreement.
7. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Association shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Association, by an
assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform
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this Agreement in the same manner and to the same extent that the Association
would be required to perform it if no such succession or assignment had taken
place. Failure of the Association to obtain such an assumption agreement prior
to the effectiveness of any such succession or assignment shall be a breach of
this Agreement and shall entitle the Employee to compensation from the
Association in the same amount and on the same terms as the compensation
pursuant to Section 3(a) hereof. For purposes of implementing the provisions of
this Section 7(a), the date on which any such succession becomes effective shall
be deemed the Date of Termination.
(b) This Agreement and all rights of the Employee hereunder shall inure to
the benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any amounts would still
be payable to the Employee hereunder if the Employee had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Employee's devisee, legatee or other designee
or if there is no such designee, to the Employee's estate.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Association at its home
office, to the attention of the Board of Directors with a copy to the Secretary
of the Association, or, if to the Employee, to such home or other address as the
Employee has most recently provided in writing to the Association.
9. Amendments. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties, except as herein otherwise
provided.
10. Headings. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
11. 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.
12. Governing Law. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of Ohio.
13. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator's award in any court having jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
ATTEST: PEOPLES FEDERAL SAVINGS AND
LOAN ASSOCIATION OF XXXXXX
----------------------
Secretary By: _________________________
Its: President and Chief Executive Officer
EMPLOYEE
_________________________________
Xxxxxx Xxxxx
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