Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 19th day of August, 2003 (the
"Effective Date") by and between X. X. Xxxxx Federal Savings Bank (the "Bank"),
a corporation organized under the laws of the State of Illinois, with its office
at 00000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx, XX, and Xxxxxx X. Xxxxxx (the
"Employee"). Any reference to the "Company" herein shall refer to AJS Bancorp,
Inc. the holding company of the Bank.
WHEREAS, the Bank and the Employee entered into an employment agreement
dated the 18th day of December 1995, pursuant to which the Employee has
heretofore been employed by the Bank as its President and Chief Executive
Officer; and
WHEREAS, the Employee has since advanced to the positions of Chairman of
the Board and Chief Executive Officer of the Bank and is experienced in all
phases of the business of the Bank; and
WHEREAS, the Board of Directors of the Bank and the Employee believe it is
in the best interests of the Bank to enter into a new employment agreement (the
"Agreement") in order to reinforce and reward the Employee for his service and
dedication to the continued success of the Bank; and
WHEREAS, the parties hereto desire by this writing to set forth the terms
of the continuing employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. During the term of his employment hereunder, the Employee
shall serve as the Chairman of the Board and Chief Executive Officer of the
Bank. The Employee shall render such administrative and management services for
the Bank as are currently rendered and as are customarily performed by persons
situated in a similar executive capacity. The Employee shall also promote, by
entertainment or otherwise, as and to the extent permitted by law, the business
of the Bank. The Employee's other duties shall be such as the Board of Directors
(the "Board") of the Bank may from time to time reasonably direct, including
normal duties as an officer of the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during the term
of this Agreement a salary at the rate of One Hundred Seventy Eight Thousand and
00/100 Dollars ($178,000.00) per annum (the "Base Salary"). The Board shall
review, not less often than annually, the rate of the Employee's salary, and in
its sole discretion may decide to increase (but not decrease) his Base Salary.
Any such increase in the Base Salary shall become the Base Salary for all
purposes under this Agreement. Such Base Salary shall be payable in cash no less
frequently than monthly (the monthly amount shall be referred to as the "monthly
Base Salary") or in accordance with the normal payroll practices of the Bank, as
such may be changed from time to time. Notwithstanding the foregoing, following
a Change in Control (as defined in Section 10(a)(3) of this Agreement), the
Board shall continue to annually review the rate of the
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Exhibit 10.1
Employee's Base Salary, and shall increase said rate of Base Salary by a
percentage which is not less than the average annual percentage increase in Base
Salary that the Employee received over the three calendar years immediately
preceding the year in which the Change in Control occurs.
3. Discretionary Bonuses. The Employee shall participate in an equitable
manner with all other senior management employees of the Bank in discretionary
bonuses that the Board may award from time to time to the Bank's senior
management employees. No other compensation provided for in this Agreement shall
be deemed a substitute for the Employee's right to participate in such
discretionary bonuses. Notwithstanding the foregoing, following a Change in
Control, the Employee shall receive discretionary bonuses that are made no less
frequently than, and in annual amounts not less than, the average annual
discretionary bonuses paid to the Employee during each of the three calendar
years immediately preceding the year in which such Change in Control occurs.
4. Benefit Plans and Expenses.
(a) Participation in Retirement, Medical and Other Plans. During the
term of this Agreement, the Employee shall participate in any plan that the Bank
maintains for the benefit of its employees if the plan relates to (1) pension,
profit-sharing, or other retirement benefits, or (ii) medical insurance or the
reimbursement of medical or dependent care expenses. If the Employee ceases
employment with the Bank for any reason other than death or "Just Cause" (as
defined in Section 9(c) hereof), then notwithstanding termination of the
Employee's employment or of this Agreement, the Bank shall provide the Employee
and his dependents with coverage under the Bank's group health insurance plan
(and if the Bank maintains more than one plan for its employees, any one of such
plans selected by the Employee in accordance with the general procedures by
which the Bank's full-time employees make such elections). The Bank shall bear
the full cost for said coverage, which shall continue until the Employee's
death, with the terms and conditions thereof being determined from time to time
as though the Employee had remained a full-time employee of the Bank (but with
the Bank in all events paying the full cost for such insurance). The Bank shall
also provide the Employee's spouse with continued health insurance coverage
(with the Bank paying the full cost for such insurance) for her lifetime.
(b) Employee Benefits; Expenses. The Employee shall be eligible to
participate in any fringe benefits which are or may become available to the
Bank's senior management employees, including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the Employee under this
Agreement. The Bank shall provide the Employee with an automobile suitable to
the position of Chairman of the Board and Chief Executive Officer of the Bank,
and such automobile may be used by the Employee in carrying out his duties under
this Agreement and for his personal use such as commuting between his residence
and his principal place of employment. The Bank shall reimburse the Employee for
the cost of maintenance, use and servicing of such automobile. The Bank shall
reimburse the Employee for his reasonable out-of-pocket expenses incurred in
connection with the performance of his duties under this Agreement, including,
without limitation, fees for memberships in such clubs and organization that the
Employee and the Board mutually agree are necessary and appropriate to
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Exhibit 10.1
further the business of the Bank, including membership in the Midlothian Country
Club, or upon substantiation of such expenses in accordance with the policies of
the Bank.
5. Term. The Bank hereby employs the Employee, and the Employee hereby
accepts such employment under this Agreement, for the period commencing on the
Effective Date and ending thirty-six months thereafter (or such earlier date as
is determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of employment
shall be extended for an additional one-year period beyond the then effective
expiration date provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards,
and that this Agreement shall be extended. Only those members of the Board of
Directors who have no personal interest in this Employment Agreement shall
discuss and vote on the approval and subsequent renewal of this Agreement.
6. Loyalty: Noncompetition.
(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time and attention to the
performance of his duties hereunder; provided, however, from time to time,
Employee may serve on the boards of directors of, and hold any other offices or
positions in, companies or organizations, which will not present any conflict of
interest with the Bank or any of its subsidiaries or affiliates, or unfavorably
affect the performance of Employee's duties pursuant to this Agreement, or will
not violate any applicable statute or regulation. During the term of his
employment under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the Bank, or be
gainfully employed in any other position or job other than as provided above.
(b) Nothing contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.
7. Standards. The Employee shall perform his duties under this Agreement
in accordance with such reasonable standards as the Board may establish from
time to time. The Bank will provide Employee with the working facilities and
staff customary for similar executives and necessary for him to perform his
duties.
8. Vacation, Sick and Other Leave. At such reasonable times as the Board
shall in its discretion permit, the Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment under
this Agreement, all such voluntary absences to count as vacation time, provided
that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Bank. The Employee shall not receive any additional
compensation from the Bank on account of his failure to take vacation leave, and
the Employee shall not accumulate unused vacation leave from one fiscal year to
the next, except to the extent authorized by the Board.
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Exhibit 10.1
(b) In addition, the Employee shall be entitled to an annual sick
leave benefit as established by the Board. In the event any sick leave benefit
shall not have been used during any year, such leave shall not accrue to
subsequent years, except to the extent authorized by the Board.
(c) In addition to the aforesaid paid vacations, the Employee shall
be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Bank for such additional periods of time
and for such valid and legitimate reasons as the Board may in its discretion
determine. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.
9. Termination and Termination Pay. Subject to Section 10 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's beneficiary or beneficiaries, or his estate, shall be entitled to
receive the compensation due the Employee through the last day of the calendar
month in which his death occurred. Notwithstanding any provision of this
Agreement to the contrary, in the event that the Employee dies while employed by
the Bank, the Bank shall pay the Employee's beneficiary or beneficiaries, or his
estate, the Employee's Base Salary then in effect pursuant to Section 2 hereof
for a period of one (1) year from the date of the Employee's death.
(b) Disability.
(1) In the event of the disability (as hereinafter defined) of
the Employee, the Bank shall continue to pay the Employee the monthly Base
Salary in Section 2 hereof during the period of his disability, provided,
however, that in the event the Employee is disabled for a continuous period
exceeding twelve (12) calendar months, the Bank may, at its election, terminate
the Agreement, in which event the Employee shall be entitled to receive the
benefits described in Section 9(b)(2) hereof.
As used in this Agreement, the term "disability" shall mean the complete
inability of the Employee to perform his duties under this Agreement as
determined by an independent physician selected with the approval of the Bank
and the Employee.
(2) The Bank shall pay to the Employee a monthly disability
benefit equal to fifty (50) percent of his monthly Base Salary at the time he
became disabled. Payment of such disability benefit shall commence on the last
day of the month following the month for which the final payment under Section
9(b)(1) was made, and cease on the earliest of the month in which the Employee
(1) dies, (ii) attains age 65, or (iii) returns to full-time employment with the
Bank.
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Exhibit 10.1
(3) Any amounts payable under Sections 9(b)(1) or 9(b)(2)
hereof shall be reduced by any amounts paid to the Employee under any other
disability program maintained by the Bank.
(4) During the period the Employee is entitled to receive
payments under Section 9(b)(1) and 9(b)(2) hereof, the Employee shall, to the
extent that he is physically and mentally able to do so, furnish information and
assistance to the Bank, and, in addition, upon reasonable request in writing on
behalf of the Board, or an executive officer designated by such Board, from time
to time, make himself available to the Bank to undertake reasonable assignments
consistent with the dignity, importance and scope of his prior position and his
physical and mental health. During such period of service, the Employee shall be
responsible and report to, and be subject to the supervision of, the Board or an
executive officer designated by the Board, as to the method and manner in which
he shall perform such assignments, subject always to the provisions of this
Section 9(b)(4), and shall keep such Board or such executive officer
appropriately informed of his progress in each such assignment.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause. Termination for "Just Cause" shall mean
termination because of, in the good faith determination of the Board, the
Employee's personal dishonesty, incompetence, willful misconduct, breach of
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. Any stock options or restricted stock
awards granted to the Employee under any stock plan of the Bank, the Company or
any subsidiary or affiliate thereof, shall become null and void effective upon
the Employee's receipt of notice of termination for Just Cause pursuant to
section 9 hereof, and shall not be exercisable by the Employee at any time
subsequent to such termination for Just Cause.
(d) Without Just Cause; Constructive Discharge.
(1) The Board may, by written notice to the Employee,
immediately terminate his employment at any time for a reason other than Just
Cause, in which event the Employee, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, as severance
pay or liquidated damages, or both, shall be entitled to receive an amount equal
to three (3) times the sum of (i) his Base Salary provided pursuant to Section 2
hereof, and (ii) the highest rate of bonus awarded to the Employee, pursuant to
Section 3 hereof, at any time during the prior three years. In addition, the
Employee shall be entitled to a lump sum payment in an amount equal to the
present value of the Bank's contributions that would have been made on
Employee's behalf under the Bank's tax-qualified retirement plans (including the
401(k) Plan, the profit sharing plan and the employee stock ownership plan) if
he had continued working for the Bank for a thirty-six (36) month period
following his termination of employment earning the Base Salary that would have
been achieved during the remaining unexpired term of this Agreement and making
the maximum amount of employee contributions permitted, if any, under such
plans. Upon an event of termination at any time for a reason other than Just
Cause, the Employee will vest on the date of termination of employment in any
outstanding unvested stock options or shares of restricted stock of the Company
that have been awarded to him.
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Exhibit 10.1
Notwithstanding the foregoing, in the event such termination occurs after a
Change in Control and within the time period set forth in Section 10(a)(1)
hereof, the benefits and compensation provided for in that Section 10 shall
apply. All amounts payable to the Employee in cash, other than the lump sum
payment to Employee in lieu of the Bank's contributions to the tax-qualified
plans, shall be paid, at the option of the Employee, or his beneficiary or
beneficiaries, or his estate, as applicable, either (I) in periodic payments
through the Expiration Date, or (II) in one lump sum (adjusted to reflect the
present value of such accelerated payment) within thirty (30) days of such
termination.
(2) The Employee may voluntarily terminate his employment
under this Agreement within ninety (90) days following the occurrence of an
event which constitutes "Constructive Discharge", and shall thereupon be
entitled to receive the compensation and benefits payable under Section 9(d)(1)
hereof (unless such voluntary termination occurs following a Change in Control
as set forth under Section 10(b) in which event the benefits and compensation
provided for in Section 10 shall apply). For purposes of this Section 9, a
Constructive Discharge shall include the occurrence of any of the following
events which has not been consented to in advance in writing by the Employee:
(1) the requirement that the Employee move his personal residence, or perform
his principal executive functions, more than thirty-five (35) miles from his
primary office; (ii) a material reduction in the Employee's base compensation;
(iii) the failure to increase the Employee's Base Salary or to pay the Employee
discretionary bonuses pursuant to Sections 2 and 3 of this Agreement; (iv) the
failure by the Bank to continue to provide the Employee with compensation and
benefits provided for under this Agreement, as the same may be increased from
time to time, or with benefits substantially similar to those provided to him
under any of the employee benefit plans in which the Employee now or hereafter
becomes a participant, or the taking of any action by the Bank which would
directly or indirectly reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by him; (v) the requirement that the
Employee report directly to a person or persons other than the Board; (vi) the
assignment to the Employee of duties and responsibilities materially different
from those normally associated with his position as referenced at Section 1;
(vii) a failure to elect or reelect the Employee to the Board of Directors of
the Bank; (viii) a material diminution or reduction in the Employee's
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Bank.
(3) Notwithstanding the foregoing, but only to the extent
required under federal banking law, the amount payable under clause (d)(1)
hereof shall be reduced to the extent that on the date of the Employee's
termination of employment, the present value of the benefits payable thereunder
exceeds the limitation on severance benefits that is set forth in Regulatory
Bulletin 27b of the Office of Thrift Supervision, and the Office of Thrift
Supervision Thrift Activities Handbook Section 310, as in effect on the
Effective Date. In the event that Section 280G of the Internal Revenue Code of
1986, as amended (the "Code") becomes applicable to payments made under this
Section 9(d), and the payments exceed the "Maximum Amount" as defined in Section
10(a)(2) hereof, the payments shall be reduced in accordance with Section
10(a)(2) of this Agreement.
(e) Termination or Suspension Under Federal Law.
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Exhibit 10.1
(1) If the Employee 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. 1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order. No such order shall
affect the vested rights of the parties.
(2) If the Bank is in default (as defined in Section 3(x)(1)
of FDIA), all obligations under this Agreement shall terminate as of the date of
default; however, this Paragraph shall not affect the vested rights of the
parties.
(3) All obligations under this Agreement shall terminate,
except to the extent that continuation of this Agreement is necessary for the
continued operation of the Bank: (1) by the Director of the Office of Thrift
Supervision ("Director of OTS"), or his designee, at the time that the Federal
Deposit Insurance Corporation ("FDIC") or the Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of FDIA; or (ii) by the Director of the
OTS, or her designee, at the time that the Director of the OTS, or his designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director of the OTS to be in an
unsafe or unsound condition. Such action shall not affect any vested rights of
the parties.
(4) If a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the
Employee 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 (1) pay the Employee all or part of the
compensation withheld while its contract obligations were suspended, and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.
(f) Voluntary Termination by Employee. Subject to Sections 9(d)(2)
and 10 hereof, the Employee may voluntarily terminate employment with the Bank
during the term of this Agreement, upon at least sixty (60) days' prior written
notice to the Board of Directors, in which case the Employee shall receive only
his compensation, vested rights (including continuing group health benefits as
provided in Section 4(a) hereof) and employee benefits up to the date of his
termination. Notwithstanding any contrary provision of this Agreement, in the
event that the Employee elects to retire from employment with the Bank (such
event being referred to herein as "Retirement"), the Employee (or in the event
of his death after Retirement but prior to payment pursuant to this Section
9(f), his estate) shall be paid within six months of Retirement a lump sum
payment equal to fifty-percent (50%) of the Base Salary provided pursuant to
Section 2 hereof as of such date of Retirement.
10. Change in Control.
(a) Change in Control; Involuntary Termination.
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Exhibit 10.1
(1) Notwithstanding any provision herein to the contrary, if the
Employee's employment under this Agreement is terminated by the Bank, without
the Employee's prior written consent and for a reason other than Just Cause, in
connection with or within twelve (12) months after any Change in Control of the
Bank or the Company, the Employee shall, subject to paragraph (2) of this
Section 10(a), be paid an amount equal to three (3) times the sum of (i) the
Employee's Base Salary provided pursuant to Section 2 hereof, as in effect on
the date of such Change in Control, and (ii) the highest rate of bonus awarded
to the Employee at any time during the prior three years. In addition, the
Employee shall be entitled to a lump sum payment in an amount equal to the
present value of the Bank's contributions that would have been made on
Employee's behalf under the Bank's tax-qualified retirement plans (including the
401(k) Plan, the profit sharing plan and the employee stock ownership plan) if
he had continued working for the Bank for a thirty-six (36) month period
following his termination of employment earning the Base Salary that would have
been achieved during the remaining unexpired term of this Agreement and making
the maximum amount of employee contributions permitted, if any, under such
plans. Upon termination of employment following a Change in Control, the
Employee will immediately vest in any outstanding unvested stock options or
shares of restricted stock of the Company that have been awarded to him. All
amounts payable to the Employee in cash, other than the lump sum payment to
Employee in lieu of the Bank's contributions to the tax-qualified plans, shall
be paid, at the option of the Employee, either in one lump sum (adjusted for the
present value of such accelerated payment) within thirty (30) days of such
termination, or in substantially equal monthly payments paid over the thirty-six
(36) months following such termination. In the event of termination of
employment following a Change in Control, Employee shall have continued use of
the automobile provided by the Bank with such automobile allowance as was
provided during the most recently completed 12 month period ending on the last
day of the month prior to termination of employment and shall continue to
receive payment for his Midlothian Country Club for a period of thirty-six (36)
months following termination of employment. Following said thirty-six (36) month
period, the Employee shall be permitted to purchase the automobile for its then
fair market value.
(2) Notwithstanding the foregoing paragraph (a)(1), in the event
that the Bank's independent accountants determine that the total payments
receivable under Section 10(a)(1) hereof, when added to any other payments
contingent on a Change in Control of the Bank or the Company, exceed 2.999 times
the Employee's "base amount" as defined in Section 280G(b)(3) of the Code and
regulations promulgated thereunder (the "Maximum Amount"), then such payments
shall be reduced to avoid an "excess parachute payment", as defined in Section
280G(b)(1) of the Code. The Employee shall determine which and how much, if any,
of the payments to which he is entitled shall be eliminated or reduced so that
the total payments to be received by the Employee do not exceed the Maximum
Amount. If the Employee does not make his determination within ten business days
after receiving a written request from the Bank, the Bank may make such
determination, and shall notify the Employee promptly thereof. Within five
business days of the earlier of the Bank's receipt of the Employee's
determination pursuant to this paragraph or the Bank's determination in lieu of
a determination by the Employee, the Bank shall pay to or distribute to or for
the benefit of the Employee such amounts as are then due the Employee under this
Agreement.
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(3) The term "Change in Control" shall mean an event of a nature
that: (i) would be required to be reported in response to Item 1(a) 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"); or (ii)
results in a Change in Control of the Bank or the Company within the meaning of
the Home Owners' Loan Act, as amended ("HOLA"), and applicable rules and
regulations promulgated thereunder, as in effect at the time of the Change in
Control; or (iii) without limitation such a Change in Control shall be deemed to
have occurred at such time as (a) 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 representing 25% or more of the combined voting power
of Company's outstanding securities except for any securities purchased by the
Bank's employee stock ownership plan or trust; or (b) individuals who constitute
the Company's Board 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 Company's stockholders was
approved by the same nominating committee serving under an Incumbent Board,
shall be, for purposes of this clause (b), considered as though he were a member
of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation,
sale of all or substantially all the assets of the Bank or the Company or
similar transaction in which the Bank or Company is not the surviving
institution occurs; or (d) a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the Plan are to be exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror. Notwithstanding anything in this paragraph to the contrary, a change in
control shall not be deemed to have occurred in the event of a conversion of the
Company's or the Bank's mutual holding company to stock form, or in connection
with any reorganization used to effect such a conversion.
(b) Change in Control; Voluntary Termination. Notwithstanding any
other provision of this Agreement to the contrary, but subject to Sections
10(a)(2), 10(c), and 10(e) hereof, the Employee may voluntarily terminate his
employment under this Agreement within ninety (90) days following a Change in
Control as defined in paragraph (a)(4) of this Section 10, and the Employee
shall thereupon be entitled to receive the payment described in Section 10(a) of
this Agreement. Alternatively, the Employee may voluntarily terminate his
employment under this Agreement if, within twelve (12) months following such
Change in Control of the Bank or the Company an event constituting a
Constructive Discharge shall occur. If an event constituting a Constructive
Discharge shall occur, the Employee shall be entitled to voluntarily terminate
employment within ninety (90) days of such Constructive Discharge and shall be
entitled to the payments and benefits set forth in Section 10(a) hereof. For
purposes of this Section 10, a Constructive Discharge includes any of the
following events which has not been consented to in
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Exhibit 10.1
advance by the Employee in writing: (i) the requirement that the Employee move
his personal residence, or perform his principal executive functions, more than
thirty-five (35) miles from his primary office as of the date of the Change in
Control; (ii) a material reduction in the Employee's base compensation as in
effect on the date of the Change in Control or as the same may be changed by
mutual agreement from time to time; (iii) the failure to increase the Employees
Base Salary or to pay the Employee discretionary bonuses pursuant to Sections 2
and 3 of this Agreement; (iv) the failure by the Bank to continue to provide the
Employee with compensation and benefits provided for under this Agreement, as
the same may be increased from time to time, or with benefits substantially
similar to those provided to him under any of the employee benefit plans in
which the Employee now or hereafter becomes a participant, or the taking of any
action by the Bank which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by him
at the time of the Change in Control; (v) the requirement that the Employee
report directly to a person or persons other than the Board; (vi) the assignment
to the Employee of duties and responsibilities materially different from those
normally associated with his position as referenced at Section 1; (vii) a
failure to elect or reelect the Employee to the Board of Directors of the Bank,
if the Employee is serving on the Board on the date of the Change in Control;
(viii) a material diminution or reduction in the Employee's responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank.
(c) Compliance with 12 U.S.C. Section 1828(k). 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. Section 1828(k) and any
regulations promulgated thereunder.
(d) Trust.
(1) Within five business days before or after a Change in
Control (as defined in Section 10(a) of this Agreement) which was not approved
in advance by a resolution of a majority of the members of the Incumbent Board,
the Bank shall (i) deposit, or cause to be deposited, in a grantor trust (the
"Trust") substantially in the form described in Revenue Procedure 92-64, as
issued by the Internal Revenue Service and as amended or superseded thereby, an
amount equal to 2.99 times the Employee's "base amount" as defined in Section
280G(b)(3) of the Code, and (ii) provide the trustee of the Trust with a written
direction to hold said amount and any investment return thereon in a segregated
account for the benefit of the Employee, and to follow the procedures set forth
in the next paragraph as to the payment of such amounts from the Trust.
(2) During the twelve (12) consecutive month period following
the date on which the Bank makes the deposit referred to in the preceding
paragraph, the Employee may provide the trustee of the Trust with a written
notice requesting that the trustee pay to the Employee an amount designated in
the notice as being payable pursuant to Section 10(a) or (b). Within three
business days after receiving said notice, the trustee of the Trust shall send a
copy of the notice to the Bank via overnight and registered mail return receipt
requested. On the tenth (10th) business day after mailing said notice to the
Bank, the trustee of the Trust shall pay the Employee the amount designated
therein in immediately available funds, unless prior thereto the Bank provides
the trustee with a written notice directing the trustee to withhold such
payment. In
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Exhibit 10.1
the latter event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to Section 10(a) or (b) hereof, and the party responsible for the payment of the
costs of such arbitration (which may include any reasonable legal fees and
expenses incurred by the Employee) shall be determined by the arbitrator. The
trustee shall choose the arbitrator to settle the dispute, and such arbitrator
shall be bound by the rules of the American Arbitration Association in making
her determination. The parties and the trustee shall be bound by the results of
the arbitration and, within 3 days of the determination by the arbitrator, the
trustee shall pay from the Trust the amounts required to be paid to the Employee
and/or the Bank, and in no event shall the trustee be liable to either party for
making the payments as determined by the arbitrator.
(e) Regulatory Limitation. Notwithstanding the foregoing, but only
to the extent required under federal banking law, the amount payable under
Subsections (a) and (b) of this Section 10 shall be reduced to the extent that
on the date of the Employee's termination of employment, the amount payable
under Subsection (a) or (b) of this Section 10 exceeds the limitation on
severance benefits that is set forth in Regulatory Bulletin 27a of the Office of
Thrift Supervision, as in effect on the Effective Date.
(f) In the event that any dispute arises between the Employee and
the Bank as to the terms or interpretation of this Agreement, including this
Section 10, whether instituted by formal legal proceedings or otherwise,
including any action that the Employee takes to enforce the terms of this
Section 10 or to defend against any action taken by the Bank, the Employee shall
be reimbursed for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided that the Employee
shall obtain a final judgment by a court of competent jurisdiction in favor of
the Employee. Such reimbursement shall be paid within ten (10) days of
Employee's furnishing to the Bank written evidence, which may be in the form,
among other things, of a cancelled check or receipt, of any costs or expenses
incurred by the Employee.
11. Federal Income Tax Withholding. The Bank may withhold all Federal and
State income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or ruling.
12. Successors and Assigns.
(a) Bank. This Agreement shall not be assignable by the Bank,
provided that this Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of 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 Bank.
(b) Employee. Since the Bank is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Bank; provided, however, that nothing in this paragraph shall
preclude (1) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii) the executors, administrators, or
11
Exhibit 10.1
other legal representatives of the Employee or his estate from assigning any
rights hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
13. 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.
14. Applicable Law. Except to the extent preempted by Federal law, the
laws of the State of Illinois shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
15. 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.
16. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto, and shall completely supersede
any prior agreements between the parties (including but not limited to their
agreement dated July 20, 1992 and the employment agreement dated December 18,
1995).
12
Exhibit 10.1
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: X. X. XXXXX FEDERAL SAVINGS BANK
/s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxx X. Xxxxxx
--------------------------------- ----------------------------------
Secretary Xxxxxxxx X. Xxxxxx President, Xxx X. Xxxxxx
WITNESS:
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
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