EXECUTIVE EMPLOYMENT AGREEMENT
EXHIBIT
1.01
BY
AND BETWEEN:
XXXXX
X. XXXXXXX
Executive
Vice President and Chief Financial Officer
American
Federal Savings Bank
AND
AMERICAN
FEDERAL SAVINGS BANK
EFFECTIVE
OCTOBER 1, 2006
THIS
AGREEMENT is made effective as of October 1, 2006, by and between American
Federal Savings Bank (the “BANK”) and Xxxxx X. Xxxxxxx
(“EXECUTIVE”).
WHEREAS,
EXECUTIVE serves in a position of substantial responsibility;
WHEREAS,
the BANK wishes to assure itself of the services of EXECUTIVE for the period
provided in this Agreement; and
WHEREAS,
EXECUTIVE is willing to serve in the employ of the BANK on a full-time basis
for
said period.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, and upon
the other terms and conditions hereinafter provided, the parties hereby agree
as
follows:
1. POSITION
AND RESPONSIBILITIES.
During
the period of his employment hereunder, EXECUTIVE agrees to serve as Executive
Vice President and Chief Financial Officer of the BANK. Executive shall render
administrative and management duties to the BANK such as are customarily
performed by persons situated in a similar executive capacity.
2. TERMS
AND
DUTIES.
(a) The
initial term of this Agreement shall be two (2) years and be deemed to have
commenced as of October 1, 2006 and shall continue for a period ending September
30, 2008. Commencing on or about September 1 of each year from 2007 through
2008, the Board of Directors of the BANK (the “Board”) shall perform an annual
review of this Employment Agreement. Commencing in September 2008, the Board
may
extend or renew the Agreement for an additional two year term. Prior to the
extension or renewal of the Agreement as provided herein, the Board of the
BANK
will conduct a formal performance evaluation of EXECUTIVE for purposes of
determining whether to extend or renew the Agreement, and the results thereof
shall be included in the minutes of the Board’s meeting.
(b) During
the period of his employment hereunder, except for periods of absence occasioned
by illness, reasonable vacation periods, and reasonable leaves of absence,
EXECUTIVE shall devote substantially all his business time, attention, skill,
and efforts to the faithful performance of his duties hereunder including
activities and services related to the organization, operation and management
of
the BANK; provided, however, that, with the approval of the Board, as evidenced
by a resolution of such Board, from time to time, EXECUTIVE may serve, or
continue to serve, on the boards of directors of, and hold any other offices
or
positions in, companies or organizations, which, in such Board’s judgment, will
not present any conflict of interest with the BANK, or materially affect the
performance of EXECUTIVE’s duties pursuant to this Agreement.
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3. COMPENSATION
AND REIMBURSEMENT.
(a) The
compensation specified under this Agreement shall constitute the salary and
benefits paid for the duties described in Sections 1 and 2. The BANK shall
pay
EXECUTIVE as compensation a salary of $112,000 per year (“Base Salary”). Such
Base Salary shall be payable in accordance with the customary payroll practices
of the BANK. During the period of this Agreement, EXECUTIVE’s Base Salary shall
be reviewed at least annually; the first such review will be made no later
than
one year from the date of this Agreement. Such review shall be conducted by
a
Committee designated by the Board, and the Board may increase but not decrease
EXECUTIVE’s Base Salary. In addition to the Base Salary provided in this Section
3(a), the BANK shall provide EXECUTIVE at no cost to EXECUTIVE with all such
other benefits as are provided uniformly to regular (not temporary) full-time
employees of the BANK.
(b) The
BANK
will provide EXECUTIVE with employee benefit plans, arrangements and perquisites
substantially equivalent to those in which EXECUTIVE was participating or
otherwise deriving benefit from immediately prior to the beginning of the term
of this agreement. Without limiting the generality of the foregoing provisions
of this Subsection (b), EXECUTIVE will be entitled to participate in or receive
benefits under any employee benefit plans including, but not limited to,
retirement plans, profit-sharing plans, health-and-accident plans, medical
coverage or any other employee benefit plan or arrangement made available by
the
BANK in the future to its senior executives and key management employees,
subject to, and on a basis consistent with, the terms, conditions and overall
administration of such plans and arrangements. EXECUTIVE will be entitled to
incentive compensation and bonuses as provided in any plan, or pursuant to
any
arrangement of the BANK in which EXECUTIVE is eligible to participate. Nothing
paid to EXECUTIVE under any such plan or arrangement will be deemed to be in
lieu of other compensation to which EXECUTIVE is entitled under this
Agreement.
(c) In
addition to the Base Salary provided for by paragraph (a) of this Section 3,
the
BANK shall pay or reimburse EXECUTIVE for all reasonable travel and other
obligations under this Agreement and may provide such additional compensation
in
such form and such amounts as the Board may from time to time
determine.
4. PAYMENTS
TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon
the
occurrence of an Event of Termination (as herein defined) during EXECUTIVE’s
term of employment under this Agreement, the provisions of this Section shall
apply. As used in this Agreement, an “Event of Termination” shall mean and
include any one or more of the following; (i) the termination by the BANK of
EXECUTIVE’s full-time employment hereunder for any reason (except termination
for cause as defined in Section 7 hereof): disability, as defined in Section
5(a) hereof; death; resignation or retirement, as defined in Section 6 hereof;
(ii) EXECUTIVE’s resignation from the BANK’s employ, upon (A) (unless consented
to by EXECUTIVE) a material change in EXECUTIVE’s function, duties, title or
responsibilities, which change would cause EXECUTIVE’s position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Sections 1 and 2, above (any such material change shall
be
deemed a continuing breach of this Agreement), (B) (unless consented to by
EXECUTIVE)
a
relocation of EXECUTIVE’s principal place of employment by more than 50 miles
from its location at the effective date of this Agreement, or, without
EXECUTIVE’s consent, a material reduction in the benefits and perquisites to
EXECUTIVE from those being provided as of the effective date of this Agreement,
(C) the liquidation or dissolution of the BANK, or (D) any breach of this
Agreement by the BANK. Upon the occurrence of any event described in clauses
(A), (B), (C), or (D), above, EXECUTIVE shall have the right to elect to
terminate his employment under this Agreement by resignation upon not less
than
sixty (60) days prior written notice given within a reasonable period of time
not to exceed, except in case of a continuing breach, four (4) calendar months
after the event giving rise to such right to elect.
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(b) Upon
the
occurrence of an Event of Termination as described in Section 4(a) hereof,
the
BANK shall pay EXECUTIVE, 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, a sum equal to the payments due to EXECUTIVE
for the remaining term of the Agreement, including Base Salary (of not less
than
one year if an Event of Termination occurs with a term of less than one year
remaining under this Agreement), bonuses, and any other cash or deferred
compensation paid or to be paid (including the value of employer contributions
that would have been made on EXECUTIVE’s behalf over the remaining term of the
agreement to any tax-qualified retirement plan sponsored by the BANK as of
the
Date of Termination) to EXECUTIVE for the term of the Agreement provided,
however, that if the BANK is not in compliance with its minimum capital
requirements or if such payments would cause the BANK’s capital to be reduced
below its minimum capital requirements, such payments shall be deferred until
such time as the BANK is in capital compliance. All payments made pursuant
to
this Section 4(b) shall be paid in substantially equal monthly installments
over
the remaining term of this Agreement following EXECUTIVE’s termination;
provided, however, that if the remaining term of the Agreement is less than
one
(1) year (determined as of EXECUTIVE’s Date of Termination), such payments and
benefits shall be paid to EXECUTIVE in a lump sum within thirty (30) days of
the
Date of Termination.
(c) Upon
the
occurrence of an Event of Termination, the BANK will continue to pay life,
medical, and disability insurance having substantially identical coverage to
that maintained by the BANK for EXECUTIVE prior to his termination. Such
coverage shall cease upon the expiration of the remaining term of this agreement
unless the remaining term is less than one year in which case the remaining
term
shall be deemed a one year term.
5. TERMINATION
FOR DISABILITY.
(a) If
EXECUTIVE shall become disabled as defined in the BANK’s then current disability
plan (or, if no such plan is then in effect, if EXECUTIVE is permanently and
totally disabled within the meaning of Section 22(e)(3) of the Code as
determined by a physician designated by the Board), the BANK may terminate
EXECUTIVE’s employment for “Disability.”
(b) Upon
EXECUTIVE’s termination of employment for Disability, the BANK will pay
EXECUTIVE, as disability pay, a monthly payment equal to three-quarters (3/4)
of
EXECUTIVE’s monthly Base Salary on the effective date of such termination. These
disability payments shall commence on the effective date of EXECUTIVE’s
termination and will end on the earlier of (i) the date EXECUTIVE returns to
the
full-time employment of the BANK in the same capacity as he was employed prior
to his termination for Disability and pursuant to an employment agreement
between EXECUTIVE and the BANK; (ii) EXECUTIVE’s full-time employment by another
employer; (iii) EXECUTIVE attaining the age of sixty-five (65); or (iv)
EXECUTIVE’s death; or (v) the expiration of this Agreement unless such Agreement
expires in less than one year in which case the Agreement shall be deemed to
expire in one year. The disability pay shall be reduced by the amount, if any,
paid to EXECUTIVE under any plan of the BANK providing disability benefits
to
EXECUTIVE.
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(c) The
BANK
will cause to be continued any life, medical, and disability coverage in
existence at the time of termination for disability substantially identical
to
the coverage maintained by the BANK for EXECUTIVE prior to his termination
for
Disability. The coverage and payments described herein shall cease upon the
earlier of (i) the date EXECUTIVE returns to the full-time employment of the
BANK, in the same capacity as he was employed prior to his termination for
Disability and pursuant to an employment agreement between EXECUTIVE and the
BANK; (ii) EXECUTIVE’s full-time employment by another employer; (iii)
EXECUTIVE’s attaining the age of sixty-five (65); (iv) EXECUTIVE’s death; or (v)
the expiration of the term of this Agreement, unless the Agreement expires
in
less than one year in which case the Agreement shall be deemed to expire in
one
year.
(d) Notwithstanding
the foregoing, there will be no reduction in the compensation otherwise payable
to EXECUTIVE
during
any period during which EXECUTIVE is incapable of performing his duties
hereunder by reason of temporary disability.
6.
TERMINATION
UPON RETIREMENT; DEATH OF EXECUTIVE; RESIGNATION.
Termination
by the BANK of EXECUTIVE based on “Retirement” shall mean retirement at or after
attaining age sixty-five (65) or in accordance with any retirement arrangement
established with EXECUTIVE’s consent with respect to him. Upon termination of
EXECUTIVE upon Retirement, EXECUTIVE shall be entitled to all benefits under
any
retirement plan of the BANK or the COMPANY and other plans to which EXECUTIVE
is
a party. Upon the death of EXECUTIVE during the term of this Agreement, the
BANK
shall pay to EXECUTIVE’s estate the compensation due to EXECUTIVE through the
last day of the calendar month in which his death occurred. Upon the voluntary
resignation of EXECUTIVE during the term of this Agreement, other than in
connection with an Event of Termination, the BANK shall pay to EXECUTIVE the
compensation due to EXECUTIVE through his Date of Termination.
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7. TERMINATION
FOR CAUSE.
For
purposes of this Agreement, “Termination for Cause” shall include termination
because of EXECUTIVE’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. Notwithstanding the
foregoing, EXECUTIVE shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the members
of the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to EXECUTIVE and an opportunity for him, together with counsel
to be heard before the Board), finding that in the good faith opinion of the
Board, EXECUTIVE was guilty of conduct justifying termination for cause and
specifying the reasons thereof. EXECUTIVE shall not have the right to receive
compensation or other benefits for any period after termination for cause.
Any
stock options granted to EXECUTIVE under any stock option plan or any unvested
awards granted under any other stock benefit plan of the BANK, the COMPANY,
or
any subsidiary or affiliate thereof, shall become null and void effective upon
EXECUTIVE’s receipt of Notice of Termination for Cause pursuant to Section 7
hereof, and shall not be exercisable by EXECUTIVE at any time subsequent to
such
termination for cause.
8. REQUIRED
PROVISIONS.
(a) The
BANK
may terminate EXECUTIVE’s employment at any time, but any termination by the
BANK, other than termination for cause, shall not prejudice EXECUTIVE’s right to
compensation or other benefits under this Agreement. EXECUTIVE shall not have
the right to receive compensation or other benefits for any period after
termination for cause as defined in Section 7 herein.
(b) If
EXECUTIVE is suspended and/or temporarily prohibited from participating in
the
conduct of the BANK’s affairs by a notice served under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (“FDIA”), the BANK’s obligations under the
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the BANK
may, in its discretion, (i) pay EXECUTIVE 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 that were suspended.
(c) If
EXECUTIVE is removed and/or permanently prohibited from participating in the
conduct of the BANK’s affairs by an order issued under Section 8(e)(4) or (g)(1)
of the FDIA, all obligations of the BANK under the Agreement shall terminate
as
of the effective date of the order, but vested rights of the contracting parties
shall not be affected.
(d) If
the
BANK is in default (as defined in Section 3(x)(1) of the FDIA), all obligations
under this Agreement shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the parties.
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(e) All
obligations under this Agreement shall be terminated (except to the extent
determined that continuation of the Agreement is necessary for the continued
operation of the BANK): (i) by the Director of the Office of Thrift Supervision
(the “Director’) or his designee at the time the Federal Deposit Insurance
Corporation enters into an agreement to provide assistance to or on behalf
of
the BANK under the authority contained in Section 13(c) of the FDIA or (ii)
by
the Director, or his designee at the time the Director or such designee approves
a supervisory merger to resolve problems related to operation of the BANK or
when the BANK is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however, shall
not be affected by such action.
(f) Any
payments made to EXECUTIVE pursuant to this Agreement, or otherwise, are subject
to and conditioned upon compliance with Section 18(k) of the FDIC and any
regulations promulgated thereunder.
9. NOTICE.
(a) Any
purported termination by the BANK or by EXECUTIVE shall be communicated by
Notice of Termination to the other party hereto. For purposes of this Agreement,
a Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth
in reasonable detail the facts and circumstances claimed to provide a basis
for
termination of EXECUTIVE’s employment under the provision so
indicated.
(b) “Date
of
Termination” shall mean (A) if EXECUTIVE’s employment is terminated for
Disability, thirty (30) days after a Notice of Termination is given (provided
that he shall not have returned to the performance of his duties on a full-time
basis during such thirty (30) day period), and (B) if his employment is
terminated for any other reason, other than termination for cause, the date
specified in the Notice of Termination. In the event of EXECUTIVE’s termination
for cause, the Date of Termination shall be the same as the date of the Notice
of Termination.
(c) If,
within thirty (30) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be extended
by
a notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Unless the termination is for cause, notwithstanding the pendency
of
any such dispute, the BANK will continue to pay EXECUTIVE his full compensation
in effect when the notice giving rise to the dispute was given (including,
but
not limited to Base Salary) and continue him as a participant in all
compensation benefit and insurance plans in which he was participating when
the
notice of dispute was given, until the dispute is finally resolved in accordance
with this agreement. Amounts paid under this Section are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement.
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10. NON-COMPETITION.
(a) Upon
any
termination of EXECUTIVE’s employment hereunder pursuant to an Event of
Termination as provided in Section 4 hereto, EXECUTIVE agrees not to compete
with the BANK for a period of one (1) year following such termination in any
city, town or county in which the BANK has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
date of such termination. EXECUTIVE agrees that during such period and within
said cities, towns and counties, EXECUTIVE shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities
of
the BANK. The parties hereto, recognizing that irreparable injury will result
to
the BANK, its business and property in the event of EXECUTIVE’s breach of this
Subsection 10(a) agree that in the event of any such breach by EXECUTIVE, the
BANK will be entitled, in addition to any other remedies and damages available,
to an injunction to restrain the violation hereof by EXECUTIVE, EXECUTIVE’s
partners, agents, servants, employers, employees and all persons acting for
or
with EXECUTIVE. EXECUTIVE represents and admits that in the event of the
termination of his employment pursuant to Section 4 hereof, EXECUTIVE’s
experience and capabilities are such that EXECUTIVE can obtain employment in
a
business engaged in other lines and/or of a different nature than the BANK,
and
that the enforcement of a remedy by way of injunction will not prevent EXECUTIVE
from earning a livelihood. Nothing herein will be construed as prohibiting
the
BANK from pursuing any other remedies available to the BANK for such breach
or
threatened breach, including the recovery of damages from
EXECUTIVE.
(b) EXECUTIVE
recognizes and acknowledges that the knowledge of the business activities and
plans for business activities of the BANK and affiliates thereof, as it may
exist from time to time, is a valuable, special and unique asset of the business
of the BANK. EXECUTIVE will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or
considered business activities of the BANK or affiliates thereof to any person,
firm, corporation, or other entity for any reason or purpose whatsoever.
Notwithstanding the foregoing, EXECUTIVE may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely
and
exclusively derived from the business plans and activities of the BANK. In
the
event of a breach or threatened breach by EXECUTIVE of the provisions of this
Section, the BANK will be entitled to an injunction restraining EXECUTIVE from
disclosing, in whole or in part, the knowledge of the past, present, planned
or
considered business activities of the BANK or affiliates thereof, or from
rendering any services to any person, firm, corporation, other entity to whom
such knowledge, in whole or in part, has been disclosed or is threatened to
be
disclosed. Nothing herein will be construed as prohibiting the BANK from
pursuing any other remedies available to the BANK for such breach or threatened
breach, including the recovery of damages from EXECUTIVE.
11. SOURCE
OF
PAYMENTS.
All
payments provided in this Agreement shall be timely paid in cash or check from
the general funds of the BANK.
12. EFFECT
ON
PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
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This
Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the BANK or any predecessor
of
the BANK and EXECUTIVE, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to EXECUTIVE of a kind elsewhere
provided. No provision of this Agreement shall be interpreted to mean that
EXECUTIVE is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
13. NO
ATTACHMENT.
(a) 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, hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no
effect.
(b) This
Agreement shall be binding upon, and inure to the benefit of, EXECUTIVE, the
BANK, and its respective successors and assigns.
14. MODIFICATION
AND WAIVER.
(a) This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b) No
term
or condition of this Agreement shall be deemed to have been waived, nor shall
there by any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the
specific term or condition waived and shall not constitute a waiver of such
term
or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If,
for
any reason, any provision of this Agreement, or any part of any provision,
is
held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such
other
provision and part thereof shall to the full extent consistent with law continue
in full force and effect.
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16. HEADINGS
FOR REFERENCE ONLY.
The
headings of sections and paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the
provisions of this Agreement.
17. GOVERNING
LAW.
This
Agreement shall be governed by the laws of the State of Montana, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law
or
regulation, the provisions of such law or regulation shall prevail.
18. ARBITRATION.
Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration conducted before a panel of three
arbitrators sitting in a location selected by the employee within fifty miles
from the location of the BANK, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction; provided, however, that
EXECUTIVE shall be entitled to seek specific performance of his right to be
paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
19. PAYMENT
OF LEGAL FEES.
All
reasonable legal fees paid or incurred by EXECUTIVE pursuant to any dispute
or
question of interpretation relating to this Agreement shall be paid or
reimbursed by the BANK, to EXECUTIVE, if EXECUTIVE is successful pursuant to
a
legal judgment, arbitration or settlement.
20. INDEMNIFICATION.
The
BANK
shall provide EXECUTIVE (including his heirs, executors and administrators)
with
coverage under a standard directors’ and officers’ liability insurance policy at
its expense, or in lieu thereof, shall indemnify EXECUTIVE (and his heirs,
executors and administrators) to the fullest extent permitted under federal
banking laws against all expenses and liabilities reasonably incurred by him
in
connection with or arising out of any action, suit or proceeding in which he
may
be involved by reason of his having been a director or officer of the BANK
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgment, court costs and attorneys’ fees and
the cost of reasonable settlements. Notwithstanding anything in this Paragraph
20 to the contrary, the BANK shall not indemnify the EXECUTIVE under any
provision of this Agreement for services performed solely in the EXECUTIVE’s
capacity as an executive of any affiliate of the BANK.
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21. SUCCESSOR
TO THE BANK.
The
BANK
shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the BANK, expressly and unconditionally to assume and
agree to perform the BANK’s obligations under this Agreement, in the same manner
and to the same extent that the BANK would be required to perform if no such
succession or assignment had taken place.
[REST
OF
PAGE LEFT INTENTIONALLY BLANK]
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IN
WITNESS WHEREOF, the BANK has caused this Agreement to be executed and its
seal
to be affixed hereunto by a duly authorized officer, and EXECUTIVE has signed
this Agreement, all on the _____ day of ______________, 2006.
| ATTEST: | AMERICAN FEDERAL SAVINGS BANK | ||
| /s/ | /s/ | ||
|
[SEAL] |
|
||
| WITNESS: | |||
|
|
Xxxxx
X. Xxxxxxx
Executive
Vice President and
Chief
Financial Officer,
American
Federal Savings Bank
(“EXECUTIVE”)
|
||
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