TierOne CORPORATION AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.4
TierOne CORPORATION
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “Agreement") is made and entered into as of December 17, 2008 by
and between TierOne Corporation, a business corporation organized and existing
under the laws of the State of Wisconsin (the "Company"), and Xxxxx X. Xxxxxx
(the "Executive").
W I T N E
S S E T H :
WHEREAS, the Executive is currently
employed as the President and Chief Operating Officer of the Company pursuant to
an employment agreement between the Company and the Executive entered into as of
October 1, 2002 which was amended and restated effective July 27, 2006 and
amended as of December 20, 2006 (the “Company Employment
Agreement”);
WHEREAS, the Executive is currently
employed as the President and Chief Operating Officer of TierOne Bank (the
“Bank”) pursuant to an employment agreement between the Bank and the Executive
entered into as of September 25, 2000, as subsequently amended by
resolutions of the Board of Directors of the Bank and as amended and restated
effective July 27, 2006 and which is being further amended and restated as of
the date hereof (the “Bank Employment Agreement”);
WHEREAS, the Company desires to amend
and restate the Company Employment Agreement in order to make changes to comply
with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
as well as certain other changes;
WHEREAS, the Company desires to assure
itself of the continued availability of the Executive's services as provided in
this Agreement; and
WHEREAS, the Executive is willing to
serve the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the
premises and the mutual covenants and conditions hereinafter set forth, the
Company and the Executive hereby agree as follows:
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SECTION
1.
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EFFECTIVE
DATE; EMPLOYMENT.
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This Agreement shall be effective on
the date first written above (the “Effective Date”). The Company agrees to
employ the Executive, and the Executive hereby agrees to such employment, during
the period and upon the terms and conditions set forth in this
Agreement.
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SECTION
2. EMPLOYMENT
PERIOD.
(a) The
terms and conditions of this Agreement shall be and remain in effect during the
period of three years beginning on October 7, 2008 and ending on the third
anniversary of the Commencement Date, plus such extensions, if any, as are
provided pursuant to Section 2(b) hereof (the "Employment Period").
(b) Except
as provided in Section 2(c), beginning on the Commencement Date, on each day
during the Employment Period, the Employment Period shall automatically be
extended for one additional day, unless either the Company, on the one hand, or
the Executive, on the other hand, elects not to extend the Agreement further by
giving written notice thereof to the other party, in which case the Employment
Period shall end on the third anniversary of the date on which such written
notice is given. Upon termination of the Executive's employment with
the Company for any reason whatsoever, any daily extensions provided pursuant to
this Section 2(b), if not theretofore discontinued, shall automatically
cease.
(c) Nothing
in this Agreement shall be deemed to prohibit the Company at any time from
terminating the Executive's employment during the Employment Period with or
without notice for any reason, provided that the relative
rights and obligations of the Company and the Executive in the event of any such
termination shall be determined under this Agreement.
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SECTION
3.
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DUTIES.
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Throughout the Employment Period, the
Executive shall serve as the President and Chief Operating Officer of the
Company, having such power, authority and responsibility and performing such
duties as are prescribed by or under the Bylaws of the Company and as are
customarily associated with such positions. The Executive shall
devote his full business time, attention, skills and efforts (other than during
weekends, holidays, vacation periods, and periods of illness or leaves of
absence and other than as permitted or contemplated by Section 7 hereof) to the
business and affairs of the Company as he has customarily done as an officer and
employee of the Bank and shall use his best efforts to advance the interests of
the Company.
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SECTION
4.
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CASH
COMPENSATION.
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(a) In
consideration for the services to be rendered by the Executive hereunder, the
Company and/or its subsidiaries shall pay to him a salary of three hundred
seventy-seven thousand and five hundred dollars ($377,500) annually (“Base
Salary”). The Executive's Base Salary shall be payable in
approximately equal installments in accordance with the Company’s and its
applicable subsidiaries’ customary payroll practices for senior
officers. Base Salary shall include any amounts of compensation
deferred by the Executive under any tax-qualified retirement or welfare benefit
plan or any other deferred compensation arrangement. The Board of
Directors of the Company (“Company Board”) and the Board of Directors of the
Bank (the “Bank Board”) shall review the Executive's annual rate of salary at
such times during the Employment Period as they deem appropriate, but not less
frequently than once every twelve months, and may, in their respective
discretion, approve an increase therein. In addition
to
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salary,
the Executive may receive other cash compensation from the Company or its
subsidiaries for services hereunder at such times, in such amounts and on such
terms and conditions as the Company Board or the Bank Board may determine from
time to time. Any increase in the Executive’s annual salary shall
become the Base Salary of the Executive for purposes hereof. The
Executive’s Base Salary as in effect from time to time cannot be decreased by
the Company and/or the Bank without the Executive’s express prior written
consent.
(b) The
Executive shall be entitled to participate in an equitable manner with all other
executive officers of the Company in discretionary bonuses as authorized by the
Company Board to executive officers. No other compensation provided
for in this Agreement shall be deemed a substitute for the Executive’s right to
participate in such bonuses when and as declared by the Company
Board.
(c) The
Executive shall be entitled to receive fees for serving as a director of the
Company or as a member of any committee as received by other members of the
Company Board.
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SECTION
5.
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EMPLOYEE
BENEFIT PLANS AND PROGRAMS.
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During the Employment Period, the
Executive shall be treated as an employee of the Company and the Bank and shall
be entitled to participate in and receive benefits under any and all qualified
or non-qualified retirement, pension, savings, profit-sharing or stock bonus
plans, any and all group life, health (including hospitalization, medical and
major medical), dental, accident and long term disability insurance plans, and
any other employee benefit and compensation plans (including, but not limited
to, any incentive compensation plans or programs, stock option and appreciation
rights plans and restricted stock plans) as may from time to time be maintained
by, or cover employees of, the Company and the Bank, in accordance with the
terms and conditions of such employee benefit plans and programs and
compensation plans and programs and consistent with the Company's and the Bank’s
customary practices. The Company agrees to maintain its current
benefit restoration plan (or benefits equivalent thereto) for the Executive
while he is employed by the Company but not beyond the expiration of the
Employment Period. Nothing paid to the Executive under any such plan
or program will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
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SECTION
6.
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INDEMNIFICATION
AND INSURANCE.
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(a) During
the Employment Period and for a period of six years thereafter, the Company
shall cause the Executive to be covered by and named as an insured under any
policy or contract of insurance obtained by it to insure its directors and
officers against personal liability for acts or omissions in connection with
service as an officer or director of the Company or service in other capacities
at the request of the Company. The coverage provided to the Executive
pursuant to this Section 6 shall be of the same scope and on the same terms and
conditions as the coverage (if any) provided to other officers or directors of
the Company or any successor.
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(b) To
the maximum extent permitted under applicable law, during the Employment Period
and for a period of six years thereafter, the Company shall indemnify the
Executive against and hold him harmless from any costs, liabilities, losses and
exposures that may be incurred by the Executive in his capacity as a director or
officer of the Company or any subsidiary or affiliate.
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SECTION
7.
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OUTSIDE
ACTIVITIES.
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The Executive may serve as a member of
the boards of directors of such business, community and charitable organizations
as he may disclose to and as may be approved by the Company Board (which
approval shall not be unreasonably withheld), provided that in each case
such service shall not materially interfere with the performance of his duties
under this Agreement or present any conflict of interest. The
Executive may also engage in personal business and investment activities which
do not materially interfere with the performance of his duties hereunder, provided that such activities
are not prohibited under any code of conduct or investment or securities trading
policy established by the Company and generally applicable to all similarly
situated executives. If the Executive is discharged or suspended, or is subject
to any regulatory prohibition or restriction with respect to participation in
the affairs of the Bank, he shall continue to perform services for the Company
in accordance with this Agreement but shall not directly or indirectly provide
services to or participate in the affairs of the Bank in a manner inconsistent
with the terms of such discharge or suspension or any applicable regulatory
order.
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SECTION
8.
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WORKING
FACILITIES AND EXPENSES.
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It is understood by the parties that
the Executive's principal place of employment shall be at the Company's principal
executive office located in Lincoln, Nebraska, or at such other location within
25 miles of the
address of such principal executive office, or at such other location as the
Company and the Executive may mutually agree upon. The Company shall
provide the Executive at his principal place of employment with a private
office, secretarial services and other support services and facilities suitable
to his position with the Company and necessary or appropriate in connection with
the performance of his assigned duties under this Agreement. The
Company shall reimburse the Executive for his ordinary and necessary business
expenses attributable to the Company’s business, including, without limitation,
the Executive's travel and entertainment expenses incurred in connection with
the performance of his duties for the Company under this Agreement, in each case
upon presentation to the Company of an itemized account of such expenses in such
form as the Company may reasonably require. Such reimbursement shall
be paid promptly by the Company and in any event no later than March 15 of the
year immediately following the year in which such expenses were incurred. In
addition, the Company and/or its subsidiaries shall provide the Executive with
either (a) an automobile allowance of $1,000 per month to cover the Executive’s
costs of operating the automobile in connection with the business of the Company
and its subsidiaries, or (b) in lieu of the automobile allowance, regular
transportation to and from work on a regular basis.
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SECTION
9.
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TERMINATION
OF EMPLOYMENT WITH BENEFITS.
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(a) Subject
to Section 9(d), the Executive shall be entitled to the benefits described in
Section 9(b) in the event that:
(i) his
employment with the Company terminates during the Employment Period as a result
of the Executive's termination for Good Reason (as defined in
Section 9(a)(i)(A) and (B) of this Agreement), which shall mean a termination
based on the following:
(A) any material breach of this Agreement by the Company,
including without limitation any of the following: (1) a material diminution in
the Executive’s base compensation, (2) a material diminution in the Executive’s
authority, duties, titles or responsibilities as prescribed in Section
3, or (3) a
material diminution in the authority, duties or responsibilities of the officer
to whom the Executive is required to report, or
(B) any material change in the geographic location at
which the Executive must perform his services under this
Agreement;
provided, however, that prior to any termination of
employment for Good Reason, the Executive must first provide written notice to
the Company within ninety (90) days of the initial existence of the condition,
describing the existence of such condition, and the Company shall thereafter
have the right to remedy the condition within thirty (30) days of the date the
Company received the written notice from the Executive. If the
Company remedies the condition within such thirty (30) day cure period, then no
Good Reason shall be deemed to exist with respect to such
condition. If the Company does not remedy the condition within such
thirty (30) day cure period, then the Executive may deliver a notice of
termination for Good Reason at any time within sixty (60) days following the
expiration of such cure period; or
(ii) the
Executive's employment with the Company is terminated by the
Company during the Employment Period for any reason other than for
"cause," death or “Disability,” as provided in Section 10(a).
(b) Subject
to Section 9(d) and if the Executive has offered to continue to provide services
on the terms contemplated by this Agreement and such offer has been declined,
upon the termination of the Executive’s employment pursuant to Section 9(a) of
this Agreement, the Company shall pay and provide to the Executive (or, in the
event of his subsequent death, to his estate):
(i) his
earned but unpaid Base Salary (including, without limitation, all items which
constitute wages under applicable law and the payment of which is not otherwise
provided for in this Section 9(b)) as of the date of the termination of his
employment, such payment to be made at the time and in the manner prescribed by
law applicable to the payment of wages but in no event later than 30 days after
termination of employment;
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(ii) the
benefits, if any, to which he is entitled under the employee benefit plans and
programs and compensation plans and programs maintained for the benefit of the
Company's and the Bank’s officers and employees through the date of the
termination of his employment;
(iii) continued
group life, health (including hospitalization, medical and major medical),
dental, accident and long term disability insurance benefits, in addition to
that provided pursuant to Section 9(b)(ii), and after taking into account the
coverage provided by any subsequent employer, if and to the extent necessary to
provide for the Executive, for the period beginning on the date on
which his employment terminates and ending on the last day of the Employment
Period (the “Remaining Employment Period”) and at no cost to the Executive,
coverage equivalent to the coverage to which he would have been entitled under
such plans if he had continued to be employed during such period at the highest
annual rate of salary achieved during the Employment Period; provided that any insurance premiums payable by the
Company or any successors pursuant to this Section 9(b)(iii) shall be payable at
such times and in such amounts (except that the Company shall also pay any
employee portion of the premiums) as if the Executive was still an employee of
the Company, subject to any increases in such amounts imposed by the insurance
company or COBRA, and the amount of insurance premiums required to be paid by
the Company in any taxable year shall not affect the amount of insurance
premiums required to be paid by the Company in any other taxable year; and
provided further that if the Executive’s participation in any group insurance
plan is barred, the Company shall either arrange to provide the Executive with
insurance benefits substantially similar to those which the Executive was
entitled to receive under such group insurance plan or, if such coverage cannot
be obtained, pay a lump sum cash equivalency amount within thirty (30) days
following the date of termination based on the annualized rate of premiums being
paid by the Company as of the date of termination;
(iv) within
30 days following the date on which his employment terminates, a lump sum
payment, in an amount equal to the present value of the Base Salary that the
Executive would have earned if he had continued to be employed during the
Remaining Employment Period at the highest annual rate of Base Salary achieved
during the Employment Period, with such present value to be determined using a
discount rate equal to the applicable short-term federal rate prescribed under
Section 1274(d) of the Code, compounded using the compounding periods
corresponding to the Company's and the Bank’s regular payroll periods for their
officers, and with such lump sum to be paid in lieu of all other payments of
Base Salary provided for under this Agreement in respect of the Remaining
Employment Period;
(v) within
30 days following the date on which his employment terminates, a lump sum
payment in an amount equal to the excess, if any, of:
(A) the
present value of the aggregate benefits to which he would be entitled under any
and all qualified defined benefit pension plans and non-qualified plans related
thereto maintained by, or covering employees of, the Company and the Bank if he
were 100% vested thereunder and had continued to be employed during the
Remaining
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Employment
Period at the highest annual rate of Base Salary achieved during the Employment
Period; over
(B) the
present value of the benefits to which he is actually entitled under such
defined benefit pension plans as of the date on which his employment terminates,
with such present values to be determined using the mortality tables prescribed
under Section 415(b)(2)(E)(v) of the Code and a discount rate, compounded
monthly, equal to the annualized rate of interest prescribed by the Pension
Benefit Guaranty Corporation for the valuation of immediate annuities payable
under terminating single-employer defined benefit plans for the month in which
the Executive's employment terminates ("Applicable PBGC Rate");
(vi) within
30 days following the date on which his employment terminates, a lump sum
payment in an amount equal to the present value of the additional employer
contributions to which he would have been entitled under any and all qualified
defined contribution plans and non-qualified plans related thereto maintained
by, or covering employees of, the Company and the Bank as if he were 100% vested
thereunder and had continued to be employed during the Remaining Employment
Period at the highest annual rate of Base Salary achieved during the Employment
Period and making the maximum amount of employee contributions, if any, required
or permitted under such plan or plans, with such present value to be determined
on the basis of a discount rate, compounded using the compounding period that
corresponds to the frequency with which employer contributions are made to the
relevant plan, equal to the Applicable PBGC Rate, provided that no payments
shall be made pursuant to this subsection (vi) with respect to the Company’s
Employee Stock Ownership Plan (“ESOP”) if the ESOP is terminated
effective as of a date within one year of the date of the termination of the
Executive’s employment;
(vii) within
30 days following the date on which his employment terminates, a lump
sum payment in an amount equal to the present value of the payments that would
have been made to the Executive under any cash bonus or long-term or short-term
cash incentive compensation plan maintained by, or covering employees of, the
Company and the Bank if he had continued to be employed during the Remaining
Employment Period and had earned in each calendar year that ends during the
Remaining Employment Period a bonus or incentive award that equals the highest
annual bonus or incentive award paid to the Executive during the preceding 36
calendar months, with the present value of such payments to be determined using
a discount rate equal to the applicable short-term federal rate prescribed under
Section 1274(d) of the Code, compounded using the compounding periods
corresponding to the Company’s schedule of paying bonuses; and
(viii) within
30 days following the occurrence of an event described in Section 9(a), upon the
surrender of then outstanding options or appreciation rights previously issued
to the Executive under any stock option and appreciation rights plan or program
maintained by, or covering employees of, the Company, a lump sum payment in an
amount equal to the product of:
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(A) the
excess of (I) the fair market value of a share of stock of the same class as the
stock subject to the option or appreciation right, determined as of the date on
which his employment terminates, over (II) the exercise price per share for such
option or appreciation right, as specified in or under the relevant plan or
program; multiplied by
(B) the
number of shares with respect to which options or appreciation rights are being
surrendered.
The
Company and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first written above and that the
payments and benefits contemplated by this Section 9(b) constitute reasonable
damages under the circumstances and shall be payable without any requirement of
proof of actual damage but subject to mitigation as provided in Section
9(d). The Company and the Executive further agree that the Company
may condition the payments and benefits (if any) due under Sections 9(b)(iii),
(iv), (v), (vi) and (vii) on the receipt of the Executive's resignation from any
and all positions which he holds as an officer, director or committee member
with respect to the Company or any of its subsidiaries or
affiliates.
(c) If
the Executive’s employment with the Bank is terminated at the same time that his
employment with the Company is terminated pursuant to Section 9(a) hereof, and
if the termination benefits payable by the Bank to the Executive pursuant to
Section 4(b) or 5(c) of the Bank Employment Agreement are limited by the proviso
clause in Section 4(b) or 5(c) of the Bank Employment Agreement, then the
Company shall pay to the Executive the amount by which his termination benefits
under the Bank Employment Agreement are reduced by the proviso clause in Section
4(b) or 5(c) thereof or by Section 6 thereof, provided that the termination
benefits payable to the Executive under the Bank Employment Agreement are
reduced to their present value using discounting methods similar to those set
forth in Section 9(b) of this Agreement.
(d) In
the event that a Change in Control as defined in Section 11(a) hereof occurs on
or before the date of termination of the Executive’s employment, then the
Company's payments under Section 11(b) hereof shall be in lieu of and not in
addition to payments under Sections 9(b)(iii) through 9(b)(vii)
hereof.
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SECTION
10.
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TERMINATION
WITHOUT ADDITIONAL COMPANY
LIABILITY.
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(a) In
the event that the Executive's employment with the Company shall terminate
during the Employment Period on account of:
(i)
the discharge of the Executive for "cause," which, for purposes of this
Agreement, shall mean a discharge because the Company Board determines that the
Executive has: (A) willfully failed to perform his assigned duties under
this Agreement, other than any failure resulting from the Executive’s incapacity
due to physical or mental injury or illness; (B) committed an act involving
moral turpitude in the course of his employment with the Company and its
subsidiaries; (C) engaged in willful misconduct; (D) breached his fiduciary
duties for personal profit; (E) willfully violated, in any
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material
respect, any law, rule or regulation (other than traffic violations or similar
offenses), written agreement or final cease-and-desist order with respect to his
performance of services for the Company or the Bank, as determined by the
Company Board; or (F) materially breached the terms of this
Agreement;
(ii) the
Executive's voluntary resignation from employment (including voluntary
retirement) with the Company for reasons other than those specified in Section
9(a)(i); or
(iii)
the death of the Executive while employed by the Company, or the termination of
the Executive's employment because of "Disability" as defined in Section 10(c)
below;
then in
any of the foregoing events, the Company shall have no further obligations under
this Agreement, other than (A) the payment to the Executive of his earned but
unpaid Base Salary as of the date of the termination of his employment, (B) the
payment to the Executive of the benefits to which he is entitled under all
applicable employee benefit plans and programs and compensation plans and
programs, and (C) the provision of such other benefits, if any, to which he is
entitled as a former employee under the Company's employee benefit plans and
programs and compensation plans and programs.
(b) For
purposes of this Section 10, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Company Board or based upon the
written advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for "cause" within the meaning of Section
10(a)(i) unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of three-fourths of
the members of the Company Board at a meeting of such Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
such Board), finding that, in the good faith opinion of such Board, the
Executive is guilty of the conduct described in Section 10(a)(i) above, and
specifying the particulars thereof in detail.
(c) “Disability”
shall be deemed to have occurred if the Executive: (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Company and its subsidiaries. The existence of
such physical or mental impairment shall be determined by a physician selected
by the Chief Medical Officer at
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the
University of Nebraska Medical Center at Omaha, Nebraska, and the physician
shall certify the existence or absence of such impairment to the Company and the
Executive.
(d) During
any period in which the Executive is absent due to physical or mental
impairment, the Company may, without breaching this Agreement, appoint another
person or persons to act as interim President and interim Chief Operating
Officer pending the Executive’s return to his duties on a full-time basis
hereunder or his termination as a result of such Disability. Prior to
the Executive’s employment being terminated due to Disability under Section
10(e) hereof, the Executive shall continue to receive his full Base Salary,
bonuses and other benefits to which he is entitled under this Agreement,
including continued participation in all employee benefit plans and
programs.
(e) The
Company may provide notice to the Executive in writing that it intends to
terminate the Executive’s employment under this Agreement, with the termination
date to be on or after the date that the Executive has been absent from his
duties hereunder on a full-time basis for six consecutive months due to any
physical or mental impairment. At the time his employment hereunder
is terminated due to Disability, (i) the Executive shall not be entitled to any
payments or benefits pursuant to Sections 4 and 5 hereof for periods subsequent
to such date of termination, and (ii) the Executive shall become entitled to
receive the Disability payments that may be available under any applicable
long-term disability plan.
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SECTION
11.
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TERMINATION
UPON OR FOLLOWING A CHANGE IN
CONTROL.
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(a) The
term “Change in Control” shall mean a change in the ownership of the Company or
the Bank, a change in the effective control of the Company or the Bank or a
change in the ownership of a substantial portion of the assets of the Company or
the Bank, in each case as provided under Section 409A of the Code and the
regulations thereunder. In no event, however, shall a Change in
Control be deemed to have occurred as a result of any acquisition of securities
or assets of the Company, the Bank, or a subsidiary of either of them, by the
Company, the Bank, or any subsidiary of either of them, or by any employee
benefit plan maintained by any of them.
(b) Upon
the occurrence of a Change in Control prior to the expiration of the Employment
Period, the Company shall pay to the Executive a severance benefit in a lump sum
payment, within 25 days after the effective time of such Change in Control equal
to the greater of (i) the sum of the amounts payable as Base Salary pursuant to
Section 4 during the Remaining Employment Period and as additional cash
compensation pursuant to Section 9(b)(vii), (ii) three times the Executive’s
“base amount” from the Company and its subsidiaries as defined under Section
280G of the Code, minus $1.00, or (iii) the amounts payable pursuant to
Sections 9(b)(iii) through 9(b)(vii) hereof. Payments pursuant to
this Section 11(b) shall be in lieu of and not in addition to payments pursuant
to Sections 9(b)(iii) through 9(b)(vii), and vice versa.
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SECTION
12.
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TAX
INDEMNIFICATION.
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(a) If
the payments and benefits pursuant to this Agreement, either alone or together
with other payments and benefits which the Executive has the right to receive
from the
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Company
and its subsidiaries (including, without limitation, the payments and benefits
which the Executive would have the right to receive from the Bank pursuant to
Section 4(b) or 5(c) of the Bank Employment Agreement), would constitute a
“parachute payment” as defined in Section 280G(b)(2) of the Code (the “Initial
Parachute Payment”), then the Company shall pay to the Executive, within ten
(10) business days after the date of termination and subject to applicable
withholding requirements, a lump sum cash amount equal to the sum of the
following:
(i) twenty
(20) percent (or such other percentage equal to the tax rate imposed by Section
4999 of the Code) of the amount by which the Initial Parachute Payment exceeds
the Executive’s “base amount” from the Company and its subsidiaries, as defined
in Section 280G(b)(3) of the Code, with the difference between the Initial
Parachute Payment and the Executive’s base amount being hereinafter referred to
as the “Initial Excess Parachute Payment”; and
(ii) such
additional amount (tax allowance) as may be necessary to compensate the
Executive for the payment by the Executive of state, local and federal income
and excise taxes on the payment provided under clause (i) above and on any
payments under this clause (ii). In computing such tax allowance, the
payment to be made under clause (i) above shall be multiplied by the “gross up
percentage” (“GUP”). The GUP shall be determined as
follows:
Tax
Rate
GUP = 1- Tax
Rate
The Tax Rate for purposes of computing
the GUP shall be the highest marginal federal, state and local income and
employment-related tax rate (including Social Security and Medicare taxes),
including any applicable excise tax rate, applicable to the Executive in the
year in which the payment under clause (i) above is made, and shall also reflect
the phase-out of deductions and the ability to deduct certain of such
taxes.
(b) Notwithstanding
the foregoing, if it shall subsequently be determined in a final judicial
determination or a final administrative settlement to which the Executive is a
party that the actual excess parachute payment as defined in Section 280G(b)(1)
of the Code (before giving effect to the payments under Sections 12(a)(i) and
(ii) above) is different from the Initial Excess Parachute Payment (such
different amount being hereafter referred to as the “Determinative Excess
Parachute Payment”), then the Company’s independent tax counsel or accountants
shall determine the amount (the “Adjustment Amount”) which either the Executive
must pay to the Company or the Company must pay to the Executive in order to put
the Executive (or the Company, as the case may be) in the same position the
Executive (or the Company, as the case may be) would have been if the Initial
Excess Parachute Payment had been equal to the Determinative Excess Parachute
Payment. In determining the Adjustment Amount, the independent tax counsel or
accountants shall take into account any and all taxes (including any penalties
and interest) paid by or for the Executive or refunded to the Executive or for
the Executive’s benefit. As soon as practicable after the Adjustment
Amount has been so determined, and in no event more than thirty (30) days after
the Adjustment Amount has been so
11
determined,
the Company shall pay the Adjustment Amount to the Executive or the Executive
shall repay the Adjustment Amount to the Company, as the case may
be.
(c) In
each calendar year that the Executive receives payments of benefits that
constitute a parachute payment, the Executive shall report on his state, local
and federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the Company
as described above. The Company shall indemnify and hold the
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorneys’ fees, interest, fines and penalties)
which the Executive incurs as a result of so reporting such information, with
such indemnification to be paid by the Company to the Executive as soon as
practicable and in any event no later than March 15 of the year immediately
following the year in which the amount subject to indemnification was
determined. The Executive shall promptly notify the Company in writing whenever
the Executive receives notice of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Section 12 is being
reviewed or is in dispute. The Company shall assume control at its
expense over all legal and accounting matters pertaining to such federal tax
treatment (except to the extent necessary or appropriate for the Executive to
resolve any such proceeding with respect to any matter unrelated to amounts paid
or payable pursuant to this Section 12) and the Executive shall cooperate fully
with the Company in any such proceeding. The Executive shall not
enter into any compromise or settlement or otherwise prejudice any rights the
Company may have in connection therewith without the prior consent of the
Company.
|
SECTION
13.
|
SOURCE
OF PAYMENTS; NO DUPLICATION OF
PAYMENTS.
|
(a) All
payments provided in this Agreement shall be timely paid in cash or check from
the general funds of the Company subject to Section 13(b).
(b) Notwithstanding
any provision herein to the contrary, to the extent that payments and benefits,
as provided by this Agreement, are paid to or received by the Executive under
the Bank Employment Agreement, such compensation payments and benefits paid by
the Bank will be subtracted from any amount due simultaneously to the Executive
under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Bank Employment Agreement (other than severance and change in
control payments and benefits pursuant to Sections 9 and 11 hereof) shall be
allocated in proportion to the level of activity and the time expended on such
activities by the Executive as determined by the Company and the Bank on a
quarterly basis.
|
SECTION
14.
|
COVENANT
NOT TO COMPETE.
|
The Executive hereby covenants and
agrees that, in the event of his termination of employment with the Company for
any reason prior to the expiration of the Employment Period (other than a
termination of employment in connection with or within 12 months following a
Change in Control), for a period of two years following the date of his
termination of employment with the Company (or, if less, for the Remaining
Employment Period), he shall not, without the written consent of the Company,
become an officer, employee, consultant, director
12
or
trustee of any savings bank, savings and loan association, savings and loan
holding company, bank or bank holding company, or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within any
county in which the Company or the Bank maintains an office.
|
SECTION
15.
|
CONFIDENTIALITY.
|
Unless he obtains the prior written
consent of the Company, the Executive shall at all times keep confidential and
shall refrain from using for the benefit of himself, or any person or entity
other than the Company or any entity which is a subsidiary of the Company or of
which the Company is a subsidiary, any material document or information obtained
from the Company, or from its parent or subsidiaries, in the course of his
employment with any of them concerning their properties, operations or business
(unless such document or information is readily ascertainable from public or
published information or trade sources or has otherwise been made available to
the public through no fault of his own) until the same ceases to be material (or
becomes so ascertainable or available); provided, however, that
nothing in this Section 15 shall prevent the Executive, with or without the
Company's consent, from participating in or disclosing documents or information
in connection with any judicial or administrative investigation, inquiry or
proceeding or the Company’s public reporting requirements to the extent that
such participation or disclosure is required under applicable law.
|
SECTION
16.
|
SOLICITATION.
|
The Executive hereby covenants and
agrees that, for a period of two years following his termination of employment
with the Company for any reason (other than a termination of employment in
connection with or within 12 months following a Change in Control), he shall
not, without the written consent of the Company, either directly or
indirectly:
(a) solicit,
offer employment to, or take any other action intended, or that a reasonable
person acting in like circumstances would expect, to have the effect of causing
any officer or employee of the Company or any of its subsidiaries or affiliates
to terminate his employment and accept employment or become affiliated with, or
provide services for compensation in any capacity whatsoever to, any savings
bank, savings and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of accepting
deposits, making loans or doing business within the counties specified in
Section 14;
(b) provide
any information, advice or recommendation with respect to any such officer or
employee to any savings bank, savings and loan association, bank, bank holding
company, savings and loan holding company, or other institution engaged in the
business of accepting deposits, making loans or doing business within the
counties specified in Section 14, that is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of causing any
officer or employee of the Company or any of its subsidiaries or affiliates to
terminate his employment and accept employment or become affiliated with, or
provide services for compensation in any capacity whatsoever to, any savings
bank, savings and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the
13
business
of accepting deposits, making loans or doing business within the counties
specified in Section 14; or
(c) solicit,
provide any information, advice or recommendation or take any other action
intended, or that a reasonable person acting in like circumstances would expect,
to have the effect of causing any customer of the Company or the Bank to
terminate an existing business or commercial relationship with the Company or
the Bank.
|
SECTION
17.
|
NO
EFFECT ON EMPLOYEE BENEFIT PLANS OR
PROGRAMS.
|
The termination of the Executive's
employment during the Employment Period or thereafter, whether by the Company or
by the Executive, shall have no effect on the vested rights of the Executive
under the Company's or the Bank’s qualified or non-qualified retirement,
pension, savings, thrift, profit-sharing or stock bonus plans, group life,
health (including hospitalization, medical and major medical), dental, accident
and long term disability insurance plans, ESOP Supplemental Executive Retirement
Plan, 401(k) Supplemental Executive Retirement Plan or other employee benefit
plans or programs, or compensation plans or programs in which the Executive was
a participant.
|
SECTION
18.
|
SUCCESSORS
AND ASSIGNS.
|
(a) This
Agreement is personal to each of the parties hereto, and neither party may
assign or delegate any of its rights or obligations hereunder without first
obtaining the written consent of the other party; provided, however, that the
Company will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by an assumption agreement in form and
substance satisfactory to the Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession or assignment
had taken place. Failure of the Company to obtain such an assumption
agreement prior to the effectiveness of any such succession or assignment shall
be a breach of this Agreement and shall entitle the Executive to compensation
from the Company in the same amount and on the same terms as the compensation
pursuant to Section 9 or 11 hereof. For purposes of implementing the
provisions of this Section 18(a), the date which any such succession without an
assumption agreement becomes effective shall be deemed the date of termination
of the Executive’s employment.
(b) This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal and legal representatives,
executors, administrators, successors, heirs, distributees, devises and
legatees. If the Executive should die while any amounts would still
be payable to the Executive hereunder if the Executive had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive’s
beneficiary.
14
SECTION
19. NOTICES.
Any communication required or permitted
to be given under this Agreement, including any notice, direction, designation,
consent, instruction, objection or waiver, shall be in writing and shall be
deemed to have been given at such time as it is delivered personally, or five
days after mailing if mailed, postage prepaid, by registered or certified mail,
return receipt requested, addressed to such party at the address listed below or
at such other address as one such party may by written notice specify to the
other party:
If to the Executive:
Xxxxx X. Xxxxxx
At the address last
appearing
on the personnel records
of
the Company
If to the Company:
TierOne Corporation
0000 X Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
(or the address of the Company’s
principal executive office, if different)
Attention: Chairman of the
Board
with a copy, in the case of a notice to
the Company, to:
Elias, Matz, Xxxxxxx & Xxxxxxx
L.L.P.
000 00xx Xxxxxx,
X.X.
Xxxxxxxxxx,
X.X. 00000
Attention: Xxxxxxx X. Xxxxxxx,
Esq.
Xxxxxx
X. Xxxxxx, Xx., Esq.
|
SECTION
20.
|
INDEMNIFICATION
FOR ATTORNEYS' FEES.
|
(a) The Company shall indemnify, hold
harmless and defend the Executive against reasonable costs, including legal fees
and expenses, incurred by him in connection with or arising out of any action,
suit or proceeding in which he may be involved, as a result of his efforts, in
good faith, to defend or enforce the terms of this Agreement. For
purposes of this Agreement, any settlement agreement which provides for payment
of any amounts in settlement of the Company's obligations hereunder shall be
conclusive evidence of the Executive's entitlement to indemnification hereunder,
and any such indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement agreement
expressly provides otherwise.
(b) The Company's obligation to make
the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-
15
off,
counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. Unless it is
determined that a claim made by the Executive was either frivolous or made in
bad faith, the Company agrees to pay as incurred (and in any event no later than
March 15 of the year immediately following the year in which incurred), to the
full extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of or in connection with his consultation with
legal counsel or arising out of any action, suit, proceeding or contest
(regardless of the outcome thereof) by the Company, the Executive or others
regarding the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Code. This
Section 20(b) shall apply whether such consultation, action, suit, proceeding or
contest arises before, on, after or as a result of a Change in
Control.
|
SECTION
21.
|
SEVERABILITY.
|
A determination that any provision of
this Agreement is invalid or unenforceable shall not affect the validity or
enforceability of any other provision hereof.
|
SECTION
22.
|
WAIVER.
|
Failure to insist upon strict
compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition. A waiver of any
provision of this Agreement must be made in writing, designated as a waiver, and
signed by the party against whom its enforcement is sought. Any
waiver or relinquishment of any right or power hereunder at any one or more
times shall not be deemed a waiver or relinquishment of such right or power at
any other time or times.
|
SECTION
23.
|
COUNTERPARTS.
|
This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.
|
SECTION
24.
|
GOVERNING
LAW.
|
This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Nebraska applicable to contracts entered into and to be performed
entirely within the State of Nebraska, except to the extent that federal law
controls.
|
SECTION
25.
|
HEADINGS
AND CONSTRUCTION.
|
The headings of sections in this
Agreement are for convenience of reference only and are not intended to qualify
the meaning of any section. Any reference to a section number shall
refer to a section of this Agreement, unless otherwise stated.
16
SECTION
26. ENTIRE AGREEMENT;
MODIFICATIONS.
This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and supersedes
in its entirety any and all prior agreements, understandings or representations
relating to the subject matter hereof, except that the parties acknowledge that
this Agreement shall not impact any of the rights and obligations of
the parties to the Bank Employment Agreement or any of the agreements or plans
referenced in the Bank Employment Agreement except as set forth in Section 13
hereof. No modifications of this Agreement shall be valid unless made
in writing and signed by the parties hereto; provided, however, that if the
Company determines, after a review of the final regulations issued under Section
409A of the Code and all applicable IRS guidance, that this Agreement should be
further amended to avoid triggering the tax and interest penalties imposed by
Section 409A of the Code, the Company may amend this Agreement to the extent
necessary to avoid triggering the tax and interest penalties imposed by Section
409A of the Code.
|
SECTION
27.
|
REQUIRED
REGULATORY PROVISIONS.
|
Notwithstanding anything herein
contained to the contrary, any payments to the Executive by the Company, whether
pursuant to this Agreement or otherwise, are subject to and conditioned upon
their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12
U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R.
Part 359.
SECTION
28. DISPUTE
RESOLUTION.
(a) In
the event of any dispute, claim, question or disagreement arising out of or
relating to this Agreement or the breach hereof, the parties hereto shall use
their best efforts to settle such dispute, claim, question or
disagreement. To this effect, they shall consult and negotiate with
each other, in good faith, and, recognizing their mutual interests, attempt to
reach a just and equitable solution satisfactory to both parties.
(b) If
they do not reach such a solution within a period of thirty (30) days, then the
parties agree first to endeavor in good faith to amicably settle their dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association (the “AAA”), before resorting to arbitration.
(c) Thereafter,
any unresolved controversy or claim arising out of or relating to this Agreement
or the breach thereof, upon notice by any party to the other, shall be submitted
to and finally settled by arbitration in accordance with the Commercial
Arbitration Rules (the “Rules”) of the AAA in effect at the time demand for
arbitration is made by any such party. The parties shall mutually
agree upon a single arbitrator within thirty (30) days of such
demand. In the event that the parties are unable to so agree within
such thirty (30) day period, then within the following thirty (30) day period,
one arbitrator shall be named by each party. A third arbitrator shall
be named by the two arbitrators so chosen within ten (10) days after the
appointment of the first two arbitrators. In the event that the third
arbitrator is not agreed upon, he or she shall be named by the
AAA. Arbitration shall occur in Lincoln, Nebraska.
17
(d) The
award made by all or a majority of the panel of arbitrators shall be final and
binding, and judgment may be entered based upon such award in any court of law
having competent jurisdiction. The award is subject to confirmation,
modification, correction or vacation only as explicitly provided in Title 9 of
the United States Code. The prevailing party shall be entitled to
receive any award of pre- and post-award interest as well as attorney’s fees
incurred in connection with the arbitration and any judicial proceedings relate
thereto. The parties acknowledge that this Agreement evidences a
transaction involving interstate commerce. The United States
Arbitration Act and the Rules shall govern the interpretation, enforcement, and
proceedings pursuant to this Section. Any provisional remedy which
would be available from a court of law shall be available from the arbitrators
to the parties to this Agreement pending arbitration. Either party
may make an application to the arbitrators seeking injunctive relief to maintain
the status quo, or may seek from a court of competent jurisdiction any interim
or provisional relief that may be necessary to protect the rights and property
of that party, until such times as the arbitration award is rendered or the
controversy otherwise resolved.
IN WITNESS WHEREOF, the Company has
caused this Agreement to be executed and the Executive has hereunto set his
hand, all as of the day and year first written above.
THIS
CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.
/s/ Xxxxx X.
Xxxxxx
Xxxxx X. Xxxxxx,
Executive
ATTEST: TierOne CORPORATION
By
/s/ Xxxxxx X.
Xxxxxxxx By
/s/ Xxxxxxx X.
Xxxxxxxxx
|
Name:
Xxxxxx X. Xxxxxxxx
|
Name:
Xxxxxxx X. Xxxxxxxxx
|
|
Its:
Assistant Secretary
|
Its:
Chairman of the Board and Chief
Executive
|
|
|
Officer
|
[Seal]
18
