SEPARATION AGREEMENT AND RELEASE
EXHIBIT
10.3
This
Separation Agreement and Release (“Agreement”) is entered into this 26th day of
September, 2007 between XXXXXX X. XXXX (“Employee”) on one hand, and ROYAL
FINANCIAL, INC. and ROYAL SAVINGS BANK (collectively, the “Company”) on the
other hand. Employee and Company
collectively are referred to herein as the “Parties.” This Agreement
is made for good and valuable consideration, the receipt and sufficiency of
which is acknowledged by the Parties.
RECITALS
WHEREAS,
Employee has been employed as the Chief Executive Officer/President, and has
served as a member of the Board of Directors, of the Company pursuant to an
Executive Employment Agreement dated January 20, 2005 (“Employment
Agreement”);
WHEREAS,
on June 18, 2007, the Company suspended Employee with pay as a result of
and pending the conclusion of an internal investigation regarding alleged
irregularities with respect to the Company’s internal controls and allegations
of misconduct on the part of Employee raised by other executive officers of
the
Company; and
WHEREAS,
to avoid the potential cost involved with and uncertainty of litigation, the
Parties wish to resolve their dispute as to Employee’s employment with the
Company and have mutually agreed to terminate the Employment Agreement whereby
Employee will resign all positions of employment he currently holds with the
Company, his membership on the Board of Directors of each of Royal Financial,
Inc. and Royal Savings Bank, and any positions with any affiliates of the
Company, under the terms set forth in this Agreement.
NOW
THEREFORE, the Parties, desiring to resolve the matters at issue, agree as
follows:
AGREEMENT
1. Employee’s
Resignation and Termination of Employment Agreement. Employee
hereby agrees to resign as President/Chief Executive Officer and member of
the
Board of Directors of each of Royal Financial, Inc. and Royal Savings Bank
and
any and all positions with any affiliates of the Company (see
Schedule A attached hereto), effective eight (8) days after he executes
this Agreement, assuming he does not revoke this Agreement during that
timeframe. Employee’s Employment Agreement shall terminate on the
date Employee so resigns, and upon such termination, the Employee and Company
shall have no further rights and obligations under the Employment Agreement
except for those rights and obligations as specifically set forth
herein. Specifically, the vesting rights relating to any and all
stock options and shares of restricted stock granted to Employee pursuant to
the
terms of the 2005 Royal Financial, Inc. Stock Option Plan and the 2005 Royal
Financial, Inc. Recognition and Retention Plan and Trust Agreement,
respectively, shall cease on the effective date of his resignation; provided,
however, Employee shall retain such rights to any stock options and shares
of
restricted stock that have previously vested up to the effective date of his
resignation.
2. Confidentiality. Except
as necessary to comply with the Company’s reporting obligations to the
Securities and Exchange Commission (“SEC”) or any state or federal
banking
regulators,
to provide relevant information to investors and potential investors, or to
disclose as necessary to its accountants, attorneys and officers and directors
with a need to know, Company agrees to keep the terms of this Agreement in
strict confidence from all persons not a party to this
Agreement. Likewise, Employee agrees to keep the terms of this
Agreement in strict confidence from all persons not a party to this Agreement,
except that Employee may disclose the contents of this Agreement to his
immediate family members, attorney(s), accountant(s), and financial advisor(s),
who also agree to keep this information confidential.
3. Non-disparagement. Employee
agrees that he shall not disparage the Company nor the Company’s business, nor
any of its officers, directors or employees, nor otherwise seek to reduce the
goodwill of the Company or diminish or negatively impact the reputation of
the
Company, its officers, directors, or employees. The Company, on
behalf of its directors and executive officers, agrees not to disparage Employee
or to act in any way to diminish or negatively impact Employee’s
reputation. Notwithstanding this provision, the Company and Employee
retain all rights of communication with respect to Company’s ongoing
investigation of: (a) Employee’s alleged misconduct, and (b) the
conversion of the Company to a publicly traded entity. The Company
also retains all rights of communication with respect to its reporting
requirements to the SEC and any state and federal banking
regulators.
4. Releases. (a) In
consideration of the payments and promises made by the Company to Employee
herein, Employee on behalf of Employee and his spouse, heirs, executors,
administrators, children and assigns hereby fully releases and discharges the
Company, its officers, directors, shareholders, parents, subsidiaries, benefit
plans and their administrators, affiliates, supervisors, managers, employees,
agents, representatives, fiduciaries, insurers and attorneys, and its and their
predecessors, successors, heirs, executors, administrators, and assigns
(“Released Parties”) from any and all claims, actions, causes of actions,
grievances, suits, charges, or complaints of any kind or nature whatsoever,
that
he ever had or now has, whether fixed or contingent, liquidated or unliquidated,
know or unknown, and whether arising in tort, contract, statute, or equity,
before any federal, state, local, or private court, agency, arbitrator,
mediator, or other entity, regardless of the relief or remedy, related to his
employment with the Company, the termination of his employment with the Company,
the termination of his Employment Agreement, any claim for attorneys’ fees and
costs related to his present disputes with the Company, and any related claims
arising from acts occurring before, during or after his suspension on
June 18, 2007. Without limitation, this release specifically
includes any and all claims for violation of Title VII of the Civil Rights
Act
of 1964, as amended, the Rehabilitation Act of 1973, as amended, the Employee
Retirement Income Security Act of 1974, as amended, the Civil Rights Act of
1991, the Age Discrimination in Employment Act, the Americans With Disabilities
Act, the Family and Medical Leave Act, the Illinois Human Rights Act, and for
defamation, intentional infliction of emotional distress, invasion of privacy,
breach of contract, and any other statutory claim or common-law
claim. This release does not affect claims that arise in the future
after the date on which Employee’s right to revoke this Agreement
expires. Notwithstanding the terms set forth above in this paragraph
4(a), Employee does not release any claims, actions, causes of actions,
grievances, suits, charges, or complaints of any kind or nature whatsoever
arising out of the Company’s ongoing investigation of Employee’s alleged
misconduct and the conversion of the Company to a publicly traded entity,
including, but not limited to, any third-party action, including any action
instituted by any state or federal regulatory agency such as the
SEC. Nothing contained in this paragraph 4(a) shall limit or
impair any of Employee’s rights or vested benefits under any of the
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Company’s
existing benefit plans up to and including the effective date of his
resignation.
(b) The
Company hereby releases and discharges the Employee, and his heirs, executors
and administrators, from any and all claims, actions, causes of actions,
grievances, suits, charges, or complaints of any kind or nature whatsoever,
that
it has ever had or now has, whether fixed or contingent, liquidated or
unliquidated, and whether arising in tort, contract, statute, or equity, before
any federal, state, local, or private court, agency, arbitrator, mediator,
or
other entity, regardless of the relief or remedy. Notwithstanding the
terms set forth above in this paragraph 4(b), the Company does not release
any
claims, actions, causes of actions, grievances, suits, charges, or complaints
of
any kind or nature whatsoever arising out of the Company’s ongoing investigation
of Employee’s alleged misconduct and of the conversion of the Company to a
publicly traded entity, including, but not limited to, any third-party action,
including any action instituted by any state or federal regulatory agency such
as the SEC.
5. Payment
and Health Insurance. In exchange for the considerations set
forth herein, the Company agrees to: (a) pay Employee the total amount of
Forty-Eight Thousand Seventy-Seven Dollars and Fifteen Cents ($48,077.15),
minus
federal or state tax withholdings, on the 14th day after
Employee
has executed (and not revoked) this Agreement; and (b) reimburse the
Employee for the cost of COBRA medical insurance coverage (including the
administrative fee) for Employee and any eligible dependents, for the period
from the effective date of his resignation with the Company through
January 20, 2008, assuming Employee is eligible for and elects COBRA
coverage for that period and he is not otherwise eligible for medical insurance
coverage during that period under any other employer’s group health insurance
plan. The COBRA reimbursement payments referenced above will be made
directly to the Employee assuming the Employee provides proof of his election
of
COBRA and proof of payment of the COBRA payments to the Company’s group medical
insurer. Employee will remain responsible for complying with all the
other requirements of COBRA, including continuing to pay for his medical
insurance after the Company is no longer obligated to provide reimbursement
of
such payments.
6. No
Admission of Liability. This Agreement includes a
settlement of any employment-related claims Employee may have against the
Released Parties, and the Released Parties do not admit any liability to
Employee with respect to any such claims. The Parties intend to avoid
any future litigation with respect to all such claims released under this
Agreement.
7. Restrictive
Covenants. The Company and Employee hereby agree that the rights
and obligations set forth in paragraphs 12, 13 and 14 of Employee’s Employment
Agreement shall remain in full force and effect, and are incorporated by
reference in this Agreement as if fully set forth herein. Specifically, Employee
renews his commitment to strictly honor the restrictive covenants set forth
in
paragraphs 12 and 13 of his Employment Agreement. Employee further
agrees that the Company shall maintain any and all its enforcement rights and
remedies set forth in paragraph 14 of Employee’s Employment
Agreement.
8. Parties’
Representations. The Parties agree, represent and warrant as
follows:
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a.
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The
Employee and the Company are the sole and only real Parties in interest
with respect to any claims the Parties have agreed to release hereunder,
and Employee and the Company have not assigned or transferred, or
purported to assign or
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transfer
to any person or entity whatsoever, any of the claims released under
this
Agreement;
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b.
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Each
party has read this Agreement and knows and understands its contents
fully. The Parties understand that they are giving up any
claims released hereunder against the other party, and that they
may never
bring an arbitration or lawsuit to recover for such
claims;
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c.
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Each
party to this Agreement has received independent legal advice from
its or
his attorney with respect to the legal consequences of making the
settlement provided for herein and with respect to the execution
of this
Agreement. Each party voluntarily executes this Agreement,
after consulting with counsel and without being pressured or influenced
by
any statement or representation of any person acting on behalf of
any
other party, including any other party’s officers, directors,
shareholders, partners, employees, agents, insurers, successors,
assigns
and attorneys; and
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d.
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Each
signatory is fully authorized to sign this
Agreement.
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9. Joint
Drafting. The Parties have jointly participated in the drafting
of this Agreement. No one party shall be deemed to be the draftsman
of this Agreement. The provisions of this Agreement are to be
construed fairly and reasonably, and not strictly for or against any
party.
10. Execution. This
Agreement may be signed in multiple counterparts and each counterpart or a
telefacsimile copy of the Agreement, which shall be considered an original
for
all purposes, when taken with the other executed counterpart, shall constitute
a
binding agreement among the Parties executed as of the date first written
above.
11. No
Reinstatement. Employee waives any right to reinstatement and
agrees not to apply for reemployment with the Company.
12. Older
Workers’ Benefits Protection Act Provisions.
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a.
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Employee
acknowledges that he has been advised in writing to consult with
an
attorney about this Agreement, and that he is represented by his
attorney
of choice, Xxxxxx Xxxxxxx, Esq., with respect to his consideration
of this
Agreement.
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b.
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Employee
acknowledges that he was given the opportunity to review and consider
this
Agreement for a period of up to twenty-one (21)
days.
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c.
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After
he signs this Agreement, Employee shall have seven (7) days in which
to
change his mind and revoke his acceptance of this
Agreement.
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13. Governing
Law/Jurisdiction/Prevailing Party. For purposes of interpretation
of this Agreement, the Parties agree that Illinois law shall apply, and that
any
action to enforce, construe or interpret this Agreement shall be brought in
the
state court of the State of Illinois, County of Xxxx. If any such
action is instituted, the prevailing party in any such action shall be
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entitled
to reimbursement from the other party of his/its reasonable attorneys’ fees and
costs incurred in such action.
14. Entire
Agreement. This Agreement shall be the sole and exclusive
agreement among the Parties related to the subject matter herein.
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By: /s/
Xxxxxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxxxxxxx
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XXXXXX
X. XXXX
By: /s/
Xxxxxx X. Xxxx
Dated: September 26,
2007
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Its: Chief
Financial Officer and Acting Chief
Executive
Officer
Dated:
September 26, 2007
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ROYAL
SAVINGS BANK
By: /s/
Xxxxxxx Xxxxxxxxxxx
Xxxxxxx Xxxxxxxxxxx
Its: Chief
Financial Officer and Acting Chief
Executive
Officer
Dated:
September 26, 2007
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5
Schedule A
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·
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Royal
Financial, Inc. – President and Chief Executive Officer, and
Director
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·
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Royal
Savings Bank – President and Chief Executive Officer, and
Director
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·
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Royal
Charitable Foundation – President and
Director
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·
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Royal
Financial, Inc. – Employee Stock Ownership Plan Committee
Member
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