EXHIBIT 10.8
Proposed Form of Change in Control Severance Agreement for Xxxxxx Xxxxxxxx
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made
and entered into as of this ___ day of ______________, 1999 (the "Commencement
Date"), by and between Alaska Federal Savings Bank (which, together with any
successor thereto which executes and delivers the assumption agreement provided
for in Section 5(a) hereof or which otherwise becomes bound by all of the terms
and provisions of this Agreement by operation of law, is hereinafter referred to
as the "Bank"), and Xxxxxx Xxxxxxxx (the "Executive").
WHEREAS, the Executive is currently serving as Vice
President/Controller; and
WHEREAS, the Board of Directors of the Bank (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Bank or of its holding company, Alaska Pacific
Bancshares, Inc. (the "Company"), 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 management personnel to the detriment of the Bank,
the Company and its stockholders; and
WHEREAS, the Board believes it is in the best interests of the Bank to
enter into this Agreement with the Executive in order to assure continuity of
management of the Bank and to reinforce and encourage the continued attention
and dedication of the Executive to the Executive's assigned duties without
distraction in the face of potentially disruptive circumstances arising from the
possibility of a change in control of the Company and/or the Bank, although no
such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. Certain Definitions.
(a) The term "Change in Control" means (1) an event of a nature that
results in the acquisition of control of the Company or the Bank within the
meaning of the Savings and Loan Holding Company Act under 12 U.S.C. Section
1467a and 12 C.F.R. Part 574 (or any successor statute or regulation) or
requires the filing of a notice with the Federal Deposit Insurance Corporation
under 12 U.S.C. Section 1817(j) (or any successor statute or regulation); (2) an
event that would be required to be reported in response to Item 1 of the current
report on Form 8-K, as in effect on the Effective Date, pursuant to Section 13
or 15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); (3) any
person (as the term is used in Sections 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 Company or the Bank
representing 25% or more of the combined voting power of the Company's or the
Bank's outstanding securities; (4) individuals who are
members of the board of directors of the Company immediately following the
Effective Date or who are members of the board of directors of the Bank
immediately following the Effective Date (in each
case, the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequently
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 Company's or the Bank's stockholders was approved by the nominating
committee serving under an Incumbent Board, shall be considered a member of the
Incumbent Board; or (5) consummation of a plan of reorganization, merger,
consolidation, sale of all or substantially all of the assets of the Company or
a similar transaction in which the Company is not the resulting entity, or a
transaction at the completion of which the former stockholders of the acquired
corporation become the holders of more than 40% of the outstanding common stock
of the Company and the Company is the resulting entity of such transaction;
provided that the term "Change in Control" shall not include an acquisition of
securities by an employee benefit plan of the Bank or the Company.
(b) The term "Commencement Date" means the date of this Agreement.
(c) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company (or its successors) that are part of the affiliated
group (as defined in Section 1504 of the Internal Revenue Code of 1986, as
amended (the "Code"), without regard to subsection (b) thereof) that includes
the Bank, including but not limited to the Company.
(d) The term "Date of Termination" means the date specified in the
Notice of Termination (which, in the case of a Termination for Cause shall not
be less than 30 days from the date such Notice of Termination is given, and in
the case of a termination for Good Reason shall not be less than 15 nor more
than 60 days from the date such Notice of Termination is given); provided,
however, that if within 15 days after any Notice of Termination is given, or, if
later, prior to the Date of Termination (as determined without regard to this
proviso), the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is finally determined,
whether by mutual written agreement of the parties, by a binding arbitration
award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); and provided,
further, that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Bank will continue to pay
the Executive the Executive's full salary at the rate in effect when the notice
giving rise to the dispute was given and continue the Executive as a participant
in all benefit and fringe benefit plans in which the Executive was participating
when the notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Section 1(d).
(e) The term "Good Reason" means the occurrence, without the
Executive's express written consent, of a material diminution of or interference
with the Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination specified in the Notice of
Termination given by the Executive in respect thereof:
(i) a requirement that the Executive be based at any location
not within 35 miles of Juneau, Alaska, or that she
substantially increase her travel on Company or Bank
business;
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(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material adverse
change in the Executive's perquisites, benefits, contingent
benefits or vacation, other than as part of an overall
program applied uniformly and with equitable effect to all
members of the senior management of the Company or the Bank;
(v) a material and extended increase in the required hours of
work or the workload of the Executive;
(vi) the failure of the Bank to obtain a satisfactory agreement
from any successor to assume the obligations and liabilities
under this Agreement, as contemplated in Section 5(a)
hereof; or
(vii) any purported termination of the Executive's employment
that is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 4 hereof (and, if
applicable, the requirements of Section 1(g) hereof), which
purported termination shall not be effective for purposes of
this Agreement.
(f) The term "Notice of Termination" means a notice of termination
of the Executive's employment pursuant to Section 7 of this Agreement.
(g) The term "Termination for Cause" means termination of the
employment of the Executive because of the Executive'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. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that her action or failure to act was in
the best interest of the Bank. Notwithstanding the foregoing, no Termination for
Cause shall be deemed to have occurred unless and until there shall have been
delivered to the Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board duly called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board), stating
that in the good faith opinion of the Board the Executive has engaged in conduct
described in the preceding sentence and specifying the particulars thereof in
detail.
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2. Term.
(a) The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to extension or earlier termination
as provided herein.
(b) Except as provided in section 2(c), beginning on the first
anniversary of the Commencement Date, and on each anniversary thereafter, the
term of this Agreement shall be extended for a period of one additional year,
provided that (i) neither the Executive nor the Company has given notice to the
other in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further; and (ii) prior to such
anniversary, the Board of Directors 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.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank
at any time from terminating the Executive's employment during the term of this
Agreement with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
(d) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank'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
Bank'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 Bank may in its discretion (i) pay the Executive all or part
of the remuneration withheld while its obligations under this Agreement were
suspended and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(e) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank'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 Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.
(f) If the Bank 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.
(g) 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 Bank: (i) 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 Bank under the authority contained in Section 13(c) of the
FDIA; or (ii) 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 Bank or when the Bank is determined 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.
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3. Severance Benefits.
(a) In the event that the Bank shall terminate the Executive's
employment other than Termination for Cause, or the Executive shall terminate
her employment for Good Reason, within 12 months following a Change in Control,
the Bank shall (i) pay the Executive her salary through the Date of Termination
at the rate in effect at the time the Notice of Termination is given, at the
time such payments are due; (ii) continue to pay, for a period of 12 months
following the Date of Termination, for the life, health and disability coverage
that is in effect with respect to the Executive and her eligible dependents at
the time the Notice of Termination is given; and (iii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 100% of the Executive's
"base amount" as determined under Section 280G of the Code, less the aggregate
present value of the payments or benefits, if any, in the nature of compensation
for the benefit of the Executive, arising under any other plans or arrangements
(i.e., not this Agreement) between the Company or any of the Consolidated
Subsidiaries and the Executive, which constitute "parachute payments" under
Section 280G of the Code.
Notwithstanding any other provision of this Agreement, if payments and
the value of benefits received or to be received under this Agreement, together
with any other amounts and the value of benefits received or to be received by
the Executive, would cause any amount to be nondeductible by the Company or any
of the Consolidated Subsidiaries for federal income tax purposes pursuant to or
by reason of Section 280G of the Code, then payments 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 be received by the Executive
without causing any amount to become nondeductible pursuant to or by reason of
Section 280G of the Code. The Executive shall determine the allocation of such
reduction among payments and benefits to the Executive.
(b) The Executive shall not be required to mitigate the amount of
any 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 Executive as
the result of employment by another employer, by retirement benefits after the
Date of Termination or otherwise. This Agreement shall not be construed as
providing the Executive any right to be retained in the employ of the Bank or
any affiliate of the Bank.
4. Notice of Termination. In the event that the Bank desires to
terminate the employment of the Executive during the term of this Agreement, the
Bank shall deliver to the Executive a written notice of termination, stating (i)
whether such termination constitutes Termination for Cause, and, if so, setting
forth in reasonable detail the facts and circumstances that are the basis for
the Termination for Cause, and (ii) specifying the Date of Termination. In the
event that the Executive desires to terminate her employment and determines in
good faith that she has experienced Good Reason to terminate her employment, she
shall send a written notice to the Bank stating the circumstances that
constitute Good Reason and the Date of Termination.
The Executive's right to terminate her employment for Good Reason shall
not be affected by the Executive's incapacity due to physical or mental illness.
The Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
under this Agreement.
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5. 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 Bank shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation, operation of law or otherwise) to
all or substantially all of the business and/or assets of the Bank, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform it if no such
succession or assignment had taken place. Failure of the Bank 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 Executive
to compensation and benefits from the Bank in the same amount and on the same
terms that she would be entitled to hereunder if she terminated her employment
for Good Reason, in addition to any payments and benefits to which the Executive
is entitled under Section 3 hereof. For purposes of implementing the provisions
of this Section 5(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 Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
6. Deferred Payments. If following a termination of the Executive, the
aggregate payments to be made by the Bank under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed the limitation on deductible compensation contained in
Section 162(m) of the Code in any calendar year, any such amounts in excess of
such limitation shall be mandatorily deferred with interest thereon at 8.0% per
annum to a calendar year such that the amount to be paid to the Executive in
such calendar year, including deferred amounts, does not exceed such limitation.
7. Delivery of Notices. For the purposes of this Agreement, all notices
and other communications to any party hereto shall be in writing and shall be
deemed to have been duly given when delivered or sent by certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxx Xxxxxxxx
At the address last appearing
on the personnel records of
the Executive
If to the Bank: Alaska Federal Savings Bank
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxx 00000
Attention: Secretary
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or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
8. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
9. 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.
10. 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.
11. Governing Law. This Agreement shall be governed by the laws of the
State of Alaska to the extent that federal law does not govern.
12. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location with
the Bank, in accordance with the rules of the American Arbitration Association
then in effect; provided, however, that the Executive shall be entitled to seek
specific performance of her rights under Section 1(d) during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction.
13. Reimbursement of Expenses. In the event any dispute shall arise
between the Executive and the Bank as to the terms or interpretation of this
Agreement, including this Section 13, whether instituted by formal legal
proceedings or otherwise, including any action taken by the Executive to enforce
the terms of this Section 13, or in defending against any action taken by the
Bank, the Bank shall reimburse the Executive for all costs and expenses incurred
by the Executive, including reasonable attorney's fees, arising from such
dispute, proceedings or actions, unless a court of competent jurisdiction
renders a final and nonappealable judgment against the Executive as to the
matter in dispute. Reimbursement of the Executive's expenses shall be paid
within ten days of the Executive furnishing to the Bank 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 Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
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THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: ALASKA FEDERAL SAVINGS BANK
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________________________ By:
________________________ Its:
EXECUTIVE
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