EMPLOYMENT AGREEMENT
Exhibit
99
THIS
AGREEMENT is entered into this 17th day of July, 2007 (the “Effective Date”) by
and between X. X. Xxxxx Federal Savings Bank (the “Bank”), a corporation
organized under the laws of the State of Illinois, with its office at 00000
X.
Xxxxxx Xxxxxx, Xxxxxxxxxx, XX, and Xxxxxx X. Xxxxxx (the
“Employee”). Any reference to the “Company” herein shall refer to AJS
Bancorp, Inc. the holding company of the Bank.
WHEREAS,
the Bank and the Employee entered into an employment agreement dated the 19th day of
August
2003, pursuant to which the Employee was employed by the Bank as its Chairman
of
the Board and Chief Executive Officer; and
WHEREAS,
Section 409A of the Internal Revenue Code (“Code”), effective January 1, 2005,
requires deferred compensation arrangements, including those set forth in
employment agreements, to comply with its provisions and restrictions and
limitations on payments of deferred compensation; and
WHEREAS,
Employee’s employment
agreement was updated, effective June 20, 2006, to comply with Code Section
409A; and
WHEREAS,
final regulations issued under Code Section 409A in April 2007 necessitate
further changes to said employment agreement; and
WHEREAS,
the Employee has agreed to such changes; and
WHEREAS,
the Board of Directors of the Bank and the Employee believe it is in the best
interests of the Bank to enter into a new employment agreement (the “Agreement”)
in order to reinforce and reward the Employee for his service and dedication
to
the continued success of the Bank and to incorporate the changes required by
the
new tax laws; and
WHEREAS,
the parties hereto desire by this writing to set forth the terms of the revised
Agreement and the continuing employment relationship of the Bank and the
Employee.
NOW,
THEREFORE, it is AGREED as follows:
1. Employment. During
the term of his employment hereunder, the Employee shall serve as the Chairman
of the Board and Chief Executive Officer of the Bank. The Employee shall render
such administrative and management services for the Bank as are currently
rendered and as are customarily performed by persons situated in a similar
executive capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Bank.
The
Employee’s other duties shall be such as the Board of Directors (the “Board”) of
the Bank may from time to time reasonably direct, including normal duties as
an
officer of the Bank.
2. Base
Compensation. The Bank agrees to pay the Employee during the term
of this Agreement a salary at the rate of one hundred eighty-five thousand
and
00/100 Dollars
($185,000)
per annum (the “Base Salary”). The Board shall review, not less often than
annually, the rate of the Employee’s salary, and in its sole discretion may
decide to increase (but not decrease) his Base Salary. Any such increase in
the
Base Salary shall become the Base Salary for all purposes under this Agreement.
Such Base Salary shall be payable in cash no less frequently than monthly (the
monthly amount shall be referred to as the “monthly Base Salary”) or in
accordance with the normal payroll practices of the Bank, as such may be changed
from time to time. Notwithstanding the foregoing, following a Change in Control
(as defined in Section 10(a)(3) of this Agreement), the Board shall continue
to
annually review the rate of the Employee’s Base Salary, and shall increase said
rate of Base Salary by a percentage which is not less than the average annual
percentage increase in Base Salary that the Employee received over the three
calendar years immediately preceding the year in which the Change in Control
occurs.
3. Discretionary
Bonuses. The Employee shall participate in an equitable manner
with all other senior management employees of the Bank in discretionary bonuses
that the Board may award from time to time to the Bank’s senior management
employees. No other compensation provided for in this Agreement shall be deemed
a substitute for the Employee’s right to participate in such discretionary
bonuses. Notwithstanding the foregoing, following a Change in Control, the
Employee shall receive discretionary bonuses that are made no less frequently
than, and in annual amounts not less than, the average annual discretionary
bonuses paid to the Employee during each of the three calendar years immediately
preceding the year in which such Change in Control occurs.
4. Benefit
Plans and Expenses.
(a) Participation
in Retirement, Medical and Other Plans. During the term of this
Agreement, the Employee shall participate in any plan that the Bank maintains
for the benefit of its employees if the plan relates to (1) pension,
profit-sharing, or other retirement benefits, or (ii) medical insurance or
the
reimbursement of medical or dependent care expenses. If the Employee ceases
employment with the Bank for any reason other than death or “Just Cause” (as
defined in Section 9(c) hereof), then notwithstanding termination of the
Employee’s employment or of this Agreement, the Bank shall provide the Employee
and his dependents with coverage under the Bank’s group health insurance plan
(and if the Bank maintains more than one plan for its employees, any one of
such
plans selected by the Employee in accordance with the general procedures by
which the Bank’s full-time employees make such elections). The Bank shall bear
the full cost for said coverage, which shall continue until the Employee’s
death, with the terms and conditions thereof being determined from time to
time
as though the Employee had remained a full-time employee of the Bank (but with
the Bank in all events paying the full cost for such insurance). The Bank shall
also provide the Employee’s spouse with continued health insurance coverage
(with the Bank paying the full cost for such insurance) for her
lifetime.
(b) Employee
Benefits; Expenses. The Employee shall be eligible to participate
in any fringe benefits which are or may become available to the Bank’s senior
management employees, including for example: any stock option or incentive
compensation plans, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Employee under this
Agreement. The Bank shall provide the Employee with an automobile suitable
to
the position of Chairman of the Board and Chief Executive Officer
of
2
the
Bank,
and such automobile may be used by the Employee in carrying out his duties
under
this Agreement and for his personal use such as commuting between his residence
and his principal place of employment. The Bank shall reimburse the Employee
for
the cost of maintenance, use and servicing of such automobile. The Bank shall
reimburse the Employee for his reasonable out-of-pocket expenses incurred in
connection with the performance of his duties under this Agreement, including,
without limitation, fees for memberships in such clubs and organization that
the
Employee and the Board mutually agree are necessary and appropriate to further
the business of the Bank, including membership in the Midlothian Country Club,
or upon substantiation of such expenses in accordance with the policies of
the
Bank.
5. Term. The
Bank hereby employs the Employee, and the Employee hereby accepts such
employment under this Agreement, for the period commencing on the Effective
Date
and ending thirty-six months thereafter (or such earlier date as is determined
in accordance
with
Section 9). Additionally, on each annual anniversary date from the Effective
Date, the Employee’s term of employment shall be extended for an additional
one-year period beyond the then effective expiration date provided the Board
determines in a duly adopted resolution that the performance of the Employee
has
met the Board’s requirements and standards, and that this Agreement shall be
extended. Only those members of the Board of Directors who have no personal
interest in this Employment Agreement shall discuss and vote on the approval
and
subsequent renewal of this Agreement.
6. Loyalty:
Noncompetition.
(a) During
the period of his employment hereunder and except for illnesses, reasonable
vacation periods, and reasonable leaves of absence, the Employee shall devote
all his full business time and attention to the performance of his duties
hereunder; provided, however, from time to time, Employee may serve on the
boards of directors of, and hold any other offices or positions in, companies
or
organizations, which will not present any conflict of interest with the Bank
or
any of its subsidiaries or affiliates, or unfavorably affect the performance
of
Employee’s duties pursuant to this Agreement, or will not violate any applicable
statute or regulation. During the term of his employment under this Agreement,
the Employee shall not engage in any business or activity contrary to the
business affairs or interests of the Bank, or be gainfully employed in any
other
position or job other than as provided above.
(b) Nothing
contained in this Paragraph 6 shall be deemed to prevent or limit the Employee’s
right to invest in the capital stock or other securities of any business
dissimilar from that of the Bank, or, solely as a passive or minority investor,
in any business.
7. Standards. The
Employee shall perform his duties under this Agreement in accordance with such
reasonable standards as the Board may establish from time to time. The Bank
will
provide Employee with the working facilities and staff customary for similar
executives and necessary for him to perform his duties.
8. Vacation,
Sick and Other Leave. At such reasonable times as the Board shall
in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent himself
3
voluntarily
from the performance of his employment under this Agreement, all such voluntary
absences to count as vacation time, provided that:
(a) The
Employee shall be entitled to an annual vacation in accordance with the policies
that the Board periodically establishes for senior management employees of
the
Bank. The Employee shall not receive any additional compensation from the Bank
on account of his failure to take vacation leave, and the Employee shall not
accumulate unused vacation leave from one fiscal year to the next, except to
the
extent authorized by the Board.
(b) In
addition, the Employee shall be entitled to an annual sick leave benefit as
established by the Board. In the event any sick leave benefit shall not have
been used during any year, such leave shall not accrue to subsequent years,
except to the extent authorized by the Board.
(c) In
addition to the aforesaid paid vacations, the Employee shall be entitled without
loss of pay, to absent himself voluntarily from the performance of his
employment with the Bank for such additional periods of time and for such valid
and legitimate reasons as the Board may in its discretion determine. Further,
the Board may grant to the Employee a leave or leaves of absence, with or
without pay, at such time or times and upon such terms and conditions as such
Board in its discretion may determine.
9. Termination
and Termination Pay. Subject to Section 10 hereof, the Employee’s
employment hereunder may be terminated under the following
circumstances:
(a) Death. The
Employee’s employment under this Agreement shall terminate upon his death during
the term of this Agreement, in which event the Employee’s beneficiary or
beneficiaries, or his estate, shall be entitled to receive the compensation
due
the Employee through the last day of the calendar month in which his death
occurred. Notwithstanding any provision of this Agreement to the contrary,
in
the event that the Employee dies while employed by the Bank, the Bank shall
pay
the Employee’s beneficiary or beneficiaries, or his estate, the Employee’s Base
Salary then in effect pursuant to Section 2 hereof for a period of one (1)
yearfrom the date of the Employee’s death, in accordance with its regular
payroll practice.
(b) Disability.
(1) In
the event of Employee’s Disability (as hereinafter defined), the Employee shall
receive any disability insurance for which the Employee shall be eligible under
any disability insurance or similar program maintained by the
Bank. For the first twelve (12) months of the Employee’s disability,
the Bank shall pay the Employee the difference between the Employee’s monthly
Base Salary in Section 2 and the amount that is paid to the Employee pursuant
to
any disability insurance or similar program which the Bank has provided or
may
provide on behalf of its employees pursuant to any xxxxxxx’x or social security
disability program, it being understood that such program or insurance shall
have primary responsibility of coverage. Notwithstanding anything to
the contrary herein, no payments shall be made hereunder which would violate
Code Section 409A. Accordingly, any payments
required
4
hereunder
shall commence within thirty (30) days from the date of determination of
Employee’s Disability.
“Disability”
or “Disabled” shall be construed to comply with Section 409A of the Internal
Revenue Code and shall be deemed to have occurred if: (i) Executive is unable
to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death, or last for a continuous period of not less than 12 months; (ii) by
reason of any medically determinable physical or mental impairment that can
be
expected to result in death, or last for a continuous period of not less than
12
months, Executive is receiving income replacement benefits for a period of
not
less than three months under an accident and health plan covering employees
of
the Bank or the Company; or (iii) Executive is determined to be totally disabled
by the Social Security Administration.
(2) In
the event Employee is Disabled for a continuous period exceeding twelve (12)
calendar months, the Bank may, at its election, terminate this Agreement and
Employee’s employment (if not previously terminated). In such event,
the Employee shall be entitled to receive from the Bank the difference between
fifty (50%) percent of his Base Salary in Section 2 and the amount that is
paid
to the Employee pursuant to any Disability insurance or similar program
sponsored by the Bank. Payment of such
Disability benefit shall commence on the last day of the month following the
month for which the final payment under Section 9(b)(1) was made, and cease
on
the earliest of the month in which the Employee (1) dies, (ii) attains age
65,
or (iii) returns to full-time employment with the Bank. Payments
required hereunder shall be made consistent with the requirements of Code
Section 409A, in the same manner contemplated by Section 9(b)(1)
hereof.
(3) During
the period the Employee is entitled to receive payments under Section 9(b)(1)
and 9(b)(2) hereof, the Employee shall, to the extent that he is physically
and
mentally able to do so, furnish information and assistance to the Bank, and,
in
addition, upon reasonable request in writing on behalf of the Board, or an
executive officer designated by such Board, from time to time, make himself
available to the Bank to undertake reasonable assignments consistent with the
dignity, importance and scope of his prior position and his physical and mental
health.During such period of service, the Employee shall be responsible and
report to, and be subject to the supervision of, the Board or an executive
officer designated by the Board, as to the method and manner in which he shall
perform such assignments, subject always to the provisions of this Section
9(b)(3), and shall keep such Board or such executive officer appropriately
informed of his progress in each such assignment.
(c) Just
Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
shall have no right to receive compensation or other benefits for any period
after termination for Just Cause. Termination for “Just Cause” shall mean
termination because of, in the good faith determination of the Board, the
Employee’s personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. Any stock options or restricted
stock
awards granted to the Employee under any stock plan of the Bank,
the
5
Company
or any subsidiary or affiliate thereof, shall become null and void effective
upon the Employee’s receipt of notice of termination for Just Cause pursuant to
section 9 hereof, and shall not be exercisable by the Employee at any time
subsequent to such termination for Just Cause.
(d) Without
Just Cause; Constructive Discharge.
(1) The
Board may, by written notice to the Employee, immediately terminate his
employment at any time for a reason other than Just Cause, in which event the
Employee, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, shall be entitled to receive an amount equal to three (3)
times the sum of (i) his Base Salary provided pursuant to Section 2 hereof,
and
(ii) the highest rate of bonus awarded to the Employee, pursuant to Section
3
hereof, at any time during the prior three years. In addition, the Employee
shall be entitled to a lump sum payment in an amount equal to the present value
of the Bank’s contributions that would have been made on Employee’s behalf under
the Bank’s tax-qualified retirement plans (including the 401(k) Plan, the profit
sharing plan and the employee stock ownership plan) if he had continued working
for the Bank for a thirty-six (36) month period following his termination of
employment earning the Base Salary that would have been achieved during the
remaining unexpired term of this Agreement and making the maximum amount of
employee contributions permitted, if any, under such plans. Upon an event of
termination at any time for a reason other than Just Cause, the Employee will
vest on the date of termination of employment in any outstanding unvested stock
options or shares of restricted stock of the Company that have been awarded
to
him. Notwithstanding the foregoing, in the event such termination occurs after
a
Change in Control and within the time period set forth in Section 10(a)(1)
hereof, the benefits and compensation provided for in that Section 10 shall
apply. All amounts payable to the Employee in cash shall be paid in one lump
sum
(adjusted to reflect the present value of such accelerated payment) within
thirty (30) days of such termination, or if Employee is a “Specified Employee”
(as defined in Code Section 409A) on the first day of the seventh month
following Employee’s Separation from Service.
(2) The
Employee may voluntarily terminate his employment under this Agreement within
ninety (90) days following the occurrence of an event which constitutes
“Constructive
Discharge,” and shall thereupon be entitled to receive the compensation and
benefits payable under Section 9(d)(1) hereof (unless such voluntary termination
occurs following a Change in Control as set forth under Section 10(b) in which
event the benefits and compensation provided for in Section 10 shall apply).
For
purposes of this Section 9, a Constructive Discharge shall include the
occurrence of any of the following events which has not been consented to in
advance in writing by the Employee: (1) the requirement that the Employee move
his personal residence, or perform his principal executive functions, more
than
thirty-five (35) miles from his primary office; (ii) a material reduction in
the
Employee’s base compensation; (iii) the failure to increase the Employee’s Base
Salary or to pay the Employee discretionary bonuses pursuant to Sections 2
and 3
of this Agreement; (iv) the failure by the Bank to continue to provide the
Employee with compensation and benefits provided for under this Agreement,
as
the same may be increased from time to time, or with benefits substantially
similar to those provided to him under any of the employee benefit plans in
which the Employee now or hereafter becomes a participant, or the taking of
any
action by the Bank which would
6
directly
or indirectly reduce any of such benefits or deprive the Employee of any
material fringe benefit enjoyed by him; (v) the requirement that the Employee
report directly to a person or persons other than the Board; (vi) the assignment
to the Employee of duties and responsibilities materially different from those
normally associated with his position as referenced at Section 1; (vii) a
failure to elect or reelect the Employee to the Board of Directors of the Bank;
(viii) a material diminution or reduction in the Employee’s responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank. All amounts payable to the Employee in cash
under this Section 9(d)(2) shall be paid in a lump sum (adjusted for the present
value of such accelerated payment) within thirty (30) days of such termination,
or if Employee is a Specified Employee, on the first day of the seventh month
following Employee’s Separation from Service.
(3) Notwithstanding
the foregoing, but only to the extent required under federal banking law, the
amount payable under clause (d)(1) hereof shall be reduced to the extent that
on
the date of the Employee’s termination of employment, the present value of the
benefits payable thereunder exceeds the limitation on severance benefits that
is
set forth in Regulatory Bulletin 27b of the Office of Thrift Supervision (“OTS”)
and the OTS Thrift Activities Handbook Section 310, as in effect on the
Effective Date. In the event that Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”) becomes applicable to payments
made under this Section 9(d), and the payments exceed the “Maximum Amount” as
defined in Section 10(a)(2) hereof, the payments shall be reduced in accordance
with Section 10(a)(2) of this Agreement.
(e) Definition
of Termination of Employment
For
purposes of this Section 9,
“termination of employment” or “Retirement” as used herein or in Section 10
hereof shall mean “Separation from Service” as defined in Code Section 409A and
the Treasury Regulations promulgated thereunder, provided, however, that the
Bank and Employee reasonably anticipate that the level of bona fide services
the
Employee would perform after termination would permanently decrease to a level
that is less than 50% of the average level of bona fide services performed
(whether as an employee or an independent contractor) over the immediately
preceding 12-month period.
(f) Termination
or Suspension Under Federal Law.
(1) If
the Employee is removed and/or permanently prohibited from participating in
the
conduct of the Bank’s affairs by an order issued under Sections 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and
(g)(1)), all obligations of the Bank under this Agreement shall terminate,
as of
the effective date of the order. No such order shall affect the vested rights
of
the parties.
(2) If
the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations
under this Agreement shall terminate as of the date of default; however, this
Paragraph shall not affect the vested rights of the parties.
7
(3) All
obligations under this Agreement shall terminate, except to the extent that
continuation of this Agreement is necessary for the continued operation of
the
Bank: (1) by the Director of the Office of Thrift Supervision (“Director of
OTS”), or his designee, at the time that the Federal Deposit Insurance
Corporation (“FDIC”) or the Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of FDIA; or (ii) by the Director of the OTS, or
her
designee, at the time that the Director of the OTS, or his designee approves
a
supervisory merger to resolve problems related to operation of the Bank or
when
the Bank is determined by the Director of the OTS to be in an unsafe or unsound
condition. Such action shall not affect any vested rights of the
parties.
(4) If
a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C.
1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Employee from
participating in the conduct of the Bank’s affairs, the Bank’s obligations under
this Agreement shall be suspended as of the date of such service, unless stayed
by appropriate proceedings. If the charges in the notice are
dismissed, the Bank shall (1) pay the Employee all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate
(in
whole or in part) any of its obligations which were suspended.
(g) Voluntary
Termination by Employee. Subject to Sections 9(d)(2) and 10
hereof, the Employee may voluntarily terminate employment with the Bank during
the term of this Agreement, upon at least sixty (60) days’ prior written notice
to the Board of Directors, in which case the Employee shall receive only his
compensation, vested rights (including continuing group health benefits as
provided in Section 4(a) hereof) and employee benefits up to the date of his
termination, payable as set forth in the documents governing such
payments.
Notwithstanding
any contrary provision of this Agreement, in the event that the Employee elects
to retire from employment with the Bank (such event being referred to herein
as
“Retirement”), the Employee (or in the event of his death after Retirement but
prior to payment pursuant to this Section 9(f), his estate) shall be paid
within thirty (30) days of Retirement a lump sum payment equal to
fifty-percent (50%) of the Base Salary provided pursuant to Section 2 hereof
as
of such date of Retirement or, if Code Section 409A is applicable and the
Employee is a Specified Employee, on the first day of the seventh full month
following the Employee’s Separation from Service.
10. Change
in Control.
(a) Change
in Control; Involuntary Termination.
(1) Notwithstanding
any provision herein to the contrary, if the Employee’s employment under this
Agreement is terminated by the Bank, without the Employee’s prior written
consent and for a reason other than Just Cause, in connection with or within
twelve (12) months after any Change in Control of the Bank or the Company,
the
Employee shall, subject to paragraph (2) of this Section 10(a), be paid an
amount equal to three (3) times the sum of (i) the Employee’s Base Salary
provided pursuant to Section 2 hereof, as in effect on the date of such Change
in Control, and (ii) the highest rate of bonus awarded to the
8
Employee
at any time during the prior three years. In addition, the Employee shall be
entitled to a lump sum payment in an amount equal to the present value of the
Bank’s contributions that would have been made on Employee’s behalf under the
Bank’s tax-qualified retirement plans (including the 401(k) Plan, the profit
sharing plan and the employee stock ownership plan) if he had continued working
for the Bank for a thirty-six (36) month period following his termination of
employment earning the Base Salary that would have been achieved during the
remaining unexpired term of this Agreement and making the maximum amount of
employee contributions permitted, if any, under such plans.Upon termination
of
employment following a Change in Control, the Employee will immediately vest
in
any outstanding unvested stock options or shares of restricted stock of the
Company that have been awarded to him. All amounts payable to the Employee
in
cash shall be paid in one lump sum (adjusted for the present value of such
accelerated payment) within thirty (30) days following such termination, or
if
Employee is a Specified Employee and the following is required by Code Section
409A, on the first business day of the seventh month following Separation from
Service. In the event of termination of employment following a Change in
Control, Employee shall have continued use of an automobile provided
by the Bank and shall also receive reimbursement for his membership fees and
expenses associated with his use of the Midlothian Country Club for a period
of
thirty-six (36) months following termination of
employment. Reimbursement of any automobile expenses and country club
dues to employee by the Bank shall be permitted provided that the amount of
expenses and dues paid in a calendar year that are eligible for reimbursement
equals only the amount actually expended during such calendar year,
and the maximum amount available for reimbursement in any calendar year will
not
be increased or decreased to reflect the amount expended or reimbursed in a
prior or subsequent calendar year, and further, any reimbursement must be paid
to the Employee by December 31 of the calendar year following the year in which
the Employee pays such automobile expenses and country club fees and
expenses.
(2) Notwithstanding
the foregoing paragraph (a)(1), in the event that the Bank’s independent
accountants determine that the total payments receivable under Section 10(a)(1)
hereof, when added to any other payments contingent on a Change in Control
of
the Bank or the Company, exceed 2.999 times the Employee’s “base amount” as
defined in Section 280G(b)(3) of the Code and regulations promulgated thereunder
(the “Maximum Amount”), then such payments shall be reduced to avoid an “excess
parachute payment”, as defined in Section 280G(b)(1) of the Code. The Employee
shall determine which and how much, if any, of the payments to which he is
entitled shall be eliminated or reduced so that the total payments to be
received by the Employee do not exceed the Maximum Amount. If the Employee
does
not make his determination within ten business days after receiving a written
request from the Bank, the Bank may make such determination, and shall notify
the Employee promptly thereof. Within five business days of the earlier of
the
Bank’s receipt of the Employee’s determination pursuant to this paragraph or the
Bank’s determination in lieu of a determination by the Employee, the Bank shall
pay to or distribute to or for the benefit of the Employee such amounts as
are
then due the Employee under this Agreement.
(3) The
term “Change in Control” shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a
Change in Control of the Bank or the Company
9
within
the meaning of the Home Owners’ Loan Act, as amended (“HOLA”), and applicable
rules and regulations promulgated thereunder, as in effect at the time of the
Change in Control; or (iii) without limitation such a Change in Control shall
be
deemed to have occurred at such time as (a) any “person” (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or trust;
or
(b) individuals who constitute the Company’s Board on the date hereof (the
“Incumbent Board”) cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters
of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the same nominating committee
serving under an Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or (c) a plan
of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction in which the Bank
or
Company is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Company, by someone other than
the
current management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar transaction
with one or more corporations as a result of which the outstanding shares of
the
class of securities then subject to the Plan are to be exchanged for or
converted into cash or property or securities not issued by the Company; or
(e)
a tender offer is made for 25% or more of the voting securities of the Company
and the shareholders owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell their
shares pursuant to such tender offer and such tendered shares have been accepted
by the tender offeror. Notwithstanding anything in this paragraph to
the contrary, a change in control shall not be deemed to have occurred in the
event of a conversion of the Company's or the Bank's mutual holding company
to
stock form, or in connection with any reorganization used to effect such a
conversion.
(b) Change
in Control; Voluntary Termination. Notwithstanding any other
provision of this Agreement to the contrary, but subject to Sections 10(a)(2),
10(c), and 10(e) hereof, the Employee may voluntarily terminate his employment
under this Agreement within ninety (90) days following a Change in Control
as
defined in paragraph (a)(4) of this Section 10, and the Employee shall thereupon
be entitled to receive the payment described in Section 10(a) of this Agreement.
Alternatively, the Employee may voluntarily terminate his employment under
this
Agreement if, within twelve (12) months following such Change in Control of
the
Bank or the Company an event constituting a Constructive Discharge shall
occur. If an event constituting a Constructive Discharge shall occur,
the Employee shall be entitled to voluntarily terminate employment within ninety
(90) days of such Constructive Discharge and shall be entitled to the payments
and benefits set forth in Section 10(a) hereof. For purposes of this
Section 10, a Constructive Discharge includes any of the following events which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than thirty-five (35) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in
the
Employee’s base compensation as in effect on the date of the Change in Control
or as the same
10
may
be
changed by mutual agreement from time to time; (iii) the failure to increase
the
Employees Base Salary or to pay the Employee discretionary bonuses pursuant
to
Sections 2 and 3 of this Agreement; (iv) the failure by the Bank to continue
to
provide the Employee with compensation and benefits provided for under this
Agreement, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under any of the employee benefit
plans in which the Employee now or hereafter becomes a participant, or the
taking of any action by the Bank which would directly or indirectly reduce
any
of such benefits or deprive the Employee of any material fringe benefit enjoyed
by him at the time of the Change in Control; (v) the requirement that the
Employee report directly to a person or persons other than the Board; (vi)
the
assignment to the Employee of duties and responsibilities materially different
from those normally associated with his position as referenced at Section 1;
(vii) a failure to elect or reelect the Employee to the Board of Directors
of
the Bank, if the Employee is serving on the Board on the date of the Change
in
Control; (viii) a material diminution or reduction in the Employee’s
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Bank. All amounts payable to
the Employee under this Section 10(b) shall be paid in the same manner as
required under Section 10(a) hereof.
(c) Compliance
with 12 U.S.C. Section 1828(k). Any payments made to the Employee
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
(d) Trust.
(1) Within
five business days before or after a Change in Control (as defined in Section
10(a) of this Agreement), the Bank shall (i) deposit, or cause to be deposited,
in a grantor trust (the “Trust”) substantially in the form described in Revenue
Procedure 92-64, as issued by the Internal Revenue Service and as amended or
superseded thereby, an amount equal to 2.99 times the Employee’s “base amount”
as defined in Section 280G(b)(3) of the Code, and (ii) provide the trustee
of
the Trust, who shall be an independent corporation having corporate trust
powers, with a written direction to hold said amount and any investment return
thereon in a segregated account for the benefit of the Employee, and to follow
the procedures set forth in the next paragraph as to the payment of such amounts
from the Trust.
(2) Immediately
following Employee’s Separation from Service for one of the reasons set forth in
Section 10(a) or 10 (b) hereof, or in the event Employee is a Specified
Employee, on the first day of the seventh month after Employee’s Separation from
Service, the Employee shall provide the trustee of the Trust with a written
notice requesting that the trustee pay to the Employee the amount designated
in
said notice. Within three business days after receiving said notice, the trustee
of the Trust shall send a copy of the notice to the Bank via overnight and
registered mail return receipt requested. On the tenth (10th) business
day
after mailing said notice to the Bank, the trustee of the Trust shall pay the
Employee the amount designated therein in immediately available funds, unless
prior thereto the Bank provides the trustee with a written notice directing
the
trustee to withhold such payment. In the latter event, the trustee shall submit
the dispute to non-appealable binding arbitration for a determination of the
amount payable to the Employee pursuant to Section 10(a) or (b) hereof, and
the
party responsible for the payment of the costs of such arbitration (which may
include any reasonable
11
legal
fees and expenses incurred by the Employee) shall be determined by the
arbitrator. The trustee shall choose the arbitrator to settle the dispute,
and
such arbitrator shall be bound by the rules of the American Arbitration
Association in making her determination. The parties and the trustee shall
be
bound by the results of the arbitration and, within 3 days of the determination
by the arbitrator, the trustee shall pay from the Trust the amounts required
to
be paid to the Employee and/or the Bank, and in no event shall the trustee
be
liable to either party for making the payments as determined by the
arbitrator.
(e) Regulatory
Limitation. Notwithstanding the foregoing, but only to the extent
required under federal banking law, the amount payable under Subsections (a)
and
(b) of this Section 10 shall be reduced to the extent that on the date of the
Employee’s termination of employment, the amount payable under Subsection (a) or
(b) of this Section 10 exceeds the limitation on severance benefits that is
set
forth in Regulatory Bulletin 27b of the OTS and OTS Thrift Activities Handbook
Section 310, as in effect on the Effective Date.
(f) In
the event that any dispute arises between the Employee and the Bank as to the
terms or interpretation of this Agreement, including this Section 10, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Section 10 or to defend against
any action taken by the Bank, the Employee shall be reimbursed for all costs
and
expenses, including reasonable attorneys’ fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final judgment
by a court of competent jurisdiction in favor of the Employee. Such
reimbursement shall be paid within ten (10) days of Employee’s furnishing to the
Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the
Employee.
11. Federal
Income Tax Withholding. The Bank may withhold all Federal and
State income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or
ruling.
12. Successors
and Assigns.
(a) Bank. This
Agreement shall not be assignable by the Bank, provided that this Agreement
shall inure to the benefit of and be binding upon any corporate or other
successor of the Bank which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets
or
stock of the Bank.
(b) Employee. Since
the Bank is contracting for the unique and personal skills of the Employee,
the
Employee shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank; provided,
however, that nothing in this paragraph shall preclude (1) the Employee from
designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators, or other legal representatives
of
the Employee or his estate from assigning any rights hereunder to the person
or
persons entitled thereunto.
12
(c) Attachment. Except
as required by law, no right to receive payments under this Agreement shall
be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to exclusion, attachment, levy or similar
process
or assignment by operation of law, and any attempt, voluntary or involuntary,
to
effect any such action shall be null, void and of no effect.
13. Amendments. No
amendments or additions to this Agreement shall be binding unless made in
writing and signed by all of the parties, except as herein otherwise
specifically provided.
14. Applicable
Law. Except to the extent preempted by Federal law, the laws of
the State of Illinois shall govern this Agreement in all respects, whether
as to
its validity, construction, capacity, performance or otherwise.
15. Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
16. Entire
Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto, and shall completely supersede
any prior agreements between the parties (including but not limited to their
agreement dated July 20, 1992 and the employment agreements dated December
18,
1995, and August 19, 2003).
[signature
page follows]
13
IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first hereinabove written.
|
ATTEST:
|
X.
X. XXXXX FEDERAL SAVINGS BANK
|
| /s/ Xxxxx X. Xxxxxx | /s/ Xxx X. Xxxxxx |
|
Xxxxx
X. Xxxxxx, corporate secretary
|
Xxx
X. Xxxxxx, President
|
|
WITNESS:
|
EMPLOYEE:
|
| /s/ Xxxxxxxx Xxxxx | /s/ Xxxxxx X. Xxxxxx |
|
Xxxxxxxx
Xxxxx
|
Xxxxxx
X. Xxxxxx
|
14
