Exhibit 10.7
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") is made and
entered into as of this _______ day of __________________, 1997, by and between
First Security Federal Savings Bank (hereinafter referred to as the
"Association" whether in mutual or stock form), and Xxxx X. Xxxx (the
"Employee").
WHEREAS, the Employee is currently serving as Vice President-Lending of the
Association; and
WHEREAS, the Association has adopted a plan of conversion whereby the
Association will convert to capital stock form as the subsidiary of First
SecurityFed Financial, Inc. (the "Holding Company"), subject to the approval of
the Association's members and the Office of Thrift Supervision (the
"Conversion"); and
WHEREAS, the board of directors of the Association ("Board of Directors")
recognizes that, as is the case with publicly held corporations generally, the
possibility of a change in control of the Holding Company and/or the Association
may exist and that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or distraction of key
management personnel to the detriment of the Association, the Holding Company
and their respective stockholders; and
WHEREAS, the Board of Directors believes it is in the best interests of the
Association to enter into this Agreement with the Employee in order to assure
continuity of management of the Association and to reinforce and encourage the
continued attention and dedication of the Employee to the Employee's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Holding Company or
the Association, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution
of this Agreement with the Employee to take effect as stated in Section 2
hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means (1) an event of a nature that (i)
results in a change in control of the Association or the Holding
Company within the meaning of the Home Owners' Loan Act of 1933 and 12
C.F.R. Part 574 as in effect on the date hereof; or (ii) would be
required to be reported in response to Item 1 of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); (2)
any person (as the term is used in Section 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly of securities of
the Association or the Holding Company representing 20% or more of the
Association's or the Holding Company's outstanding securities; (3)
individuals who are members of the board of directors of the
Association or the Holding Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Holding Company's stockholders
was approved by the nominating committee serving under an Incumbent
Board, shall be considered a member of the Incumbent Board; or (4) a
reorganization, merger, consolidation, sale of all or substantially
all of the assets of the Association or the Holding Company or a
similar transaction in which the Association or the Holding Company is
not the resulting entity. The term "Change in Control" shall not
include an acquisition of securities by an employee benefit plan of
the Association or the Holding Company or the acquisition of
securities of the Association by the Holding Company in connection
with the Conversion.
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(b) The term "Commencement Date" means the date of completion of the
Association's conversion to stock form
(c) The term "Date of Termination" means the earlier of (1) the date upon
which the Association gives notice to the Employee of the termination
of the Employee's employment with the Association or (2) the date upon
which the Employee ceases to serve as an employee of the Association.
(d) The term "Involuntary Termination" means termination of the employment
of Employee without the Employee's express written consent, and shall,
subject to the last sentence in this paragraph, include a material
diminution of or interference with the Employee's duties,
responsibilities and benefits as Vice President-Lending of the
Association, including (without limitation) any of the following
actions unless consented to in writing by the Employee: (1) a change
in the principal workplace of the Employee to a location outside of a
30 mile radius from the Association's headquarters office as of the
date hereof; (2) a material demotion of the Employee; (3) a material
reduction in the number or seniority of other Association personnel
reporting to the Employee or a material reduction in the frequency
with which, or in the nature of the matters with respect to which,
such personnel are to report to the Employee, other than as part of a
Association- or Holding Company-wide reduction in staff; (4) a
material adverse change in the Employee's salary, other than as part
of an overall program applied uniformly and with equitable effect to
all members of the senior management of the Association or the Holding
Company; and (5) a material permanent increase in the required hours
of work or the workload of the Employee. The term "Involuntary
Termination" does not include Termination for Cause or termination of
employment due to retirement, death, disability or suspension or
temporary or permanent prohibition from participation in the conduct
of the Association's affairs under Section 8 of the Federal Deposit
Insurance Act ("FDIA") and shall not include a material diminution of
or interference with the Employee's duties, responsibilities and
benefits unless the employee or the Association submits written notice
of involuntary termination within 120 days thereof.
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Employee because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of a fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule,
or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of
this Agreement.
2. Term. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as
provided herein. Beginning on the first anniversary of the
Commencement Date, and on each anniversary thereafter until the first
anniversary of the Commencement Date after the Employee reaches age
65, the term of this Agreement shall be extended for a period of one
year in addition to the then-remaining term, provided that, prior to
such anniversary, the Board of Directors of the Association explicitly
reviews and approves the extension. Reference herein to the term of
this Agreement shall refer to both such initial term and such extended
terms.
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3. Severance Benefits; Regulatory Provisions.
(a) Involuntary Termination in Connection With a Change in Control. In the
event of Involuntary Termination in connection with or within 24
months after a Change in Control which occurs during the term of this
Agreement, the Association shall, subject to Section 4 of this
Agreement, (1) pay to the Employee in a lump sum in cash within 25
business days after the Date of Termination an amount equal to 200% of
the Employee's "base amount" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"); and (2)
provide to the Employee during the remaining term of this Agreement
such health insurance benefits as the Association maintained for
executive officers at the Date of Termination on terms as favorable to
the Employee as applied at the Date of Termination. The total of
payments to the Employee under this section shall not exceed three
times his average compensation from the Association over the five most
recent taxable years (or, if employed by the Association for a shorter
period, over the period of his employment by the Association).
(b) Temporary Suspension or Prohibition. If the Employee is suspended
and/or temporarily prohibited from participating in the conduct of the
Association's affairs by a notice served under Section 8(e)(3) or
(g)(1) of the FDIA, 12 U.S.C. ' 1818(e)(3) and (g)(1), the
Association's obligations under this Agreement shall be suspended as
of the date of service, unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Association may in its
discretion (i) pay the Employee all or part of the compensation
withheld while its obligations under this Agreement were suspended and
(ii) reinstate in whole or in part any of its obligations which were
suspended.
(c) Permanent Suspension or Prohibition. If the Employee is removed and/or
permanently prohibited from participating in the conduct of the
Association's affairs by an order issued under Section 8(e)(4) or
(g)(1) of the FDIA, 12 U.S.C. ' 1818(e)(4) and (g)(1), all obligations
of the Association under this Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting
parties shall not be affected.
(d) Default of the Association. If the Association is in default (as
defined in Section 3(x)(1) of the FDIA), all obligations under this
Agreement shall terminate as of the date of default, but this
provision shall not affect any vested rights of the contracting
parties.
(e) Termination by Regulators. All obligations under this Agreement shall
be terminated, except to the extent determined that continuation of
this Agreement is necessary for the continued operation of the
Association: (1) by the Director of the Office of Thrift Supervision
(the "Director") or his or her designee, at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the
Association under the authority contained in Section 13(c) of the
FDIA; or (2) by the Director or his or her designee, at the time the
Director or his or her designee approves a supervisory merger to
resolve problems related to operation of the Association or when the
Association is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any such action.
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4. Certain Reduction of Payments by the Association.
(a) Notwithstanding any other provision of this Agreement, if the value
and amounts of benefits under this Agreement, together with any other
amounts and the value of benefits received or to be received by the
Employee in connection with a Change in Control would cause any amount
to be nondeductible by the Association or the Holding Company for
federal income tax purposes pursuant to Section 280G of the Code, then
amounts and benefits under this Agreement shall be reduced (not less
than zero) to the extent necessary so as to maximize amounts and the
value of benefits to the Employee without causing any amount to become
nondeductible by the Association or the Holding Company pursuant to or
by reason of such Section 280G. The Employee shall determine the
allocation of such reduction among payments and benefits to the
Employee.
(b) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with
12 U.S.C. ' 1828(k) and any regulations promulgated thereunder.
5. No Mitigation. The Employee shall not be required to mitigate the amount of
any salary or other payment or benefit provided for in this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Agreement be reduced by any compensation
earned by the Employee as the result of employment by another employer, by
retirement benefits after the date of termination or otherwise.
6. Attorneys and/or Fees. If the Employee is purportedly Terminated for Cause
and the Association denies payments and/or benefits under Section 3(a) of
this Agreement on the basis that the Employee experienced Termination for
Cause rather than Involuntary Termination, but it is determined by a court
of competent jurisdiction or by an arbitrator pursuant to Section 13 that
cause as contemplated by Section 2(e) of this Agreement did not exist for
termination of the Employee's employment, or if in any event it is
determined by any such court or arbitrator that the Association has failed
to make timely payment of any amounts or provision of any benefits owed to
the Employee under this Agreement, the Employee shall be entitled to
reimbursement for all reasonable costs, including attorneys' fees, incurred
in challenging such termination of employment or collecting such amounts or
benefits. Such reimbursement shall be in addition to all rights to which
the Employee is otherwise entitled under this Agreement.
7. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other
party; provided, however, that the Association shall require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Association, by an assumption agreement
in form and substance satisfactory to the Employee, to expressly
assume and agree to perform this Agreement in the same manner and to
the same extent that the Association would be required to perform it
if no such succession or assignment had taken place. Failure of the
Association to obtain such an assumption agreement prior to the
effectiveness of any such succession or assignment shall be a breach
of this Agreement and shall entitle the Employee to compensation from
the Association in the same amount and on the same terms as the
compensation pursuant to Section 3(a) hereof. For purposes of
implementing the provisions of this Section 7(a), the date on which
any such succession becomes effective shall be deemed the Date of
Termination.
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(b) This Agreement and all rights of the Employee hereunder shall inure to
the benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while
any amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or if
there is no such designee, to the Employee's estate.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid, to the
Association at its home office, to the attention of the Board of Directors
with a copy to the Secretary of the Association, or, if to the Employee, to
such home or other address as the Employee has most recently provided in
writing to the Association.
9. Amendments. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties, except as herein otherwise
provided.
10. Headings. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
11. Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof.
12. Governing Law. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of
Illinois.
13. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
ATTEST: FIRST SECURITY FEDERAL SAVINGS BANK
___________________________________ ___________________________________
Xxxx Xxxxx Xxxxxx, Secretary By: Xxxxxx X. Xxxxx
Its: President and Chief
Executive Officer
EMPLOYEE
___________________________________
Xxxx X. Xxxx
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