SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated this 11th day of September 2003, between
First BancTrust Corporation (the "Corporation"), First Bank & Trust, S. B., an
Illinois chartered savings bank and a wholly owned subsidiary of the Corporation
(the "Bank"), and Xxxxx X. Xxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Corporation and the Bank (collectively, the "Employers")
desire to be ensured of the Executive's active participation in the business of
the Employers;
WHEREAS, in order to induce the Executive to serve in the employ of the
Employers and in consideration of the Executive's agreeing to serve in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Employers in the event that his
employment with the Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination and which was either (i) included in the Executive's gross income
for tax purposes, including but not limited to base salary, bonuses and amounts
taxable to the Executive under any qualified or non-qualified employee benefit
plans of the Employers, or (ii) deferred at the election of the Executive.
(b) BANKING OR FINANCIAL SERVICES BUSINESS. "Banking or Financial
Services Business" shall mean any individual or entity engaging in any of the
following activities:
(i) opening and servicing checking and savings accounts including
certificates of deposit;
(ii) making, acquiring and servicing loans or other extensions of
credit, e.g., consumer financing, commercial financing, and
mortgages;
(iii) trust company functions;
(iv) selling credit life insurance directly related to an extension
of credit;
(v) providing financial counseling and portfolio advice; and,
(vi) providing securities brokerage services.
(c) CAUSE. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A
of Regulation 14A pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor thereto, whether or not any class of
securities of the Corporation is registered under the Exchange Act; provided
that, without limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; or (ii) during any period of three
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(g) DISABILITY. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within
twenty-four (24) months following a Change in Control of the Corporation based
on:
(i) Without the Executive's express written consent, the failure
to elect or to re-elect or to appoint or to re-appoint the
Executive to the Office of Senior Vice President, Manager of
the Xxxxxxxx Xxxxxx of the Employers or a material adverse
change made by the Employers in the Executive's
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functions, duties or responsibilities as Senior Vice
President, Manager of the Xxxxxxxx Xxxxxx of the Employers;
(ii) Without the Executive's express written consent, a reduction
by either of the Employers in the Executive's base salary as
in effect on the date of the change in control of the
Corporation or as the same may be increased from time to time
thereafter or a reduction in the package of fringe benefits
provided to the Executive, taken as a whole;
(iii) The principal executive office of either of the Employers is
relocated outside of the Paris, Illinois area or, without the
Executive's express written consent, either of the Employers
require the Executive to be based anywhere other than an area
in which the Employers' principal executive office is located,
except for required travel on business of the Employers to an
extent substantially consistent with the Executive's present
business travel obligations;
(iv) Any purported termination of the Executive's employment for
Disability or Retirement which is not effected pursuant to a
Notice of Termination satisfying the requirements of paragraph
(j) below; or
(v) The failure by the Employers to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 7 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Employers' termination of Executive's employment for Cause,
which shall be effective immediately; and (iv) is given in the manner specified
in Section 8 hereof.
(k) RETIREMENT. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.
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2. TERM OF EMPLOYMENT.
(a) The Employers hereby employ the Executive as Senior Vice President,
Manager of the Xxxxxxxx Xxxxxx and the Executive hereby accepts said employment
and agrees to render such services to the Employers on the terms and conditions
set forth in this Agreement. The term of this Agreement shall be a period of one
year commencing as of the date hereof (the "Commencement Date"), subject to
earlier termination as provided herein. Beginning on the day which is one year
subsequent to the Commencement Date, and on each annual anniversary thereafter,
the term of this Agreement shall be extended for a period of one year in
addition to the then-remaining term, provided that the Employers have not given
notice to the Executive in writing at least 60 days prior to such day that the
term of the Agreement shall not be extended further. Reference herein to the
term of this Agreement shall refer to both such initial term and such extended
terms. The Boards of Directors of the Employers shall review on a periodic basis
(and no less frequently than annually) whether to permit further extensions of
the term of this Agreement. As part of such review, the Board of Directors shall
consider all relevant factors, including the Executive's performance hereunder,
and shall either expressly approve further extensions of the time of this
Agreement or decide to provide notice to the contrary. Effective upon the
Commencement Date, any and all prior agreements with the Employers shall
terminate, with no obligations to the Executive thereunder.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as may be consistent with his titles and
from time to time assigned to him by the Employers' Boards of Directors.
3. TERMINATION.
(a) In the event that (i) the Executive's employment is terminated by
the Employers 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 under this Agreement for any period after the applicable Date of
Termination.
(b) 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, except that the Employers shall provide continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Employers for the Executive immediately prior to his
termination for Disability or Retirement. Such coverage shall cease upon the
expiration of the remaining term of the Executive's employment.
(c) In the event that (i) the Executive's employment is terminated by
the Employers for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Employers,
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which breach has not been cured within fifteen (15) days after a written notice
of non-compliance has been given by the Executive to the Employers, or (b) for
Good Reason, then the Employers shall, subject to the provisions of Section 4
hereof, if applicable
(A) pay to the Executive, in either twelve (12) equal monthly
installments beginning with the first business day of the month
following the Date of Termination or in a lump sum within five business
days of the Date of Termination (at the Executive's election), a cash
severance amount equal to one (1) times that portion of the Executive's
Average Annual Compensation paid by the Employers, and
(B) maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of employment pursuant hereto
prior to the Notice of Termination or (ii) 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 (B)), at
no cost to the Executive, the Executive's continued participation in
all group insurance, life insurance, health and accident insurance,
disability insurance and other employee benefit plans, programs and
arrangements offered by the Employers in which the Executive was
entitled to participate immediately prior to the Date of Termination
(excluding (x) stock option and restricted stock plans of the
Employers, (y) bonuses and other items of cash compensation included in
Average Annual Compensation and (z) other benefits, or portions
thereof, included in Average Annual Compensation), provided that in the
event that the Executive's participation in any plan, program or
arrangement as provided in this subparagraph (B) is barred, or during
such period any such plan, program or arrangement is discontinued or
the benefits thereunder are materially reduced, the Employers shall
arrange to provide the Executive with benefits substantially similar to
those which the Executive was entitled to receive under such plans,
programs and arrangements immediately prior to the Date of Termination.
4. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments
and benefits pursuant to Section 3 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Employers pursuant to Section 3
hereof shall be reduced, in the manner determined by the Executive, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits payable by the Employers under Section 3 being
non-deductible to the Employers pursuant to Section 280G of the Code and subject
to the excise tax imposed under Section 4999 of the Code. The parties hereto
agree that the present value of the payments and benefits payable pursuant to
this Agreement to the Executive upon termination shall be limited to three times
the Executive's Average Annual Compensation. The determination of any reduction
in the payments and benefits to be made pursuant to Section 3 shall be based
upon the opinion of independent counsel selected by the Employers' independent
public accountants and paid by the Employers. Such counsel shall be reasonably
acceptable to the Employers and the Executive; shall promptly prepare the
foregoing opinion, but in no event later than thirty (30) days from the Date of
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Termination; and may use such actuaries as such counsel deems necessary or
advisable for the purpose. Nothing contained herein shall result in a reduction
of any payments or benefits to which the Executive may be entitled upon
termination of employment under any circumstances other than as specified in
this Section 4, or a reduction in the payments and benefits specified in Section
3 below zero.
5. MITIGATION; EXCLUSIVITY OF BENEFITS.
(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.
(b) The specific arrangements referred to herein are not intended to
exclude any other compensation or benefits which may be available to the
Executive upon a termination of employment with the Employers pursuant to
employee benefit plans of the Employers or otherwise.
6. NON-COMPETITION.
(a) The Executive hereby agrees that for one year after the Date of
Termination (for any reason) from the Employers, the Executive, if otherwise
entitled to receive benefits under paragraph 3(c) of this Severance Agreement,
will not (i) engage in the banking or financial services business other than on
behalf of the Company or the Bank or their affiliates within the Market Area
(defined as within thirty-five miles of any of the Employer's offices or
branches), (ii) directly or indirectly own, manage, operate, control, be
employed by, or provide management or consulting service in any capacity to any
firm, corporation or other entity (other than the Company or the Bank or their
affiliates) engaged in the banking or financial services business in the Market
Area, or (iii) directly or indirectly solicit or otherwise intentionally cause
any employee, officer or member of the respective Board of Directors of the
Company or the Bank or any of their affiliates to engage in any action
prohibited under (i) or (ii) of this Section 6(a); provided that the ownership
by the Executive as an investor of not more than five percent of the outstanding
shares of stock of any corporation whose stock is listed for trading on any
securities exchange or is quoted on the automated quotation system of the
National Association of Securities Dealers, Inc., or the shares of any
investment company as defined in Section 3 of the Investment Company Act of
1940, as amended, shall not in itself constitute a violation of the Executive's
obligations under this Section 6(a).
(b) The Executive acknowledges and agrees that irreparable injury
will result to the Employers in the event of a breach of any of the provisions
of this Section 6 (the "Designated Provisions") and that the Employers will have
no adequate remedy at law with respect thereto. Accordingly, in the event of a
material breach of any Designated Provision, and in addition to any other legal
or equitable remedy the Employers may have, the Employers shall be entitled to
the entry of a preliminary and permanent injunction to restrain the violation or
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breach thereof by the Executive or any affiliates, agents or any other persons
acting for or with the Executive in any capacity whatsoever.
(c) It is the desire and intent of the parties that the provisions
of this Section 6 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Section 6 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this Section 6 shall
be unenforceable with respect to scope, duration or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provided to the Employers, to the fullest
extent permitted by applicable law, the benefits intended by this Section 6.
7. WITHHOLDING. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
8. ASSIGNABILITY. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Employers
hereunder as fully as if it had been originally made a party hereto, but may not
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
9. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: Boards of Directors
First BancTrust Corporation
First Bank & Trust, S. B.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
To the Executive: Xxxxx X. Xxxxxx
0000 Xxxx Xxxxx
Xxxxxxxx, XX 00000
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10. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers to sign on
their behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
11. 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 Illinois.
12. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
13. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive 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, including 12 C.F.R. Part
359.
17. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS. In
the event any dispute or controversy arising under or in connection with the
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, the Executive shall be entitled to the
payment of (a) all legal fees incurred by the Executive in resolving such
dispute or controversy, and (2) any back-pay, including Base Salary, bonuses and
any other cash compensation, fringe benefits and any compensation and benefits
due to the Executive under this Agreement.
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18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Employers and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employers and the Executive with
respect to the matters agreed to herein are hereby superseded and shall have no
force or effect.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: FIRST BANCTRUST CORPORATION
/s/ Xxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------- ---------------------------------
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
Attest: FIRST BANK & TRUST, S. B.
/s/ Xxxx Xxxxxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------- ---------------------------------
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
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