EXHIBIT 10.14
SEVERANCE AGREEMENT AND RELEASE
This Severance Agreement and Release ("Agreement") is between Citizens
Financial Services, FSB, a federally chartered savings bank doing business in
Indiana, and CFS Bancorp, Inc., an Indiana corporation (collectively,
"Citizens"), and Xxxxx X. Xxxxxx ("Executive"), a resident of the State of
Indiana:
I. RECITATIONS
1.01. Executive currently serves as the Vice Chairman of the Board of
Directors and President and Chief Operating Officer of Citizens, and is a
Director of Citizens.
1.02. Executive agrees to resign his employment with Citizens and his
service as a Director on Citizens' Board of Directors in consideration of the
payment and benefits set forth in Section IV of this Agreement.
II. INTENTION OF THE PARTIES
2.01. Citizens and Executive intend and expect that Executive shall
surrender and renounce all privileges and rights that derive from his employment
by Citizens (including, but not limited to, the privileges and rights derived
under the Employment Agreement, dated July 21, 2003, between Executive and CFS
Bancorp, Inc. and the Employment Agreement, dated July 21, 2003, between
Executive and Citizens Financial Services, FSB), and the separation thereof, and
service as a Director of Citizens, except any and all rights Executive has
pursuant to any pension or other retirement benefit plan, profit sharing, stock
option, employee stock ownership, or other plans (the "Plans") in which
Executive participated as of the Resignation Date subject to and in accordance
with the applicable provisions thereof.
III. AGREEMENTS OF EXECUTIVE
3.01. RESIGNATION. Executive's employment with Citizens will terminate on
August 20, 2004 (the "Resignation Date"). Effective on the Resignation Date,
Executive will be relieved of all duties for and responsibilities with Citizens.
Executive hereby resigns any and all officer, director and other positions with
Citizens or any of its affiliates or Plans effective on the Resignation Date.
3.02. CONSIDERATION. With the exception of Executive's accrued, but unused
(if any), vacation time, the severance payment and benefits set forth in Section
IV of this Agreement shall be the only payment and benefits stemming from
Executive's employment with Citizens to which he shall be entitled following his
resignation. Executive agrees that such payment is in addition to any other
payments (if any) owed Executive by Citizens.
3.03. NO ADMISSION OF LIABILITY. Executive agrees that the payment and
benefits set forth in Section IV of this Agreement shall not be deemed or
construed at any time for any purpose as an admission of liability or violation
of any applicable law by Citizens. Liability for any and all claims is expressly
denied by Citizens.
3.04. RELEASE. Executive agrees that in consideration of the payment and
benefits set forth in Section IV of this Agreement, Executive hereby releases
and forever discharges Citizens and its officers, directors, representatives,
successors and assigns, and all persons acting by, through, under, or in concert
with any of them, from all legal and equitable causes of action, that exist or
have accrued as of the date of this Agreement, whether known or unknown,
suspected or unsuspected including, but not limited to, all charges, complaints,
claims, demands, liabilities, and obligations of any kind or nature that could
be asserted against Citizens by reason of Executive's employment relationship
with Citizens, or separation thereof, or by Executive's shareholder relationship
with Citizens. This irrevocable and unconditional release includes, but is not
limited to, claims arising pursuant to the Civil Rights Act of 1866; Title VII
of the Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act, as amended ("ADEA"); the Older Workers Benefit Protection Act
("OWBPA"); the Americans with Disabilities Act; the Family and Medical Leave
Act; the Employee Retirement Income Security Act of 1974, as amended; the Fair
Labor Standards Act; the Indiana Wage Payment Act; the Indiana Wage Claims Act;
the Indiana Civil Rights Act; any state wage and hour laws; any state contract
or tort law including, but not limited to, wrongful termination, breach of
contract, breach of fiduciary duty, and infliction of emotional distress; any
claims for attorneys' fees; or claims for any rights to future employment, wages
and benefits with Citizens other than those set forth herein. This is not a
release or discharge of any of Citizens' continuing obligations set forth in
this Agreement.
3.05. NO HOSTILE ACTION. Executive agrees that he will not, without the
prior written consent of Citizens:
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of Citizens or any subsidiary
thereof, or any successor to or person in control of Citizens, or any assets of
Citizens, or any subsidiary or division thereof or of any such successor or
controlling person beyond Executive's beneficial ownership of shares of common
stock (including stock options) of Citizens as of the Resignation Date;
(b) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules of the
Securities and Exchange Commission), devote or seek to advise or influence any
person or entity with respect to the voting of, any voting securities of
Citizens;
(c) make any public announcement with respect to, or submit a proposal
for, or offer of (with or without conditions), any transaction or shareholder
proposal involving Citizens or its securities or assets;
(d) form, join or in any way participate in a "group" (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) in
connection with any of the foregoing; or
(e) request Citizens to amend or waive any provision of this paragraph.
Executive will promptly advise Citizens of any inquiry or proposal made to him
with respect to any of the foregoing.
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3.06. CONFIDENTIALITY, NONCOMPETITION AND NONSOLICITATION.
(a) For a period of three (3) years from the date of execution of this
Agreement, Executive shall not, at any time or place, either directly or
indirectly, engage in any business or activity in competition with the business
affairs or interests of Citizens or be a director, officer or consultant to any
bank, savings and loan association, credit union, thrift, savings bank or
similar institution in the Chicago-Xxxx-Kenosha CMSA (as reported by the U.S.
Census Bureau). For purposes of this Agreement, "Competition" is defined as
activities typically engaged in by financial institutions, including, but not
limited to, lending, deposit taking, and investments.
(b) For the purposes of this Agreement, directly or indirectly engaging in
a business activity in competition with the business or affairs of Citizens
includes, but is not limited to, serving or acting as an owner, partner, agent,
beneficiary or employee of any person, firm or corporate entity so engaged;
except nothing herein contained shall be deemed to prevent or limit the right of
Executive to invest any of his surplus funds in the capital stock or other
securities of any corporation whose stock or securities are publicly owned or
are regularly traded on any public exchange, nor shall anything herein contained
be deemed to prevent Executive from investing or limit Executive's right to
invest his surplus funds in real estate.
(c) Until such time as the information is generally known in the public
domain, all information relating to the business of Citizens, including, but not
limited to, that business obtained or serviced by Executive and all customer
listings, contact lists, expiration cards, asset reports, instruments,
documents, papers and other material used in connection with such business,
shall be considered confidential and proprietary information of Citizens, and
shall be the exclusive property of Citizens. Executive shall keep all such
information and material confidential. Executive shall return any such
information in his possession as of his Resignation Date, including all copies
he has made thereof. Executive represents that he has not directly or indirectly
provided such information to any third parties prior to returning the
information to Citizens.
(d) Executive agrees that for a period of three (3) years following his
Resignation Date, he will not:
(i) solicit any of Citizens' current customers or clients, defined
as customers or clients doing business with Citizens in the
two (2) year period prior to Executive's Resignation Date, for
the purpose of engaging in any activity which could be
considered "Competition" as defined herein;
(ii) divulge the names of any of Citizens' current customers or
clients to any other person, corporation or entity;
(iii) divulge to anyone, except Citizens or its representatives, any
information regarding Citizens' management strategies,
marketing information or goals, policies and/or other
information regarding the affairs of Citizens,
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all of which Executive is hereby obligated to keep secret,
however and whenever such information comes to his attention;
and
(iv) either directly or indirectly induce or solicit any person to
leave the employ of Citizens.
3.07. CONFIDENTIALITY OF AGREEMENT. Executive agrees that the terms of
this Agreement are confidential in nature and he will not share the terms of
this Agreement with anyone other than his family, accountant, lawyer or
financial advisor.
3.08. NON-DISPARAGEMENT. Executive agrees that he shall make no
disparaging comments about Citizens or any of its officers or directors to any
third parties following the execution of this Agreement.
3.09. VOLUNTARY EXECUTION. Executive acknowledges and agrees that he is
executing this Agreement of his own free will and is not executing this
Agreement under any type of coercion or duress.
3.10. CONSIDERATION AND WAIVER PERIOD. Executive acknowledges and agrees
that Citizens has informed him that he has a period of time of not less than
twenty-one (21) days within which to consider this Agreement or a reasonable
facsimile thereof. Executive acknowledges that he has been advised by Citizens
that, in the event he executes this document, he is entitled to revoke his
waiver of rights or claims arising under the ADEA and OWBPA within seven (7)
days after executing this document and that said waiver will not and does not
become effective or enforceable until the seven (7) day revocation period has
expired. This revocation must be in writing and personally delivered, or sent by
certified mail, postmarked no later than the seventh (7th) day following the
execution of this Agreement, to Xxxxxx X. Xxxxxx, CFS Bancorp, Inc., 000 Xxxxx
Xxxx, Xxxxxxx, Xxxxxxx 00000.
IV. AGREEMENTS OF CITIZENS
4.01. SEVERANCE PAYMENT. Following the expiration of any applicable
waiting periods provided in Section 3.10 hereof (provided Executive has not made
a revocation pursuant to Section 10 hereof), and in consideration of Executive's
resignation and the surrender of all rights Executive may have against Citizens
that stem from his employment with or service as an officer or director of
Citizens, or the termination thereof, or as a shareholder of Citizens, Citizens
shall pay Executive in cash or cash equivalent funds, less all withholdings
required by federal, state and local law, the following amounts:
(a) Six Hundred Thousand Dollars ($600,000.00) within ten (10) days
following the date of executive of this Agreement; and
(b) Four Hundred Thousand Dollars ($400,000.00) on January 3, 2005.
Such payment will be in addition to amounts otherwise owed to Executive by
Citizens and is in consideration for the covenants set forth in this Agreement.
Any earned but unpaid portion of Executive's base salary, at his then-effective
annual rate, plus any amounts accrued by
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Executive under Citizens' accrued vacation program through the Resignation Date
will be paid to him on the payroll date that coincides with or immediately
follows the Resignation Date.
4.02. BENEFITS. Executive shall be entitled, following his Resignation
Date, to receive such benefits as are provided under the Plans in which he
participated as of his Resignation Date, subject to and in accordance with the
applicable provisions thereof.
4.03. COBRA OR RETIREE HEALTH COVERAGE. Executive is entitled, under the
Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA"), to continued
health insurance coverage to the same extent that he was covered on his
Resignation Date. He shall be advised of those rights pursuant to a COBRA
notification letter. The qualifying date for COBRA will be the same as
Executive's Resignation Date. In the event Executive chooses to elect retiree
health insurance coverage offered by Citizens, such coverage will be provided
pursuant to the terms of that plan.
4.04. INDEMNIFICATION. Citizens shall indemnify and hold Executive
harmless from any claims, lawsuits or actions filed against him, which accrued
while he was serving as an officer or Director of Citizens, pursuant to the
terms and conditions of the indemnification provisions of Citizens' By-Laws
and/or Articles of Incorporation or Charter as in effect on the Resignation
Date. Citizens shall also indemnify and hold Executive harmless from any claims,
lawsuits, or actions filed against him in his capacity as a director, officer,
employee or agent of another corporation, association, partnership, joint
venture, trust or other enterprise where Executive serves in such capacity at
the request of Citizens, accruing prior to or including Executive's Resignation
Date, pursuant to the terms and conditions of the indemnification provisions of
Citizens' By-Laws and/or Articles of Incorporation or Charter as in effect on
the Resignation Date.
4.05. NON-DISPARAGEMENT. Citizens agrees that it, through its officers and
directors, shall make no disparaging comments about Executive to any third
parties following the execution of this Agreement. Executive acknowledges that
Citizens does not have total control over comments made to third parties by
employees in their individual capacities. However, to avoid any non-authorized
comments, Executive agrees to only refer prospective employers to an officer or
Director of Citizens for an employment recommendation.
4.06. NO ADMISSION OF LIABILITY. Citizens agrees that this Agreement shall
not be deemed or construed at any time for any purpose as an admission of
liability or violation of any applicable law by Executive. Liability for any and
all claims is expressly denied by Executive.
4.07. AUTHORIZATION. Citizens has the requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder,
subject to the terms and conditions hereof.
V. AGREEMENT OF ALL PARTIES
5.01. FURTHER ASSURANCES. Each of the parties hereto shall do, execute,
acknowledge, and deliver or cause to be done, executed, acknowledged, and
delivered at any time and from time to time upon the request of any other
parties hereto, all such further acts, documents, and
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instruments as may be reasonably required to effect any of the transactions
contemplated by this Agreement.
5.02. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that neither party hereto may assign this Agreement
without the prior written consent of the other party. Notwithstanding the
foregoing, this Agreement may be assigned, without the prior consent of
Executive, to a successor of Citizens (and Executive hereby consents to the
assignment of the restrictive covenants under this Agreement to a purchaser of
all or substantially all of the assets of Citizens or a transferee, by merger or
otherwise, of all or substantially all of the businesses and assets of Citizens)
and, upon Executive's death, this Agreement shall inure to the benefit of and be
enforceable by Executive's executors, administrators, representatives, heirs,
distributees, devisees, and legatees and all amounts payable hereunder shall be
paid to such persons or the estate of Executive.
5.03. WAIVER; AMENDMENT. No provision or obligation of this Agreement may
be waived or discharged unless such waiver or discharge is agreed to in writing
and signed by Citizens and Executive. The waiver by any party hereto of a breach
of or noncompliance with any provision of this Agreement shall not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach
or noncompliance hereunder. Except as expressly provided otherwise herein, this
Agreement may be amended, modified, or supplemented only by a written agreement
executed by Citizens and Executive.
5.04. HEADINGS. The headings in this Agreement have been inserted solely
for ease of reference and shall not be considered in the interpretation,
construction, or enforcement of this Agreement.
5.05. SEVERABILITY. All provisions of this Agreement are severable from
one another, and the unenforceability or invalidity of any provision of this
Agreement shall not affect the validity or enforceability of the remaining
provisions of this Agreement; provided, however, that should any judicial body
interpreting this Agreement deem any provision to be unreasonably broad in time,
territory, scope, or otherwise, the parties intend for the judicial body, to the
greatest extent possible, to reduce the breadth of the provision to the maximum
legally allowable parameters rather than deeming such provision totally
unenforceable or invalid.
5.06. NO COUNTERPARTS. This Agreement may not be executed in counterparts.
5.07. GOVERNING LAW; JURISDICTION; VENUE. This Agreement shall be governed
by and construed in accordance with the laws of the State of Indiana, without
reference to the choice of law principles or rules thereof. The parties hereto
irrevocably consent to the jurisdiction and venue of the state court for the
State of Indiana located in Hammond, Indiana, or the Federal District Court for
the Northern District of Indiana, Hammond Division, located in Lake County,
Indiana, and agree that all actions, proceedings, litigation, disputes or claims
relating to or arising out of this Agreement shall be brought and tried only in
such courts.
5.08. ENTIRE AGREEMENT. This Agreement constitutes the entire and sole
agreement between Citizens and Executive with respect to Executive's resignation
and there are no other
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agreements or understandings either written or oral with respect thereto. The
parties agree that the (i) the Employment Agreement, dated July 21, 2003,
between Executive and CFS Bancorp, Inc. and (ii) the Employment Agreement, dated
July 21, 2003, between Executive and Citizens Financial Services, FSB, will be
terminated effective as of the Resignation Date and of no further force or
effect or liability thereunder.
5.09. CONSTRUCTION. The rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement. Whenever in this Agreement a singular
word is used, it also shall include the plural wherever required by the context
and vice-versa. All reference to the masculine, feminine, or neuter genders
shall include any other gender, as the context requires.
5.10. ATTORNEYS' FEES. The prevailing party shall be entitled to
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with any legal action to
interpret or enforce any provision of this Agreement or for any breach of this
Agreement.
5.11. TAXES AND OTHER AMOUNTS. All taxes (other than Citizens' portion of
employment taxes) on the payments specified in Section 4.01 hereof and all other
amounts payable to Executive hereunder and under the Plans and other benefit
plans and programs will be paid by Executive. Citizens will be entitled to
withhold from such payments and benefits (i) applicable income, employment and
other taxes required to be withheld therefrom; (ii) amounts authorized by
Executive; and (iii) other required or appropriate and customary amounts.
5.12. REVIEW AND CONSULTATION. Citizens and Executive hereby acknowledge
and agree that each (i) has read this Agreement in its entirety prior to
executing it; (ii) understands the provisions and effects of this Agreement;
(iii) has consulted with such attorneys, accountants, and financial and other
advisors as it or he has deemed appropriate in connection with their respective
execution of this Agreement; and (iv) has executed this Agreement voluntarily.
EXECUTIVE HEREBY UNDERSTANDS, ACKNOWLEDGES, AND AGREES THAT THIS AGREEMENT HAS
BEEN PREPARED BY COUNSEL TO CITIZENS AND THAT HE HAS NOT RECEIVED ANY ADVICE,
COUNSEL, OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT FROM CITIZENS OR ITS
COUNSEL.
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IN WITNESS WHEREOF, this Severance Agreement and Release is executed as of
the day and year stated below.
EXECUTIVE CITIZENS FINANCIAL SERVICES, FSB
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
-------------------------------- --------------------------------
Xxxxx X. Xxxxxx Printed: Xxxxx X. Xxxxx
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Title: Vice President - Corporate
Counsel
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Date: August 20, 2004 Date: August 20, 2004
-------------------------------- ------------------------------
CFS BANCORP, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Printed: Xxxxx X. Xxxxx
---------------------------
Title: Vice President - Corporate
Counsel
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Date: August 20, 2004
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