EMPLOYMENT AGREEMENT
Exhibit
99
THIS
AGREEMENT is entered into this 16th day of October, 2007 (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, Xxxxxxxx, and Xxx 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
October
2005 (“Prior Agreement”), pursuant to which the Employee was employed as the
President of the Bank and the Company; and
WHEREAS,
Section 409A of the Internal Revenue Code (the “Code”), effective January 1,
2005, requires deferred compensation arrangements, including those set forth
in
employment agreements, to comply with its provisions and restrictions and
limitations on payments of deferred compensation and the Prior Agreement was
intended to comply with its provisions; and
WHEREAS,
the final regulations have been issued under Code Section 409A and the Bank
desires to update the Prior Agreement to incorporate the requirements of the
final regulations; 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 her service and dedication
to
the continued success of the Bank and to update the provisions for the final
regulations under Code Section 409A; 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 her employment hereunder, the Employee shall serve as the
President/Chief Operating 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 $134,000.00 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) her 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. The Employee
shall share in normal salary increases at a rate not less, but may be more,
than
the higher of the senior management employees average percentage increases
or
the average of all employees percentage increases afforded to all employees
of
the Bank. In both cases indicated above, the averages are exclusive of the
percentage increase afforded to the CEO. 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
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. If such discretionary bonuses are awarded to senior
management, Employee’s bonus shall not be less than 10% of the Employee’s then
current base salary. In addition, if such discretionary bonuses are no longer
awarded to the senior management, but pre-written, incentive bonuses are
afforded to any senior management, then such incentive bonus shall also be
offered to the Employee at an amount or percentage not less than the average
amount or percentages afforded to all senior management, inclusive
of the bonus awarded to CEO. 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.
(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. In addition, during the term of this Agreement, the Bank
shall provide Employee with an automobile suitable to her position as President
and Chief Operating Officer of the Bank. At the time of execution of
this Agreement, the Executive is leasing an automobile and the Bank has agreed
to make the lease payments for the duration of the lease
period. Following the expiration of the lease period, the Bank shall
either purchase or lease (in the name of the Bank) a new automobile of similar
quality for the use of Executive. The Bank shall reimburse the
Employee for her reasonable out-of-pocket expenses
2
incurred
in connection with the performance of her duties under this Agreement 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 her employment hereunder and except for illnesses, reasonable
vacation periods, and reasonable leaves of absence, the Employee shall devote
all her full business time and attention to the performance of her duties
hereunder; provided, however, from time to time, the 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
the Employee’s duties pursuant to this Agreement, or will not violate any
applicable statute or regulation. During the term of her 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 her duties under this Agreement in accordance with such
reasonable standards as the Board may establish from time to time. The Bank
will
provide the Employee with the working facilities and staff customary for similar
executives and necessary for her to perform her 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 herself voluntarily from the performance of her 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 her 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.
3
(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 herself voluntarily from the performance of
her
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 her death during
the term of this Agreement, in which event the Employee’s beneficiary or
beneficiaries, or her estate, shall be entitled to receive the compensation
due
the Employee through the last day of the calendar month in which her 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 her 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, in accordance with its regular payroll
practices.
(b) Disability.
(1) In
the event of Employee’s disability (as hereinafter defined), the Employee shall
receive any disability insurance for which the Employee shall be eligible under
any disability insurance or similar program maintained by the
Bank. For the first twelve (12) months of the Employee’s disability,
the Bank shall pay the Employee the difference between the Employee’s monthly
Base Salary and the amount that is paid to the Employee pursuant to any
disability insurance or similar program which the Bank has provided or may
provide on behalf of its employees pursuant to any xxxxxxx’x or social security
disability program, it being understood that such program or insurance shall
have primary responsibility of coverage. Notwithstanding anything to
the contrary herein, no payments shall be made hereunder which would violate
Code Section 409A. Accordingly, any payments required hereunder shall
commence within thirty (30) days from the date of determination of Employee’s
disability.
As
used
in this Agreement, the term “disability” or “disabled” shall be construed to
comply with Code Section 409A and shall be deemed to have occurred if: (i)
Employee is unable to engage in any substantial gainful activity by reason
of
any medically determinable physical or mental impairment that can be expected
to
result in death, or last for a continuous period of not less than 12 months;
(ii) by reason of any medically determinable physical or mental impairment
that
can be expected to result in death, or last for a continuous period of
not
4
less
than 12 months, Executive is
receiving income replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the Bank or the Company;
or (iii) Executive is determined to be totally disabled by the Social Security
Administration.
(2) In
the event Employee is disabled for a continuous period exceeding twelve (12)
calendar months, the Bank may, at its election, terminate this Agreement and
Employee’s employment (if not previously terminated). In such event,
the Employee shall be entitled to receive from the Bank the difference, if
any,
between fifty (50%) percent of her Base Salary and the amount that is paid
to
the Employee pursuant to any disability insurance or similar program sponsored
by the Bank. 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. Payments
required hereunder shall be made consistent with the requirements of Code
Section 409A, in the same manner contemplated by Section 9(b)(1)
hereof.
(3) 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 she 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 herself
available to the Bank to undertake reasonable assignments consistent with the
dignity, importance and scope of her prior position and her 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 she shall
perform such assignments, subject always to the provisions of this Section
9(b)(3), and shall keep such Board or such executive officer appropriately
informed of her progress in each such assignment.
(c) Just
Cause. The Board may, by written notice to the Employee,
immediately terminate her 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 her
employment at any time for a reason other than Just Cause, in which event
the
5
Employee,
or in the event of her subsequent death, her beneficiary or beneficiaries,
or
her estate, as the case may be, as severance pay or liquidated damages, or
both,
shall be entitled to receive an amount equal to one and one-half (1½) times (the
“Multiplier”) the sum of (i) her 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
Bank shall cause to be continued life insurance, non-taxable medical and dental
coverage, and disability coverage substantially identical to the coverage
maintained by the Bank for the Employee prior to her termination, for eighteen
(18) months (the “Period”) from the date of termination. The Employee shall also
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 the 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 she had continued working
for the Bank for a eighteen (18) month period following her 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
her. Notwithstanding anything to the contrary herein, the Multiplier and the
Period of payment of continued life, medical, dental and disability coverage
shall be reviewed annually by the Board and the Board, in its sole discretion,
may increase (but not decrease) the Multiplier and the Period in one-half
percent (½%) and in six month increments, respectively, All amounts
payable to the Employee in cash shall be paid in one lump sum (adjusted to
reflect the present value of such accelerated payment) within thirty (30) days
of such termination, or if the Employee is a Specified Employee (within the
meaning of Treasury Regulations §1.409A-1(i)) on the first day of the seventh
month following the Employee’s termination of
employment. 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.
(2) The
Employee may voluntarily terminate her 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
her personal residence, or perform her principal executive functions, more
than
thirty-five (35) miles from her 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 her 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
6
directly
or indirectly reduce any of such benefits or deprive the Employee of any
material fringe benefit enjoyed by her; (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 her position as referenced at Section 1; (vii) a
material diminution or reduction in the Employee’s responsibilities or authority
(including reporting responsibilities) in connection with her 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 Section 310 of the Regulatory Handbook of the Office of Thrift
Supervision, 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.
(4) Notwithstanding
the foregoing, for purposes of this Section 9(d), termination of employment
shall be construed to require a “Separation from Service” as defined in Code
Section 409A and the Treasury Regulations promulgated thereunder, provided,
however, that the Bank and the Employee reasonably anticipate that the level
of
bona fide services the Employee would perform after termination would
permanently decrease to a level that is less than 50% of the average level
of
bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period.
(e) Termination
or Suspension Under Federal Law.
(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
his
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
7
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 her
compensation, vested rights (including continuing group health benefits as
provided in Section 4(a) hereof) and employee benefits up to the date of her
termination, payable as set forth in the documents governing such
payments.
10. Change
in Control.
(a) Change
in Control; Involuntary Termination.
(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 Bank shall cause to be
continued life insurance, non-taxable medical and dental coverage, and
disability coverage substantially identical to the coverage maintained by the
Bank for the Employee prior to her termination, for a period of thirty-six
months from the date of termination. The Employee shall also 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 the 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 she had continued working
for the Bank for a thirty-six (36) month period following her 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 her. All amounts payable to the Employee
in
cash shall be paid in one lump sum (adjusted for the present value of such
accelerated payment) within thirty (30) days of such termination or if the
Employee is a Specified Employee (within the meaning of
Treasury
8
Regulations
§1.409A-1(i)) on the first day of the seventh month following the Employee’s
termination of employment.
(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 she 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 her 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. In the event that the
Employee’s or Bank’s determination to reduce total the payments is in violation
of Code Section 409A, such reduction shall be made pro-rata.
(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 5.01 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 1934 (the “Exchange Act”); 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
9
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 her employment
under this Agreement within ninety (90) days following a Change in Control
as
defined in paragraph (a)(3) 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 her 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 advance by the Employee in writing: (i) the requirement that
the
Employee move her personal residence, or perform her principal executive
functions, more than thirty-five (35) miles from her 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 her 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 her 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 her 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 her 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.
10
(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 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 Section 310 of the Regulatory Handbook 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
11
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.
(g) Notwithstanding
the foregoing, for purposes of this Section 10, involuntary or voluntary
termination of employment shall be construed to require a “Separation from
Service” as defined in Code Section 409A and the Treasury Regulations
promulgated thereunder, provided, however, that the Bank and the Employee
reasonably anticipate that the level of bona fide services the Employee would
perform after termination would permanently decrease to a level that is less
than 50% of the average level of bona fide services performed (whether as an
employee or an independent contractor) over the immediately preceding 36-month
period.
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 her 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 her
death, or (ii) the executors, administrators, or other legal representatives
of
the Employee or her 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.
12
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).
17. Subject
to Office of Thrift Supervision. This Agreement is subject to and
conditioned upon any required review or approval by the Office of Thrift
Supervision or any other applicable regulatory agency or authority.
[signature
page follows]
13
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/Xxxxx
X. Xxxxxx
|
By:
|
/s/
Xxxxxx X. Xxxxxx
|
Xxxxx
Xxxxxx, Secretary
|
Xxxxxx
X. Xxxxxx, Chairman and
|
|
Chief
Executive Officer
|
||
WITNESS:
|
EXECUTIVE:
|
|
/s/
Jo Xxxx Xxxx
|
/s/ Xxx X. Xxxxxx | |
Xx
Xxxx Xxxx
|
Xxx X. Xxxxxx, President |
14