EMPLOYMENT AGREEMENT
Exhibit
10.2
AGREEMENT
dated this 1st
day of
July 2006 between CFS Bancorp, Inc. (the "Corporation"), an Indiana corporation,
and Xxxxxx X. Xxxxxx (the "Executive").
WITNESSETH
WHEREAS,
the Executive is presently an officer of the Corporation and Citizens Financial
Bank (the "Bank") (together, the "Employers");
WHEREAS,
the Employers desire to be ensured of the Executive's continued active
participation in the business of the Employers;
WHEREAS,
the Corporation and the Bank desire to enter into separate agreements with
the
Executive with respect to his employment by each of the Employers;
and
WHEREAS,
in order to induce the Executive to remain in the employ of the Employers and
in
consideration of the Executive's agreeing to remain in the employ of the
Employers, the parties desire to specify the severance benefits which shall
be
due the Executive by the Corporation in the event that his employment with
the
Corporation is terminated under specified circumstances;
NOW
THEREFORE, in consideration of the mutual agreements herein contained, and
upon
the other terms and conditions hereinafter provided, the parties hereby agree
as
follows:
| 1) |
Definitions.
|
The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:
| a) |
Average
Annual Compensation.
The Executive's "Average Annual Compensation" for purposes of this
Agreement shall be deemed to mean the average Base Salary, cash bonuses
and amounts allocated to the Executive under any qualified employee
benefit plans of the Employers for the preceding three
years.
|
| b) |
Base
Salary.
"Base Salary" shall have the meaning set forth in Section 4(a)
hereof.
|
| c) |
Cause.
Termination of the Executive's employment for "Cause" shall mean
termination because of 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.
|
| d) |
Change
in Control. “Change in Control” means the
occurrence of any of the following: (i) an event that would be required
to
be reported in response to Item 5.01 of Form 8-K or Item 6(e) of
Schedule
14A of Regulation 14A pursuant to the Securities and Exchange Act
of 1934
Act, as amended (1934 Act), or any successor thereto, whether or
not any
class of securities of the Corporation is registered under the 1934
Act;
(ii) any “person” is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the 1934 Act), directly or indirectly, of securities
of the
Corporation representing 20% or more of the combined voting power
of the
Corporation’s then outstanding securities; or (iii) during any period of
thirty-six consecutive months, individuals who at the beginning of
such
period constitute the Board of Directors of the Corporation cease
for any
reason to constitute at least a majority thereof unless the election,
or
the nomination for election by stockholders, of each new director
was
approved by a vote of at least two-thirds of the directors then still
in
office who were directors at the beginning of the period.
|
| i) |
For
purposes of the definition of “Change in Control,” a Person or group of
Persons does not include the CFS Bancorp, Inc. Employee Stock Ownership
Plan Trust which forms a part of the CFS Bancorp, Inc. Employee Stock
Ownership Plan (the “ESOP”), or any other employee benefit plan,
subsidiary or affiliate of the Corporation, and the outstanding shares
of
common stock of the Corporation, on a fully diluted basis, include
all
shares owned by the ESOP, whether allocated or unallocated to the
accounts
of participants, thereunder.
|
| ii) |
For
purposes of the definition of “Change in Control,” the term “Person” means
any natural person, proprietorship, partnership, corporation, limited
liability company, organization, firm, business, joint venture,
association, trust or other entity and any government agency, body
or
authority.
|
| e) |
Code.
"Code"
shall mean the Internal Revenue Code of 1986, as
amended.
|
| f) |
Date
of Termination.
"Date of Termination" shall mean (i) if the Executive's employment
is
terminated for Cause or for Disability, the date specified in the
Notice
of Termination, and (ii) if the Executive's employment is terminated
for
any other reason, the date on which a Notice of Termination is given
or as
specified in such Notice.
|
| g) |
Disability.
Termination by the Corporation of the Executive's employment based
on
"Disability" shall mean termination because of any physical or mental
impairment which qualifies the Executive for disability benefits
under the
applicable long-term disability plan maintained by the Employers
or any
subsidiary or, if no such plan applies, which would qualify the Executive
for disability benefits under the Federal Social Security
System.
|
| h) |
Good
Reason.
Termination by the Executive of the Executive's employment for "Good
Reason" shall mean termination by the Executive within two years
following
a Change in Control of the Corporation based
on:
|
2
| (i) |
Without
the Executive's express written consent, the failure to elect or
to
re-elect or to appoint or to re-appoint the Executive to the offices
of
Chief Executive Officer of the Employers or a material adverse change
made
by the Employers in the Executive's functions, duties or responsibilities
as Chief Executive Officer of the
Employers;
|
| (ii) |
Without
the Executive's express written consent, a reduction by either of
the
Employers in the Executive's Base Salary as the same may be increased
from
time to time or, except to the extent permitted by Section 4(b) hereof,
a
reduction in the package of fringe benefits provided to the Executive,
taken as a whole;
|
| (iii) |
The
principal executive office of either of the Employers is relocated
more
than ten miles from Munster, Indiana or, without the Executive's
express
written consent, either of the Employers require the Executive to
be based
anywhere other than an area in which the Employers' principal executive
office is located, except for required travel on business of the
Employers
to an extent substantially consistent with the Executive's present
business travel obligations;
|
| (iv) |
Any
purported termination of the Executive's employment for Disability
or
Retirement which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (k) below;
or
|
| (v) |
The
failure by the Corporation to obtain the assumption of and agreement
to
perform this Agreement by any
successor.
|
| i) |
IRS.
"IRS"
shall mean the Internal Revenue
Service.
|
| j) |
Key
Employee.
"Key
Employee"
means an employee who is:
|
i) An
officer of the Corporation having annual compensation greater than
$140,000;
ii) A
five-percent owner of the Corporation; or
iii)
A
one-percent owner of the Corporation having an annual compensation greater
than
$150,000.
For
purposes of determining who is an officer for purposes of Section 1(j)(i),
no
more than 50 employees (or, if lesser, the greater of three or 10 percent of
the
employees) shall be treated as officers, and those categories of employees
listed in Code Section 414(q)(5) shall be excluded. The
$140,000 amount shall be adjusted at the same time and in the same manner as
under Code Section 415(d), except that the base period shall be the calendar
quarter beginning July 1, 2001, and any increase under this sentence which
is
not a multiple of $5,000 shall be rounded to the next lower multiple of
$5,000.
3
| k) |
Notice
of Termination.
Any purported termination of the Executive's employment by the Corporation
for any reason, including without limitation for Cause, Disability
or
Retirement, or by the Executive for any reason, including without
limitation for Good Reason, shall be communicated by written "Notice
of
Termination" to the other party hereto. For purposes of this Agreement,
a
"Notice of Termination" shall mean a dated notice which (i) indicates
the
specific termination provision in this Agreement relied upon, (ii)
sets
forth in reasonable detail the facts and circumstances claimed to
provide
a basis for termination of the Executive's employment under the provision
so indicated, (iii) specifies a Date of Termination, which shall
be not
less than 30 nor more than 90 days after such Notice of Termination
is
given, except in the case of the Corporation's termination of the
Executive's employment for Cause, which shall be effective immediately;
and (iv) is given in the manner specified in Section 11
hereof.
|
| l) |
Retirement.
"Retirement" shall mean voluntary termination by the Executive after
the
Executive attains the age 55, with at least five years of active
service.
|
| m) |
Separation
from Service.
"Separation
from Service"
means the date on which the Executive dies, retires or otherwise
experiences a Termination of Employment with the Corporation. Provided,
however, a Separation from Service does not occur if the Executive
is on
military leave, sick leave, or other bona fide leave of absence (such
as
temporary employment by the government) if the period of such leave
does
not exceed six months, or if the leave is for a longer period, so
long as
the individual’s right to reemployment with the Corporation is provided
either by statute or by contract. If the period of leave exceeds
six
months and the Executive’s right to reemployment is not provided either by
statute or contract, there shall be a Separation from Service on
the first
date immediately following such six-month period. Executive shall
incur a
"Termination
of Employment"
when a termination of employment is incurred under Proposed Treasury
Regulation 1.409A-1(h)(ii) or any final version of such Proposed
Regulation.
|
| n) |
Specified
Employee.
“Specified Employee” means an employee who is a “Key Employee” if the
Corporation’s stock is publicly traded on an established securities
market. An employee shall be a Specified Employee for the twelve-month
period beginning on the April 1st
following any calendar year in which the employee is a Key
Employee.
|
| 2) |
Term
of Employment.
|
| a) |
The
Corporation hereby employs the Executive as its Chief Executive Officer,
and the Executive hereby accepts said employment and agrees to render
such
services to the Corporation on the terms and conditions set forth
in this
Agreement. The term of this Agreement shall be a period of three
years
commencing as of the date hereof (the "Commencement Date"), subject
to
earlier termination as provided herein. Beginning on the day following
the
Commencement Date, and on each day thereafter, the term of this Agreement
shall be extended for a period of one day in addition to the
then-remaining term, provided that the Corporation has not given
notice to
the Executive in writing
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4
|
at
least 60 days prior to such day that the term of this Agreement shall
not
be extended further. Reference herein to the term of this Agreement
shall
refer to both such initial term and such extended terms. The Board
of
Directors of the Corporation shall review on a periodic basis (and
no less
frequently than annually) whether to permit further extensions of
the term
of this Agreement. As part of such review, the Board of Directors
shall
consider all relevant factors, including the Executive's performance
hereunder, and shall either expressly approve further extensions
of the
time of this Agreement or decide to provide notice to the
contrary.
|
| b) |
During
the term of this Agreement, the Executive shall perform such executive
services for the Corporation as may be consistent with his titles
and from
time to time assigned to him by the Corporation's Board of
Directors.
The Executive further agrees to serve without additional compensation
as
an officer and director of any of the Corporation's subsidiaries
and
agrees that any amounts received from such corporation may be offset
against the amounts due hereunder. In addition, it is agreed that
the
Corporation may assign the Executive to one of its subsidiaries for
payroll purposes.
|
| 3) |
Loyalty,
Confidentiality and
Non-Competition
|
| a) |
The
Executive shall devote his or her full time and best efforts to the
performance of his employment under this Agreement. During the term
of
this Agreement, the 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 the Corporation 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
CMSA.
|
| b) |
For
a period of three years from the date of voluntary termination, or
termination for Cause, the 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 the Corporation
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 CMSA.
|
| c) |
For
purposes of this Agreement, directly or indirectly engaging in any
business activity in competition with the business or affairs of
the
Corporation 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 that 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.
|
| d) |
All
information relating to business of the Employers including, but
not
limited to, that business obtained or serviced by Executive and all
customer listings, contact lists,
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5
|
expiration
cards, asset reports, instruments, documents, papers and other material
used in connection with such business, shall be the exclusive property
of
the Employers. Executive shall keep all such information and material
confidential; none of it shall be copied, reproduced or duplicated
without
the express written permission of the Employers, and Executive shall
return all material containing such information to the Employers
upon
their request or upon termination of employment. Executive also agrees
that he or she shall not utilize the confidential information or
trade
secrets of the Employers, either directly or indirectly, for any
purposes
except performance of the Executive's responsibilities and in furtherance
of the Employers’ business, unless otherwise expressly authorized by the
Employers in writing in advance.
|
| e) |
Executive
agrees that, during his employment, and for a period of three years
following the date of his involuntary termination of employment for
Cause,
or his voluntary termination without Good Reason, the
Executive:
|
| i) |
shall
not solicit any of the Employers’ past or current customers or clients for
the benefit of anyone other than the Employers or their
affiliates;
|
| ii) |
shall
not divulge the names of any of the Employers’ past or then current
customers to any other person, corporation or
entity;
|
| iii) |
shall
not divulge to anyone, except the Employers or their representatives,
any
information regarding their management strategies, marketing information
or goals, policies and/or other information regarding the affairs
of the
Employer, all of which Executive is hereby obligated to keep secret,
however and whenever such information comes to his or her attention;
and
|
| iv) |
shall
not, either directly or indirectly, induce or solicit any person
to leave
the employ of the Employers.
|
| 4) |
Compensation
and Benefits.
|
| a) |
The
Employers shall compensate and pay the Executive for his services
during
the term of this Agreement at a minimum base salary of $370,240 per
year
("Base Salary"), which may be increased from time to time in such
amounts
as may be determined by the Boards of Directors of the Employers
and may
not be decreased without the Executive's express written consent.
In
addition to his Base Salary, the Executive shall be entitled to receive
during the term of this Agreement such bonus payments as may be determined
by the Boards of Directors of the
Employers.
|
| b) |
During
the term of this Agreement, the Executive shall be entitled to participate
in and receive the benefits of any pension or other retirement benefit
plan, profit sharing, stock option, employee stock ownership, or
other
plans, benefits and privileges given to employees and executives
of the
Employers, to the extent commensurate with his then duties and
responsibilities, as fixed by the Boards of Directors of the Employers.
The Corporation shall not make any changes in such plans, benefits
or
privileges which would adversely affect the Executive's rights or
benefits
thereunder, unless such change
occurs
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6
|
pursuant
to a program applicable to all executive officers of the Corporation
and
does not result in a proportionately greater adverse change in the
rights
of or benefits to the Executive as compared with any other executive
officer of the Corporation. Nothing paid to the Executive under any
plan
or arrangement presently in effect or made available in the future
shall
be deemed to be in lieu of the salary payable to the Executive pursuant
to
Section 4(a) hereof.
|
| c) |
During
the term of this Agreement, the Executive shall be entitled to paid
annual
vacation in accordance with the policies as established from time
to time
by the Boards of Directors of the Employers. The Executive shall
not be
entitled to receive any additional compensation from the Employers
for
failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent
authorized by the Boards of Directors of the
Employers.
|
| d) |
In
the event the Executive's employment is terminated due to Disability
or
Retirement, the Employers shall provide, at its cost, all existing
life
and medical insurance coverage for the Executive and his spouse for
a
period until they both become eligible for Medicare coverage. Thereafter,
the Executive may continue, at his cost, the health insurance coverage
as
an eligible retired employee under the Employer’s health and medical
benefit plans.
|
| e) |
In
the event of the Executive's death during the term of this Agreement
or
following his termination due to Disability or Retirement, the Employers
shall provide to the Executive's spouse continued medical health
benefits
substantially identical to the coverage maintained by the Employers
for
the Executive immediately prior to his death until such time as his
spouse
becomes eligible for Medicare coverage.
|
| f) |
The
Executive's compensation, benefits and expenses shall be paid by
the
Corporation and the Bank in the same proportion as the time and services
actually expended by the Executive on behalf of each respective
Employer.
|
| g) |
During
the term of the Agreement, the Employers shall provide suitable office
space, desk,
chairs, filing cabinets, telephones and other usual and customary
office
furniture, fixtures and equipment adequate for the efficient performance
of the duties assigned to the
Executive.
|
| h) |
During
the term of this Agreement, the Employers shall provide to the Executive,
at the Employer's cost, all perquisites which other senior executives
of
the Company are generally entitled to receive, including the payment
of
his annual dues at his Country
Club.
|
| i) |
During
the term of this Agreement, the Employers
shall provide to Executive the use of an automobile of Executive's
choice
with an average annual lease cost not to exceed $10,000 per year.
The
Employers agree to replace the automobile with a new one at
|
7
| i) |
Executive's
request no more often than once every two years. Corporation shall
pay all
automobile operating expenses incurred by Executive in the performance
of
Executive's duties. Corporation shall procure and maintain in force
an
automobile liability policy for the automobile with coverage, including
Executive, in the minimum amount of $1,000,000 combined single limit
on
bodily injury and property damage.
|
| 5) |
Expenses.
The Employers shall reimburse the Executive or otherwise provide
for or
pay for all reasonable expenses incurred by the Executive in furtherance
of or in connection with the business of the Employers, including,
but not
by way of limitation, automobile expenses and other traveling expenses,
and all reasonable entertainment expenses (whether incurred at the
Executive's residence, while traveling or otherwise), subject to
such
reasonable documentation and other limitations as may be established
by
the Boards of Directors of the Employers. If such expenses are paid
in the
first instance by the Executive, the Employers shall reimburse the
Executive therefor.
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| 6) |
Termination.
|
| a) |
The
Corporation shall have the right, at any time upon prior Notice of
Termination, to terminate the Executive's employment hereunder for
any
reason, including without limitation termination for Cause, Disability
or
Retirement, and the Executive shall have the right, upon prior Notice
of
Termination, to terminate his employment hereunder for any
reason.
|
| b) |
In
the event that (i) the Executive's employment is terminated by the
Corporation for Cause or (ii) the Executive terminates his employment
hereunder other than for Disability, Retirement, death or Good Reason,
the
Executive shall have no right pursuant to this Agreement to compensation
or other benefits for any period after the applicable Date of
Termination.
|
| c) |
In
the event that the Executive's employment is terminated as a result
of
Disability, Retirement or the Executive's death during the term of
this
Agreement, the Executive shall have no right pursuant to this Agreement
to
compensation or other benefits for any period after the applicable
Date of
Termination, except as provided for in Sections 4(d) and 4(e)
hereof.
|
| d) |
In
the event that (i) the Executive's employment is terminated by the
Corporation for other than Cause, Disability, Retirement or the
Executive's death or (ii) such employment is terminated by the Executive
(a) due to a material breach of this Agreement by the Corporation,
which
breach has not been cured within fifteen days after a written notice
of
non-compliance has been given by the Executive to the Employers,
or (b)
for Good Reason, then the Corporation
shall:
|
| i) |
pay
to the Executive, a cash severance amount equal to three times that
portion of the Executive’s Average Annual Compensation paid by the
Corporation, in two equal
|
8
| i) |
installments,
with the first installment to be paid on the first business day of
the
month following the Executive’s Date of Termination and the second
installment to be paid no later than January 15th
of
the calendar year following the year in which the first installment
was
paid; and
|
| ii) |
maintain
and provide for a period ending at the earlier of (i) the expiration
of
the remaining term of employment pursuant hereto prior to the Notice
of
Termination or (ii) the date of the Executive's full-time employment
by
another employer (provided that the Executive is entitled under the
terms
of such employment to benefits substantially similar to those described
in
this subparagraph, at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and
accident
insurance, disability insurance and other employee benefit plans,
programs
and arrangements offered by the Corporation in which the Executive
was
entitled to participate immediately prior to the Date of Termination
(excluding (x) stock option and restricted stock plans of the
Employers, (y) bonuses and other items of cash compensation included
in Average Annual Compensation, and (z) other benefits, or portions
thereof, included in Average Annual Compensation), provided that
in the
event that the Executive's participation in any plan, program or
arrangement as provided in this subparagraph is barred, or during
such
period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Corporation shall
arrange
to provide the Executive with benefits substantially similar to those
which the Executive was entitled to receive under such plans, programs
and
arrangements immediately prior to the Date of
Termination.
|
| e) |
If
at the time of the Executive’s Separation from Service, for any reason
other than death, the Executive meets the definition of a Specified
Employee, payment of all amounts under subsections 6(d)(i), 6(d)(ii)
and
7(a) shall be suspended for six months following the Executive’s
Separation from Service. In such event, the first installment shall
be
paid on the first day following the end of the six-month suspension
period. The second installment shall be paid no later than January
15th
of
the calendar year following the year in which the first installment
was
paid. If the Executive incurs a Separation from Service due to death,
regardless of whether the Executive meets the definition of a Specified
Employee, payment of his benefit shall not be suspended. Provided,
however, that the six-month suspension period shall not apply to
the
provision of any group insurance, life insurance, health and accident
insurance or disability insurance under subsection
6(d)(ii).
|
| 7) |
Payment
of Additional Benefits under Certain
Circumstances.
|
| a) |
If
the payments and benefits pursuant to Section 6 hereof, either alone
or
together with other payments and benefits which the Executive has
the
right to receive from the Employers (including, without limitation,
the
payments and benefits which the Executive would have the right to
receive
from the Bank pursuant to Section 6 of the Agreement between the Bank
and the Executive dated this even date ("Bank Agreement"), before
giving
effect to any
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9
|
reduction
in such amounts pursuant to Section 7 of the Bank Agreement), would
constitute a "parachute payment" as defined in Section 280G(b)(2)
of the
Code (the "Initial Parachute Payment," which includes the amounts
paid
pursuant to clause (i) below), then the Corporation shall pay to the
Executive, a cash amount in two equal
installments, with the first installment to be paid on the first
business
day of the month following the Date
of Termination and the second installment to be paid no later than
January
15th
of
the calendar year following the year in which the first installment
was
paid. The cash amount shall be equal to the sum of the
following:
|
| i) |
the
amount by which the payments and benefits that would have otherwise
been
paid by the Bank to the Executive pursuant to Section 6 of the Bank
Agreement are reduced by the provisions of Section 7 of the Bank
Agreement;
|
| ii) |
twenty
percent (or such other percentage equal to the tax rate imposed by
Section 4999 of the Code) of the amount by which the Initial
Parachute Payment exceeds the Executive's "base amount" from the
Employers, as defined in Section 280G(b)(3) of the Code, with the
difference between the Initial Parachute Payment and the Executive's
base
amount being hereinafter referred to as the "Initial Excess Parachute
Payment";
|
| iii) |
such
additional amount (tax allowance) as may be necessary to compensate
the
Executive for the payment by the Executive of state and federal income
and
excise taxes on the payment provided under clause (ii) above and
on any
payments under this clause (iii). In computing such tax allowance,
the
payment to be made under clause (ii) above shall be multiplied by
the
"gross up percentage" ("GUP"). The GUP shall be determined as
follows:
|
GUP
= Tax
Rate / 1 - Tax Rate
| iv) |
Tax
Rate
|
The
Tax
Rate for purposes of computing the GUP shall be the highest marginal federal
and
state income and employment-related tax rate, including any applicable excise
tax rate, applicable to the Executive in the year in which the payment under
clause (ii) above is made.
| v) |
Notwithstanding
the foregoing, if it shall subsequently be determined in a final
judicial
determination or a final administrative settlement to which the
Executive
is a party that the actual excess parachute payment as defined
in Section
280G(b)(1) of the Code is different from the Initial Excess Parachute
Payment (such different amount being hereafter referred to as the
"Determinative Excess Parachute Payment"), then the Corporation's
independent tax counsel or accountants shall determine the amount
(the
"Adjustment Amount") which either the Executive must pay to the
Corporation or the Corporation must pay to the Executive in order
to put
the Executive (or the Corporation, as the case may be) in the same
position the Executive (or the Corporation, as the case
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10
|
may
be) would have been if the Initial Excess Parachute Payment had
been equal
to the Determinative Excess Parachute Payment. In determining the
Adjustment Amount, the independent tax counsel or accountants shall
take
into account any and all taxes (including any penalties and interest)
paid
by or for the Executive or refunded to the Executive or for the
Executive's benefit. As soon as practicable after the Adjustment
Amount
has been so determined, the Corporation shall pay the Adjustment
Amount to
the Executive or the Executive shall repay the Adjustment Amount
to the
Corporation, as the case may
be.
|
| b) |
In
each calendar year that the Executive receives payments of benefits
under
this Section 7, the Executive shall report on his state and federal
income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants
of the
Corporation as described above. The Corporation shall indemnify and
hold
the Executive harmless from any and all losses, costs and expenses
(including without limitation, reasonable attorneys' fees, interest,
fines
and penalties) which the Executive incurs as a result of so reporting
such
information. The Executive shall promptly notify the Company in writing
whenever the Executive receives notice of the institution of a judicial
or
administrative proceeding, formal or informal, in which the federal
tax
treatment under Section 4999 of the Code of any amount paid or payable
under this Section 7 is being reviewed or is in dispute. The
Corporation shall assume control, at its expense, over all legal
and
accounting matters pertaining to such federal tax treatment (except
to the
extent necessary or appropriate for the Executive to resolve any
such
proceeding with respect to any matter unrelated to amounts paid or
payable
pursuant to this Section) and the Executive shall cooperate fully
with the
Corporation in any such proceeding. The Executive shall not enter
into any
compromise or settlement or otherwise prejudice any rights the Corporation
may have in connection therewith without the prior consent of the
Corporation.
|
| 8) |
Mitigation;
Exclusivity of Benefits.
|
| a) |
The
Executive shall not be required to mitigate the amount of any benefits
hereunder by seeking other employment or otherwise, nor shall the
amount
of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the
Date of
Termination or otherwise.
|
| b) |
The
specific arrangements referred to herein are not intended to exclude
any
other benefits which may be available to the Executive upon a termination
of employment with the Employers pursuant to employee benefit plans
of the
Employers or otherwise.
|
| 9) |
Withholding.
All payments required to be made by the Corporation hereunder to
the
Executive shall be subject to the withholding of such amounts, if
any,
relating to tax and other payroll deductions as the Corporation may
reasonably determine should be withheld pursuant to any applicable
law or
regulation.
|
11
| 10) |
Assignability.
The Corporation may assign this Agreement and its rights and obligations
hereunder in whole, but not in part, to any corporation, bank or
other
entity with or into which the Corporation may hereafter merge or
consolidate or to which the Corporation may transfer all or substantially
all of its assets, if in any such case said corporation, bank or
other
entity shall by operation of law or expressly in writing assume all
obligations of the Corporation hereunder as fully as if it had been
originally made a party hereto, but may not otherwise assign this
Agreement or its rights and obligations hereunder. The Executive
may not
assign or transfer this Agreement or any rights or obligations
hereunder.
|
| 11) |
Notice.
For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed
to
have been duly given when delivered or mailed by certified or registered
mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth
below:
|
| a) |
To
the
Corporation:
Corporate
Secretary
|
CFS
Bancorp,
Inc.
000
Xxxxx
Xxxx
Xxxxxxx,
Xxxxxxx 00000
| b) |
To
the
Bank: Corporate Secretary
|
Citizens
Financial Bank
000
Xxxxx
Xxxx
Xxxxxxx,
Xxxxxxx 00000
| c) |
To
the Executive: Xxxxxx
X. Xxxxxx
|
[Address
Redacted]
| 12) |
Amendment;
Waiver.
No
provisions of this Agreement may be modified, waived or discharged
unless
such waiver, modification or discharge is agreed to in writing and
signed
by the Executive and such officer or officers as may be specifically
designated by the Board of Directors of the Corporation to sign on
its
behalf. No waiver by any party hereto at any time of any breach by
any
other party hereto of, or compliance with, any condition or provision
of
this Agreement to be performed by such other party shall be deemed
a
waiver of similar or dissimilar provisions or conditions at the same
or at
any prior or subsequent time.
|
| 13) |
Governing
Law.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the United States where
applicable and otherwise by the substantive laws of the State of
Indiana.
|
| 14) |
Nature
of Obligations.
Nothing contained herein shall create or require the Corporation
to create
a trust of any kind to fund any benefits which may be payable hereunder,
and to the extent that the Executive acquires a right to receive
benefits
from the Corporation hereunder,
|
12
|
such
right shall be no greater than the right of any unsecured general
creditor
of the Corporation.
|
| 15) |
Headings.
The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
|
| 16) |
Validity.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions
of
this Agreement, which shall remain in full force and
effect.
|
| 17) |
Counterparts.
This Agreement may be executed in one or more counterparts, each
of which
shall be deemed to be an original but all of which together shall
constitute one and the same
instrument.
|
| 18) |
Regulatory
Prohibition.
Notwithstanding any other provision of this Agreement to the contrary,
any
payments made to the Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with Section
18(k) of
the Federal Deposit Insurance Act (12 U.S.C. §1828(k)) and the regulations
promulgated thereunder, including 12 C.F.R. Part 359. In the event of
the Executive's termination of employment with the Bank for Cause,
all
employment relationships and managerial duties with the Bank shall
immediately cease regardless of whether the Executive remains in
the
employ of the Corporation following such termination. Furthermore,
following such termination for Cause, the Executive shall not, directly
or
indirectly, influence or participate in the affairs or the operations
of
the Bank.
|
| 19) |
Payment
of Costs and Legal Fees and Reinstatement of
Benefits.
In
the event any dispute or controversy arising under or in connection
with
the Executive's termination is resolved in favor of the Executive,
whether
by judgment, arbitration or settlement, the Executive shall be entitled
to
the payment of (a) all legal fees incurred by the Executive in
resolving such dispute or controversy, and (b) any back-pay,
including Base Salary, bonuses and any other cash compensation, fringe
benefits and any compensation and benefits due to the Executive under
this
Agreement.
|
| 20) |
Indemnification.
The Corporation shall provide the Executive (including his heirs,
executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense, or in lieu
thereof, shall indemnify the Executive (and his heirs, executors
and
administrators) to the fullest extent permitted under Indiana law
against
all expenses and liabilities reasonably incurred by him in connection
with
or arising out of any action, suit or proceeding in which he may
be
involved by reason of his having been a director or officer of the
Corporation (whether or not he continues to be a director or officer
at
the time of incurring such expenses or liabilities). Such expenses
and
liabilities shall include, but shall not be limited to, judgments,
court
costs and attorneys' fees and the cost of reasonable
settlements.
|
| 21) |
Entire
Agreement.
This Agreement embodies the entire agreement between the Corporation
and
the Executive with respect to the matters agreed to herein. All prior
agreements between
|
13
|
the
Corporation and the Executive with respect to the matters agreed
to herein
are hereby superseded and shall have no force or effect.
Nothwithstanding the foregoing, nothing contained in this Agreement
shall
affect the agreement of even date being entered into between the
Bank and
the
Executive.
|
IN
WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.
Attest: CFS
BANCORP, INC.
/s/
Xxxxxx X. Xxxxxxxx By:
/s/
Xxxxx X.Xxxxx
EXECUTIVE
/s/
Xxxxxx X.
Xxxxxx
Xxxxxx
X.
Xxxxxx
14
