Exhibit 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
________, 2002 by and between TierOne Corporation, a business corporation
organized and existing under the laws of the State of Wisconsin (the "Company"),
and Xxxxx X. Xxxxxx (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is currently employed as the President and Chief
Operating Officer of TierOne Bank (the "Bank") pursuant to an employment
agreement between the Bank and the Executive entered into as of September 25,
2000, as subsequently amended by resolutions of the Board of Directors of the
Bank (the "Bank Employment Agreement");
WHEREAS, the Bank is in the process of converting from the mutual to the
stock form of organization and will concurrently become a wholly owned
subsidiary of the Company (the "Conversion");
WHEREAS, the Executive is also currently employed as the President and
Chief Operating Officer of the Company;
WHEREAS, the Company desires to assure itself of the continued availability
of the Executive's services as provided in this Agreement;
WHEREAS, the Executive is willing to serve the Company on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Company and the Executive hereby agree
as follows:
SECTION 1. EFFECTIVE DATE; EMPLOYMENT.
This Agreement shall be effective on the date on which the Conversion is
completed (the "Effective Date"). The Company agrees to employ the Executive,
and the Executive hereby agrees to such employment, during the period and upon
the terms and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of three years beginning on the Effective Date and
ending on the third anniversary of the Effective Date, plus such extensions, if
any, as are provided pursuant to Section 2(b) hereof (the "Employment Period").
(b) Except as provided in Section 2(c), beginning on the Effective
Date, on each day during the Employment Period, the Employment Period shall
automatically be extended for one additional day, unless either the Company, on
the one hand, or the Executive, on the other hand, elects not to extend the
Agreement further by giving written notice thereof to the other party, in which
case the Employment Period shall end on the third anniversary of the date on
which such written notice is given. Upon termination of the Executive's
employment with the Company for any reason whatsoever, any daily extensions
provided pursuant to this Section 2(b), if not theretofore discontinued, shall
automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Company
at any time from terminating the Executive's employment during the Employment
Period with or without notice for any reason, provided that the relative rights
and obligations of the Company and the Executive in the event of any such
termination shall be determined under this Agreement.
SECTION 3. DUTIES.
Throughout the Employment Period, the Executive shall serve as the
President and Chief Operating Officer of the Company, having such power,
authority and responsibility and performing such duties as are prescribed by or
under the Bylaws of the Company and as are customarily associated with such
positions. The Executive shall devote his full business time, attention, skills
and efforts (other than during weekends, holidays, vacation periods, and periods
of illness or leaves of absence and other than as permitted or contemplated by
Section 7 hereof) to the business and affairs of the Company as he has
customarily done as an officer and employee of the Bank and shall use his best
efforts to advance the interests of the Company.
SECTION 4. CASH COMPENSATION.
(a) In consideration for the services to be rendered by the Executive
hereunder, the Company and/or its subsidiaries shall pay to him a salary of
three hundred thousand dollars ($300,000) annually ("Base Salary"). The
Executive's Base Salary shall be payable in approximately equal installments in
accordance with the Company's and its applicable subsidiaries' customary payroll
practices for senior officers. Base Salary shall include any amounts of
compensation deferred by the Executive under any tax-qualified retirement or
welfare benefit plan or any other deferred compensation arrangement. The Board
of Directors of the Company ("Company Board") and the Board of Directors of the
Bank (the "Bank Board") shall review the Executive's annual rate of salary at
such times during the Employment Period as they deem appropriate, but not less
frequently than once every twelve months, and may, in their respective
discretion, approve an increase therein. In addition to salary, the Executive
may receive other cash compensation from the Company or its subsidiaries for
services hereunder at such times, in such amounts and on such terms and
conditions as the Company Board or the Bank Board may determine from time to
time. Any increase in the Executive's annual salary shall become the Base Salary
of the Executive for purposes hereof. The Executive's Base Salary as in effect
from time to time cannot be decreased by the Company and/or the Bank without the
Executive's express prior written consent.
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(b) The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company in
discretionary bonuses as authorized by the Company Board to executive officers.
No other compensation provided for in this Agreement shall be deemed a
substitute for the Executive's right to participate in such bonuses when and as
declared by the Company Board.
(c) The Executive shall be entitled to receive fees for serving
as a director of the Company or as a member of any committee as received by
other members of the Company Board.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as
an employee of the Company and the Bank and shall be entitled to participate in
and receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company and the Bank, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Company's and the Bank's customary practices. The Company
agrees to maintain its current benefit restoration plan (or benefits equivalent
thereto) for the Executive while he is employed by the Company but not beyond
the expiration of the Employment Period. Nothing paid to the Executive under any
such plan or program will be deemed to be in lieu of other compensation to which
the Executive is entitled under this Agreement.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Company shall cause the Executive to be covered by and named as
an insured under any policy or contract of insurance obtained by it to insure
its directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or service in
other capacities at the request of the Company. The coverage provided to the
Executive pursuant to this Section 6 shall be of the same scope and on the same
terms and conditions as the coverage (if any) provided to other officers or
directors of the Company or any successor.
(b) To the maximum extent permitted under applicable law, during
the Employment Period and for a period of six years thereafter, the Company
shall indemnify the Executive against and hold him harmless from any costs,
liabilities, losses and exposures that may be incurred by the Executive in his
capacity as a director or officer of the Company or any subsidiary or affiliate.
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SECTION 7. OUTSIDE ACTIVITIES.
The Executive may serve as a member of the boards of directors of
such business, community and charitable organizations as he may disclose to and
as may be approved by the Company Board (which approval shall not be
unreasonably withheld), provided that in each case such service shall not
materially interfere with the performance of his duties under this Agreement or
present any conflict of interest. The Executive may also engage in personal
business and investment activities which do not materially interfere with the
performance of his duties hereunder, provided that such activities are not
prohibited under any code of conduct or investment or securities trading policy
established by the Company and generally applicable to all similarly situated
executives. If the Executive is discharged or suspended, or is subject to any
regulatory prohibition or restriction with respect to participation in the
affairs of the Bank, he shall continue to perform services for the Company in
accordance with this Agreement but shall not directly or indirectly provide
services to or participate in the affairs of the Bank in a manner inconsistent
with the terms of such discharge or suspension or any applicable regulatory
order.
SECTION 8. WORKING FACILITIES AND EXPENSES.
It is understood by the parties that the Executive's principal
place of employment shall be at the Company's principal executive office located
in Lincoln, Nebraska, or at such other location within 25 miles of the address
of such principal executive office, or at such other location as the Company and
the Executive may mutually agree upon. The Company shall provide the Executive
at his principal place of employment with a private office, secretarial services
and other support services and facilities suitable to his position with the
Company and necessary or appropriate in connection with the performance of his
assigned duties under this Agreement. The Company shall reimburse the Executive
for his ordinary and necessary business expenses attributable to the Company's
business, including, without limitation, the Executive's travel and
entertainment expenses incurred in connection with the performance of his duties
for the Company under this Agreement, in each case upon presentation to the
Company of an itemized account of such expenses in such form as the Company may
reasonably require. In addition, the Company and/or its subsidiaries shall
provide the Executive with an automobile allowance of $1,000 per month to cover
the Executive's costs of operating the automobile in connection with the
business of the Company and its subsidiaries.
SECTION 9. TERMINATION OF EMPLOYMENT WITH BENEFITS.
(a) Subject to Section 9(d), the Executive shall be entitled to
the benefits described in Section 9(b) in the event that:
(i) his employment with the Company terminates during the
Employment Period as a result of the Executive's voluntary resignation within
six full calendar months following:
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(A) the failure of the Company Board to appoint or
re-appoint or elect or re-elect the Executive to the positions with
the Company stated in Section 3 of this Agreement;
(B) the failure of the shareholders of the Company to elect
or re-elect the Executive to the Company Board or the failure of the
Company Board (or the nominating committee thereof) to nominate the
Executive for such election or re-election; or the failure of the
shareholder(s) of the Bank to elect or re-elect the Executive to the
Bank Board;
(C) the expiration of a 30-day period following the date on
which the Executive gives written notice to the Company of its
material failure, whether by amendment of the Company's Certificate of
Incorporation, the Company's Bylaws, or by action of the Company
Board, the Company's shareholders, the Bank's shareholder(s), or
otherwise, to vest in the Executive the functions, duties or
responsibilities prescribed in Section 3 of this Agreement, unless,
during such 30-day period, the Company cures such failure;
(D) the expiration of a 30-day period following the date on
which the Executive gives written notice to the Company of its
material breach of any term, condition or covenant contained in this
Agreement (including, without limitation, any reduction of the
Executive's rate of Base Salary in effect from time to time and any
change in the terms and conditions of any compensation or benefit
program in which the Executive participates which, either individually
or together with other changes, has a material adverse effect on the
aggregate value of his total compensation package), unless, during
such 30-day period, the Company cures such failure;
(E) a change in the Executive's principal place of
employment by I a distance in excess of 25 miles from the Company's
principal executive office in Lincoln, Nebraska;
(F) the liquidation, dissolution, bankruptcy or insolvency
of the Company or the Bank; or
(G) an "Event of Termination" as defined in Section 4(a) of
the Bank Employment Agreement shall have occurred;
(ii) the Executive's employment with the Company is terminated by
the Company during the Employment Period for any reason other than for
"cause," death or "Disability," as provided in Section 10(a);
(b) Subject to Section 9(c) and if the Executive has offered to
continue to provide services on the terms contemplated by this Agreement and
such offer has been declined, upon the termination of the Executive's employment
pursuant to Section 9(a) of this Agreement, the Company shall pay and provide to
the Executive (or, in the event of his subsequent death, to his estate):
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(i) his earned but unpaid Base Salary (including, without
limitation, all items which constitute wages under applicable law and
the payment of which is not otherwise provided for in this Section
9(b)) as of the date of the termination of his employment, such
payment to be made at the time and in the manner prescribed by law
applicable to the payment of wages but in no event later than 30 days
after termination of employment;
(ii) the benefits, if any, to which he is entitled under the
employee benefit plans and programs and compensation plans and
programs maintained for the benefit of the Company's and the Bank's
officers and employees through the date of the termination of his
employment;
(iii) continued group life, health (including hospitalization,
medical and major medical), dental, accident and long term disability
insurance benefits, in addition to that provided pursuant to Section
9(b)(ii), and after taking into account the coverage provided by any
subsequent employer, if and to the extent necessary to provide for the
Executive, for the period beginning on the date on which his
employment terminates and ending on the last day of the Employment
Period (the "Remaining Employment Period"), coverage equivalent to the
coverage to which he would have been entitled under such plans if he
had continued to be employed during such period at the highest annual
rate of salary achieved during the Employment Period;
(iv) within 30 days following the date on which his employment
terminates, a lump sum payment, in an amount equal to the present
value of the Base Salary that the Executive would have earned if he
had continued to be employed during the Remaining Employment Period at
the highest annual rate of Base Salary achieved during the Employment
Period, such present value to be determined using a discount rate
equal to the applicable short-term federal rate prescribed under
Section 1274(d) of the Internal Revenue Code of 1986, as amended (the
"Code"), compounded using the compounding periods corresponding to the
Company's and the Bank's regular payroll periods for their officers,
and such lump sum to be paid in lieu of all other payments of Base
Salary provided for under this Agreement in respect of the Remaining
Employment Period;
(v) within 30 days following the date on which his employment
terminates, a lump sum payment in an amount equal to the excess, if
any, of:
(A) the present value of the aggregate benefits to
which he would be entitled under any and all qualified defined benefit
pension plans and non-qualified plans related thereto maintained by,
or covering employees of, the Company and the Bank if he were 100%
vested thereunder and had continued to be employed during the
Remaining Employment Period at the highest annual rate of Base Salary
achieved during the Employment Period; over
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(B) the present value of the benefits to which he is
actually entitled under such defined benefit pension plans as of the date
on which his employment terminates; such present values to be determined
using the mortality tables prescribed under Section 415(b)(2)(E)(v) of the
Code and a discount rate, compounded monthly, equal to the annualized rate
of interest prescribed by the Pension Benefit Guaranty Corporation for the
valuation of immediate annuities payable under terminating single-employer
defined benefit plans for the month in which the Executive's employment
terminates ("Applicable PBGC Rate");
(vi) within 30 days following the date on which his employment
terminates, a lump sum payment in an amount equal to the present value of
the additional employer contributions to which he would have been entitled
under any and all qualified defined contribution plans and non-qualified
plans related thereto maintained by, or covering employees of, the Company
and the Bank as if he were 100% vested thereunder and had continued to be
employed during the Remaining Employment Period at the highest annual rate
of Base Salary achieved during the Employment Period and making the maximum
amount of employee contributions, if any, required or permitted under such
plan or plans, such present value to be determined on the basis of a
discount rate, compounded using the compounding period that corresponds to
the frequency with which employer contributions are made to the relevant
plan, equal to the Applicable PBGC Rate, provided that no payments shall be
made pursuant to this subsection (vi) with respect to the Company's
Employee Stock Ownership Plan ("ESOP") if the ESOP is terminated effective
as of a date within one year of the date of the termination of the
Executive's employment;
(vii) within 30 days following the date on which his employment
terminates, a lump sum payment in an amount equal to the present value of
the payments that would have been made to the Executive under any cash
bonus or long-term or short-term cash incentive compensation plan
maintained by, or covering employees of, the Company and the Bank if he had
continued to be employed during the Remaining Employment Period and had
earned in each calendar year that ends during the Remaining Employment
Period a bonus or incentive award that equals the highest annual bonus or
incentive award paid to the Executive during the preceding 36 calendar
months, with the present value of such payments to be determined using a
discount rate equal to the applicable short-term federal rate prescribed
under Section 1274(d) of the Code, compounded using the compounding periods
corresponding to the Company's schedule of paying bonuses;
(viii) within 30 days following the occurrence of an event described
in Section 9(a), upon the surrender of then outstanding options or
appreciation rights previously issued to the Executive under any stock
option and appreciation rights plan or program maintained by, or covering
employees of, the Company, a lump sum payment in an amount equal to the
product of:
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(A) the excess of (I) the fair market value of a share of
stock of the same class as the stock subject to the option or
appreciation right, determined as of the date on which his employment
terminates, over (II) the exercise price per share for such option or
appreciation right, as specified in or under the relevant plan or
program; multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered; and
(ix) within 30 days following the occurrence of an event
described in Section 9(a), upon the surrender of any shares previously
awarded to the Executive under any restricted stock plan maintained
by, or covering employees of, the Company, which are then subject to
restrictions, a lump sum payment in an amount equal to the product of:
(A) the fair market value of a share of stock of the same
class of stock granted under such plan, determined as of the date of
the Executive's termination of employment; multiplied by
(B) the number of shares which are being surrendered.
The Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this Section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage but subject to mitigation as provided in Section 9(d).
The Company and the Executive further agree that the Company may condition the
payments and benefits (if any) due under Sections 9(b)(iii), (iv), (v), (vi) and
(vii) on the receipt of the Executive's resignation from any and all positions
which he holds as an officer, director or committee member with respect to the
Company or any of its subsidiaries or affiliates.
(c) If the Executive's employment with the Bank is terminated at
the same time that his employment with the Company is terminated pursuant to
Section 9(a) hereof, and if the termination benefits payable by the Bank to the
Executive pursuant to Section 4(b) or 5(c) of the Bank Employment Agreement are
limited by the proviso clause in Section 4(b) or 5(c) of the Bank Employment
Agreement, then the Company shall pay to the Executive the amount by which his
termination benefits under the Bank Employment Agreement are reduced by the
proviso clause in Section 4(b) or 5(c) thereof, subject to Section 9(d) of this
Agreement and provided further that the termination benefits payable to the
Executive under the Bank Employment Agreement are reduced to their present value
using discounting methods similar to those set forth in Section 9(b) of this
Agreement.
(d) In the event that the Executive becomes entitled to
liquidated damages pursuant to this Section 9 and a Change in Control as defined
in Section 11(a) hereof has occurred within one year of the date of termination,
the Company's obligations with respect to damages payable under
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Sections 9(b)(iii) through 9(b)(vii) and 9(c) shall be reduced by the amount of
the Executive's earned income, if any (within the meaning of Section
911(d)(2)(A) of the Code), during the Remaining Employment Period. The Executive
agrees that in the event he becomes entitled to liquidated damages pursuant to
this Section 9 and a Change in Control as defined in Section 11(a) hereof has
occurred within one year of the date of termination, then throughout the
Remaining Employment Period, he shall promptly inform the Company of the nature
and amounts of earned income which he earns from providing services other than
to the Company or the Bank, or any of their respective successors, and shall
provide such documentation of such cash income as the Company may request. In
the event of changes to such cash income from time to time, the Executive shall
inform the Company of such changes, in each case within five days after the
change occurs, and shall provide such documentation concerning the change as the
Company may request. If a Change in Control has occurred within one year of the
date of termination, the Executive shall reimburse to the Company the cash
payments or benefits provided by the Company to him pursuant to Sections
9(b)(iii) through 9(b)(vii) and 9(c), up to the amount of earned income which he
earns from providing services during the Remaining Employment Period. Such
reimbursement shall be made as and when payments of such earned income are
received by the Executive or within 30 days thereafter.
SECTION 10. TERMINATION WITHOUT ADDITIONAL COMPANY LIABILITY.
(a) In the event that the Executive's employment with the Company
shall terminate during the Employment Period on account of:
(i) the discharge of the Executive for "cause," which, for purposes
of this Agreement, shall mean a discharge because the Company Board
determines that the Executive has: (A) willfully failed to perform his
assigned duties under this Agreement, other than any failure resulting from
the Executive's incapacity due to physical or mental injury or illness; (B)
committed an act involving moral turpitude in the course of his employment
with the Company and its subsidiaries; (C) engaged in willful misconduct;
(D) breached his fiduciary duties for personal profit; (E) willfully
violated, in any material respect, any law, rule or regulation (other than
traffic violations or similar offenses), written agreement or final
cease-and-desist order with respect to his performance of services for the
Company or the Bank, as determined by the Company Board; or (F) materially
breached the terms of this Agreement;
(ii) the Executive's voluntary resignation from employment (including
voluntary retirement) with the Company for reasons other than those
specified in Section 9(a)(i); or
(iii) the death of the Executive while employed by the Company, or the
termination of the Executive's employment because of "Disability" as
defined in Section 10(c) below;
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then in any of the foregoing events, the Company shall have no further
obligations under this Agreement, other than (A) the payment to the Executive of
his earned but unpaid Base Salary as of the date of the termination of his
employment, (B) the payment to the Executive of the benefits to which he is
entitled under all applicable employee benefit plans and programs and
compensation plans and programs, and (C) the provision of such other benefits,
if any, to which he is entitled as a former employee under the Company's
employee benefit plans and programs and compensation plans and programs.
(b) For purposes of this Section 10, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Company Board or based upon the written advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for "cause" within the meaning of Section 10(a)(i) unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of three-fourths of the members of the Company Board at a
meeting of such Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity, together
with counsel, to be heard before such Board), finding that, in the good faith
opinion of such Board, the Executive is guilty of the conduct described in
Section 10(a)(i) above, and specifying the particulars thereof in detail.
(c) "Disability" shall be deemed to have occurred after the Executive
has been absent from his duties hereunder on a full-time basis for six
consecutive months due to any physical or mental injury or disease that prevents
the Executive from engaging in substantially all of his duties. The existence of
such physical or mental injury or disease shall be determined by a physician
selected by the Chief Medical Officer at the University of Nebraska Medical
Center at Omaha, Nebraska, and the physician shall certify the existence or
absence of such injury or disease to the Company and the Executive. For purposes
of this section, the Executive shall be deemed to have been absent from his
duties hereunder on a full-time basis for six consecutive months if he has not,
within any six-month period, attended to his duties on a full-time basis for 15
consecutive business days within such six-month period.
(d) During any period in which the Executive is absent due to physical
or mental injury or disease, the Company may, without breaching this Agreement,
appoint another person or persons to act as interim President and interim Chief
Operating Officer pending the Executive's return to his duties on a full-time
basis hereunder or his termination as a result of such Disability. Prior to the
Executive's employment being terminated due to Disability under Section 10(e)
hereof, the Executive shall continue to receive his full Base Salary, bonuses
and other benefits to which he is entitled under this Agreement, including
continued participation in all employee benefit plans and programs.
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(e) The Company may provide notice to the Executive in writing that it
intends to terminate the Executive's employment under this Agreement, with the
termination date to be on or after the date that the Executive has been absent
from his duties hereunder on a full-time basis for six consecutive months due to
any physical or mental injury or disease. At the time his employment hereunder
is terminated due to Disability, (i) the Executive shall not be entitled to any
payments or benefits pursuant to Sections 4 and 5 hereof for periods subsequent
to such date of termination, and (ii) the Executive shall become entitled to
receive the Disability payments that may be available under any applicable
long-term disability plan.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
(a) The term "Change in Control" shall mean the occurrence of any of
the following events:
(i) approval by the shareholders of the Company of a transaction that
would result and does result in the reorganization, merger or consolidation
of the Company, with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests of the
entity resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended ("Exchange Act")) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the outstanding equity ownership interests in
the Company; and
(B) at least 51% of the securities entitled to vote generally
in the election of directors of the entity resulting from such transaction
are beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the securities entitled to vote generally in the election of directors of
the Company;
(ii) the acquisition of all or substantially all of the assets of the
Company or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the outstanding
securities of the Company entitled to vote generally in the election of
directors by any person or by any persons acting in concert, or approval by
the shareholders of the Company of any transaction which would result in
such an acquisition;
(iii) a complete liquidation or dissolution of the Company or the
Bank, or approval by the shareholders of the Company of a plan for such
liquidation or dissolution;
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(iv) the occurrence of any event if, immediately following such event,
members of the Company Board who belong to any of the following groups do
not aggregate at least a majority of the Company Board:
(A) individuals who were members of the Company Board on the
Effective Date of this Agreement; or
(B) individuals who first became members of the Company Board
after the Effective Date of this Agreement either:
(1) upon election to serve as a member of the Company
Board by the affirmative vote of three-quarters of the members of such
Board, or of a nominating committee thereof, in office at the time of such
first election; or
(2) upon election by the shareholders of the Company Board
to serve as a member of the Company Board, but only if nominated for
election by the affirmative vote of three-quarters of the members of such
Board, or of a nominating committee thereof, in office at the time of such
first nomination;
provided that such individual's election or nomination did not result from
an actual or threatened election contest or other actual or threatened
solicitation of proxies or consents other than by or on behalf of the
Company Board; or
(v) any event which would be described in Section 11(a)(i), (ii),
(iii) or (iv) if the term "Bank" were substituted for the term "Company"
therein and the term "Bank Board" were substituted for the term "Company
Board" therein.
In no event, however, shall a Change in Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this Section 11(a), the term "person" shall include the meaning
assigned to it under Sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(b) Upon the occurrence of a Change in Control prior to the expiration
of the Employment Period, the Company shall pay to the Executive a severance
benefit in a lump sum payment, within 25 days after the effective time of such
Change in Control equal to the greater of (i) the sum of the amounts payable as
Base Salary pursuant to Section 4 during the Remaining Employment Period and as
additional cash compensation pursuant to Section 9(b)(vii), (ii) three times the
Executive's "base amount" from the Company and its subsidiaries as defined under
Section 280G of the Code, minus $1.00, or (iii) the amounts payable pursuant to
Section 9(b) hereof. Payments pursuant to this Section 11(b) shall be in lieu of
and not in addition to payments pursuant to Section 9(b), and vice versa.
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SECTION 12. TAX INDEMNIFICATION.
(a) If the payments and benefits pursuant to this Agreement, either
alone or together with other payments and benefits which the Executive has the
right to receive from the Company and its subsidiaries (including, without
limitation, the payments and benefits which the Executive would have the right
to receive from the Bank pursuant to Section 4(b) or 5(c) of the Bank Employment
Agreement), would constitute a "parachute payment" as defined in Section
280G(b)(2) of the Code (the "Initial Parachute Payment"), then the Company shall
pay to the Executive, at the time such payments or benefits are paid and subject
to applicable withholding requirements, a cash amount equal to the sum of the
following:
(i) 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
Company and its subsidiaries, 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";
(ii) such additional amount (tax allowance) as may be necessary to
compensate the Executive for the payment by the Executive of state and
federal income and excise taxes on the payment provided under clause (i)
above and on any payments under this clause (ii). In computing such tax
allowance, the payment to be made under clause (i) above shall be
multiplied by the "gross up percentage" ("GUP"). The GUP shall be
determined as follows:
Tax Rate
GUP = -----------
1- Tax Rate
The Tax Rate for purposed of computing the GUP shall be the highest
marginal federal and state 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 (i)
above is made, and shall also reflect the phase-out of deductions and the
ability to deduct certain of such taxes.
(b) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
the Executive is a party that the actual excess parachute payment as defined in
Section 280G(b)(1) of the Code is different from the Initial Excess Parachute
Payment (such different amount being hereafter referred to as the "Determinative
Excess Parachute Payment"), then the Company's independent tax counsel or
accountants shall determine the amount (the "Adjustment Amount") which either
the Executive must pay to the Company or the Company must pay to the Executive
in order to put the Executive (or the Company, as the case may be) in the same
position the Executive (or the Company, as the case may be) would have been if
the Initial Excess Parachute Payment had been equal to the Determinative Excess
Parachute Payment. In determining the Adjustment Amount, the independent tax
counsel or
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accountants shall take into account any and all taxes (including any penalties
and interest) paid by or for the Executive or refunded to the Executive or for
the Executive's benefit. As soon as practicable after the Adjustment Amount has
been so determined, the Company shall pay the Adjustment Amount to the Executive
or the Executive shall repay the Adjustment Amount to the Company, as the case
may be.
(c) In each calendar year that the Executive receives payments of benefits
that constitute a parachute payment, the Executive shall report on his state and
federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the Company
as described above. The Company shall indemnify and hold the Executive harmless
from any and all losses, costs and expenses (including without limitation,
reasonable attorneys' fees, interest, fines and penalties) which the Executive
incurs as a result of so reporting such information. The Executive shall
promptly notify the Company in writing whenever the Executive receives notice of
the institution of a judicial or administrative proceeding, formal or informal,
in which the federal tax treatment under Section 4999 of the Code of any amount
paid or payable under this Section 12 is being reviewed or is in dispute. The
Company 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 12) and
the Executive shall cooperate fully with the Company in any such proceeding. The
Executive shall not enter into any compromise or settlement or otherwise
prejudice any rights the Company may have in connection therewith without the
prior consent of the Company.
SECTION 13. SOURCE OF PAYMENTS; NO DUPLICATION OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in
cash or check from the general funds of the Company subject to Section 13(b).
(b) Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by the Executive under the Bank Employment Agreement, such compensation
payments and benefits paid by the Bank will be subtracted from any amount due
simultaneously to the Executive under similar provisions of this Agreement.
Payments pursuant to this Agreement and the Bank Employment Agreement shall be
allocated in proportion to the level of activity and the time expended on such
activities by the Executive as determined by the Company and the Bank on a
quarterly basis.
SECTION 14. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Company for any reason prior to the
expiration of the Employment Period, for a period of two years following the
date of his termination of employment with the Company (or, if less, for the
Remaining Employment Period), he shall not, without the written consent of the
Company, become an officer, employee, consultant, director or trustee of any
savings bank, savings and loan association, savings
14
and loan holding company, bank or bank holding company, or any direct or
indirect subsidiary or affiliate of any such entity, that entails working within
any county in which the Company or the Bank maintains an office.
SECTION 15. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Company, the
Executive shall at all times keep confidential and shall refrain from using for
the benefit of himself, or any person or entity other than the Company or any
entity which is a subsidiary of the Company or of which the Company is a
subsidiary, any material document or information obtained from the Company, or
from its parent or subsidiaries, in the course of his employment with any of
them concerning their properties, operations or business (unless such document
or information is readily ascertainable from public or published information or
trade sources or has otherwise been made available to the public through no
fault of his own) until the same ceases to be material (or becomes so
ascertainable or available); provided, however, that nothing in this Section 15
shall prevent the Executive, with or without the Company's consent, from
participating in or disclosing documents or information in connection with any
judicial or administrative investigation, inquiry or proceeding or the Company's
public reporting requirements to the extent that such participation or
disclosure is required under applicable law.
SECTION 16. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of two
years following his termination of employment with the Company for any reason,
he shall not, without the written consent of the Company, either directly or
indirectly:
(a) solicit, offer employment to, or take any other action intended,
or that a reasonable person acting in like circumstances would expect, to
have the effect of causing any officer or employee of the Company or any of
its subsidiaries or affiliates to terminate his employment and accept
employment or become affiliated with, or provide services for compensation
in any capacity whatsoever to, any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding company,
or other institution engaged in the business of accepting deposits, making
loans or doing business within the counties specified in Section 14;
(b) provide any information, advice or recommendation with respect
to any such officer or employee to any savings bank, savings and loan
association, bank, bank holding company, savings and loan holding company,
or other institution engaged in the business of accepting deposits, making
loans or doing business within the counties specified in Section 14, that
is intended, or that a reasonable person acting in like circumstances would
expect, to have the effect of causing any officer or employee of the
Company or any of its subsidiaries or affiliates to terminate his
employment and accept employment or become affiliated with, or provide
services for compensation in any capacity whatsoever to, any
15
savings bank, savings and loan association, bank, bank holding company,
savings and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business within the
counties specified in Section 14; or
(c) solicit, provide any information, advice or recommendation or
take any other action intended, or that a reasonable person acting in like
circumstances would expect, to have the effect of causing any customer of
the Company or the Bank to terminate an existing business or commercial
relationship with the Company or the Bank.
SECTION 17. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Executive's employment during the Employment
Period or thereafter, whether by the Company or by the Executive, shall have no
effect on the vested rights of the Executive under the Company's or the Bank's
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing
or stock bonus plans, group life, health (including hospitalization, medical and
major medical), dental, accident and long term disability insurance plans, ESOP
Supplemental Retirement Plan, 401(k) Supplemental Retirement Plan or other
employee benefit plans or programs, or compensation plans or programs in which
the Executive was a participant.
SECTION 18. SUCCESSORS AND ASSIGNS.
(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 Company will 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 Company, by an assumption
agreement in form and substance satisfactory to the Executive, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession or
assignment had taken place. Failure of the Company 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 Executive to compensation
from the Company in the same amount and on the same terms as the compensation
pursuant to Section 9 or 11 hereof. For purposes of implementing the provisions
of this Section 18(a), the date which any such succession becomes effective
shall be deemed the date of termination of the Executive's employment.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts would still
be payable to the Executive hereunder if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's beneficiary.
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SECTION 19. NOTICES.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Executive:
Xxxxx X. Xxxxxx
At the address last appearing
on the personnel records of
the Executive
If to the Company:
TierOne Corporation
0000 X Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
(or the address of the Company's principal executive office,
if different)
Attention: Chairman of the Board
with a copy, in the case of a notice to the Company, to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00/xx/ Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxx, Xx., Esq.
SECTION 20. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees and expenses, incurred
by him in connection with or arising out of any action, suit or proceeding in
which he may be involved, as a result of his efforts, in good faith, to defend
or enforce the terms of this Agreement. For purposes of this Agreement, any
settlement agreement which provides for payment of any amounts in settlement of
the Company's obligations hereunder shall be conclusive evidence of the
Executive's entitlement to indemnification hereunder, and any such
indemnification payments shall be in addition to amounts payable pursuant to
such settlement agreement, unless such settlement agreement expressly provides
otherwise.
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(b) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. Unless it
is determined that a claim made by the Executive was either frivolous or made in
bad faith, the Company agrees to pay as incurred, to the full extent permitted
by law, all legal fees and expenses which the Executive may reasonably incur as
a result of or in connection with his consultation with legal counsel or arising
out of any action, suit, proceeding or contest (regardless of the outcome
thereof) by the Company, the Executive or others regarding the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code. This Section 20(b) shall
apply whether such consultation, action, suit, proceeding or contest arises
before, on, after or as a result of a Change in Control.
SECTION 21. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 22. WAIVER.
Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
SECTION 23. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same Agreement.
SECTION 24. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Nebraska applicable to contracts
entered into and to be performed entirely within the State of Nebraska, except
to the extent that federal law controls.
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SECTION 25. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
SECTION 26. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof, except that the parties acknowledge that this Agreement shall not
impact any of the rights and obligations of the parties to the Bank Employment
Agreement or any of the agreements or plans referenced in the Bank Employment
Agreement except as set forth in Section 13 hereof. No modifications of this
Agreement shall be valid unless made in writing and signed by the parties
hereto.
SECTION 27. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company, whether pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the
regulations promulgated thereunder in 12 C.F.R. Part 359.
SECTION 28. DISPUTE RESOLUTION.
(a) In the event of any dispute, claim, question or disagreement
arising out of or relating to this Agreement or the breach hereof, the parties
hereto shall use their best efforts to settle such dispute, claim, question or
disagreement. To this effect, they shall consult and negotiate with each other,
in good faith, and, recognizing their mutual interests, attempt to reach a just
and equitable solution satisfactory to both parties.
(b) If they do not reach such a solution within a period of thirty
(30) days, then the parties agree first to endeavor in good faith to amicably
settle their dispute by mediation under the Commercial Mediation Rules of the
American Arbitration Association (the "AAA"), before resorting to arbitration.
(c) Thereafter, any unresolved controversy or claim arising out of
or relating to this Agreement or the breach thereof, upon notice by any party to
the other, shall be submitted to and finally settled by arbitration in
accordance with the Commercial Arbitration Rules (the "Rules") of the AAA in
effect at the time demand for arbitration is made by any such party. The parties
shall mutually agree upon a single arbitrator within thirty (30) days of such
demand. In the event that the parties are unable to so agree within such thirty
(30) day period, then within the following thirty (30) day period, one
arbitrator shall be named by each party. A third arbitrator shall be named by
the two
19
arbitrators so chosen within ten (10) days after the appointment of the
first two arbitrators. In the event that the third arbitrator is not agreed
upon, he or she shall be named by the AAA. Arbitration shall occur in Lincoln,
Nebraska.
(d) The award made by all or a majority of the panel of arbitrators
shall be final and binding, and judgment may be entered based upon such award in
any court of law having competent jurisdiction. The award is subject to
confirmation, modification, correction or vacation only as explicitly provided
in Title 9 of the United States Code. The prevailing party shall be entitled to
receive any award of pre- and post-award interest as well as attorney's fees
incurred in connection with the arbitration and any judicial proceedings relate
thereto. The parties acknowledge that this Agreement evidences a transaction
involving interstate commerce. The United States Arbitration Act and the Rules
shall govern the interpretation, enforcement, and proceedings pursuant to this
Section. Any provisional remedy which would be available from a court of law
shall be available from the arbitrators to the parties to this Agreement pending
arbitration. Either party may make an application to the arbitrators seeking
injunctive relief to maintain the status quo, or may seek from a court of
competent jurisdiction any interim or provisional relief that may be necessary
to protect the rights and property of that party, until such times as the
arbitration award is rendered or the controversy otherwise resolved.
20
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his hand, all as of the day and year
first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
__________________________________________
Xxxxx X. Xxxxxx, Executive
ATTEST: TierOne Corporation
By_____________________________ By_______________________________________
Name: Name:
Its: Its:
[Seal]
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