HOME FEDERAL BANCORP, INC. OF LOUISIANA EMPLOYMENT AGREEMENT
Exhibit 10.2
This EMPLOYMENT AGREEMENT (this “Agreement”), is made and entered into as of the 27th day of December 2012, between Home Federal Bancorp, Inc. of Louisiana, a Louisiana corporation (the “Corporation” or the “Employer”), and Xxxxx X. Xxxxxx (the “Executive”).
WHEREAS, the Corporation’s wholly owned subsidiary Home Federal Bank (the “Bank”) is concurrently entering into a new amended and restated employment agreement with the Executive (the “Bank Agreement”); and
(i) any material breach of this Agreement by the Corporation, including without limitation any of the following: (A) a material diminution in the Executive’s base compensation, (B) a material diminution in the Executive’s authority, duties or responsibilities as described in Section 2, or (C) any requirement that the Executive report to a corporate officer or employee of the Corporation other than the Chairman of the Board of the Corporation, or
(ii) any material change in the geographic location at which the Executive must perform his services under this Agreement;
provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Corporation within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Corporation shall thereafter have the right to remedy the condition within thirty (30) days of the date the Corporation received the written notice from the Executive. If the Corporation remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition. If the Corporation does not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.
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(j) IRS. “IRS” shall mean the Internal Revenue Service.
(a) The Corporation hereby employs the Executive as the President and Chief Operating Officer of the Corporation 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 terms and conditions of this Agreement shall be and remain in effect during the period beginning on the Effective Date of this Agreement and ending on December 31, 2015, plus such extensions, if any, as are provided pursuant to Section 2(b) hereof (the “Employment Period”).
(b) Beginning on the day that is the first annual anniversary of the Effective Date and on each annual anniversary thereafter, the term of this Agreement shall be extended for a period of one additional year, provided that the Employer has not given notice to the Executive in writing at least thirty (30) days prior to such day that the term of this Agreement shall not be extended further and/or the Executive has not given notice to the Employer of his election not to extend the term at least thirty (30) days prior to any such annual anniversary date. If any party gives timely notice that the term will not be extended as of any such annual anniversary date, then this Agreement shall terminate at the conclusion of its remaining term. References herein to the term of this Agreement shall refer both to the initial term and successive terms.
(c) Nothing in this Agreement shall be deemed to prohibit the Corporation at any time from terminating the Executive’s employment during the Employment Period for any reason, provided that the relative rights and obligations of the Corporation and the Executive in the event of any such termination shall be determined under this Agreement, and provided further, that the termination of the Executive as President and/or as Chief Operating Officer shall not result in termination of the Executive’s service as a director on the Board of Directors of the Corporation.
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(d) During the term of this Agreement, the Executive shall manage the operations of the Corporation and oversee the officers that report to him. The Executive shall also oversee the implementation of the policies adopted by the Board of Directors of the Corporation and report directly to the Chairman of the Board and/or the Board of Directors of the Corporation. In addition, during the term of this Agreement, the Executive shall perform such executive services for the Corporation as may be consistent with his title and from time to time assigned to him by the Corporation’s Board of Directors.
(e) During the term of this Agreement, the Board of Directors of the Corporation shall nominate the Executive to be a director of the Corporation when his term expires and recommend his election to the stockholders of the Corporation, subject to the fiduciary duties of the Board of Directors of the Corporation. In addition, the Corporation agrees to approve the Executive’s election as a director of the Bank throughout the term of this Agreement.
(a) The Employer shall compensate and pay the Executive for his services during the term of this Agreement at a minimum base salary of $193,950 per year (“Base Salary”), which amount may be increased from time to time in such amounts as may be determined by the Board of Directors of the Employer 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 Board of Directors of the Employer.
(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, employee stock ownership, or other plans, benefits and privileges given to employees and executives of the Employer, to the extent commensurate with his then duties and responsibilities, as fixed by the Board of Directors of the Employer. 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 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 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be entitled to paid annual vacation in accordance with the policy as established from time to time by the Board of Directors of the Employer. The Executive shall not be entitled to receive any additional compensation from the Employer 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 Board of Directors of the Employer.
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(d) During the term of this Agreement, the Employer shall provide medical and dental insurance at no cost to the Executive for the benefit of the Executive and his spouse and minor children. The terms of such medical and dental insurance shall be the same or substantially similar to the coverage provided by the Corporation as of the date of this Agreement.
(e) During the term of this Agreement, the Employer shall provide the Executive, to the extent not provided by the Bank, with an automobile comparable to the one currently provided to him. The Employer shall be responsible and shall pay for all costs of insurance coverage, repairs, maintenance and other incidental expenses, including license, fuel and oil. If such expenses are paid in the first instance by the Executive, the Employer shall reimburse the Executive therefor. Such reimbursement shall be paid promptly by the Employer and in any event no later than March 15 of the year immediately following the year in which such expenses were incurred.
(f) Except as otherwise agreed between the Corporation and the Bank and to the extent applicable, (i) the Executive's compensation, benefits, and severance and (ii) expenditures made by the Executive on behalf of the Corporation, as set forth in this Agreement, shall be paid by the Corporation and the Bank in the same proportions as the (A) time and services and (B) expenditures actually expended by the Executive on the business of the Corporation and the business of the Bank, respectively. For this purpose, the Executive shall maintain, and provide to the Corporation on at least a monthly basis, documentation of the time and expenses expended by the Executive on the business of each of the Corporation and the Bank.
(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.
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(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.
(d) In the event that (y) the Executive’s employment is terminated by the Corporation for other than Cause, Disability, Retirement or the Executive’s death or (z) such employment is terminated by the Executive for Good Reason, in each case either before or after a Change in Control occurs, then the Corporation shall:
(i) pay to the Executive, in a lump sum as of the Date of Termination, a cash severance amount equal to three (3) times that portion of the Executive’s Average Annual Compensation paid by the Corporation;
(ii) maintain and provide for a period ending at the earlier of (A) thirty-six (36) months after the Date of Termination or (B) 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 (ii)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance and disability insurance offered by the Corporation in which the Executive was participating immediately prior to the Date of Termination (other than the continuation of any vacation time, sick leave or similar leave), in each case subject to Sections 5(d)(iii) and (iv) below;
(iii) in the event that the continued participation of the Executive in any group insurance plan as provided in clause (ii) of this Section 5(d) is barred or would trigger the payment of an excise tax under Section 4980D of the Code, or during the period set forth in Section 5(d)(ii) any such group insurance plan is discontinued, then the Corporation shall at its election either (A) arrange to provide the Executive with alternative benefits substantially similar to those which the Executive was entitled to receive under such group insurance plans immediately prior to the Date of Termination, provided that the alternative benefits do not trigger the payment of an excise tax under Section 4980D of the Code, or (B) pay to the Executive within 10 business days following the Date of Termination (or within 10 business days following the discontinuation of the benefits if later) a lump sum cash amount equal to the projected cost to the Corporation of providing continued coverage to the Executive until the three-year anniversary of his Date of Termination, with the projected cost to be based on the costs being incurred immediately prior to the Date of Termination (or the discontinuation of the benefits if later), as increased by 10% each year; and
(iv) any insurance premiums payable by the Corporation pursuant to Section 5(d)(ii) or (iii) shall be payable at such times and in such amounts (except that the Employer shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Corporation, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Corporation in any taxable year shall not affect the amount of insurance premiums required to be paid by the Corporation in any other taxable year.
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(e) Notwithstanding any other provision contained in this Agreement, if the time period for making any cash payment under Section 5(d) commences in one calendar year and ends in the succeeding calendar year, then the payment shall not be paid until the succeeding calendar year.
(a) If (i) the payments and benefits pursuant to Section 5 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Corporation and/or the Bank (including, without limitation, the payments and benefits which the Executive would have the right to receive from the Bank pursuant to Section 5 of the Bank Agreement before giving effect to any reduction in such amounts pursuant to Section 6 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 (A) below), and (ii) the Initial Parachute Payment either equals three times the Executive’s Base Amount or exceed three times the Executive’s Base Amount but by an amount less than 5% of three times the Executive’s Base Amount, then the Initial Parachute Payment shall be reduced by the least amount necessary to bring the present value of the payments and benefits below three times the Executive’s Base Amount, with the cash severance to be reduced first. As used in this Agreement, “Base Amount” shall have the meaning set forth in Section 280G(b)(3) of the Code.
(b) If the Initial Parachute Payment exceeds 105% of three times the Executive’s Base Amount, then the Corporation shall pay to the Executive, in a lump sum within five business days after the Date of Termination, a lump sum cash amount 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 5 of the Bank Agreement are reduced by the provisions of Section 6 of the Bank Agreement;
(ii) twenty (20) 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 Corporation and the Bank, 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”; and
(iii) such additional amount (tax allowance) as may be necessary to compensate the Executive for the payment by the Executive of state, local and federal income taxes, employment-related taxes (including Social Security and Medicare taxes) 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
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The Tax Rate for purposes of computing the GUP shall be the highest marginal federal, state and local income and employment-related tax rate (including Social Security and Medicare taxes), including any applicable excise tax rate, applicable to the Executive in the year in which the payment under clause (ii) above is made, and shall also reflect the phase-out of deductions and the ability to deduct certain of such taxes.
(b) The “Adjusted Excess Parachute Payment” shall equal the Initial Excess Parachute Payment plus the amounts paid pursuant to clauses (ii) and (iii) of Section 6(a) above.
(c) 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 Adjusted Excess Parachute Payment (such different amount being hereafter referred to as the “Determinative Excess Parachute Payment”), then the Corporation’s independent tax counsel 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 may be) would have been if the Adjusted Excess Parachute Payment had been equal to the Determinative Excess Parachute Payment. In determining the Adjustment Amount, the independent tax counsel 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, and in no event more than thirty (30) days after the Adjustment Amount has been 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.
(d) In each calendar year that the Executive receives payments of benefits that constitute a parachute amount, 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 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, with such indemnification to be paid by the Corporation to the Executive as soon as practicable and in any event no later than March 15th of the year immediately following the year in which the amount subject to indemnification was determined. The Executive shall promptly notify the Corporation 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 6 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 6), 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.
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(e) If the payments and benefits which the Executive would have the right to receive from the Bank pursuant to Section 5 of the Bank Agreement are reduced pursuant to Section 6 of the Bank Agreement for reasons unrelated to Section 280G of the Code, then the Corporation shall pay to the Executive, in a lump sum within five business days after the Date of Termination, a cash amount equal to the amount by which the payments and benefits that would have otherwise been paid by the Bank pursuant to Section 5 of the Bank Agreement are reduced by the provisions of Section 6 of the Bank Agreement.
(f) Notwithstanding any other provision contained in this Agreement, if the time period for making any cash payment under this Section 6 commences in one calendar year and ends in the succeeding calendar year, then the payment shall not be paid until the succeeding calendar year.
(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, except as set forth in Section 5(d)(ii) above.
(b) The specific arrangements referred to herein are not intended to exclude any other vested benefits which may be available to the Executive upon a termination of employment with the Corporation pursuant to employee benefit plans of the Corporation or the Bank or otherwise.
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To the Corporation: Secretary
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
To the Executive: Xxxxx X. Xxxxxx
At the address last appearing on
the personnel records of the Employer
12. 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 Louisiana.
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(Signature page follows)
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Attest: | HOME FEDERAL BANCORP, INC. OF | ||
LOUISIANA | |||
/s/XxXxxx X. Xxxxxxxx | By: | /s/Xxxxxx X. Xxxxxxx | |
XxXxxx X. Xxxxxxxx | Xxxxxx X. Xxxxxxx | ||
Corporate Secretary | Chairman of the Board | ||
EXECUTIVE | |||
By: | /s/Xxxxx X. Xxxxxx | ||
Xxxxx X. Xxxxxx |
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