Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this ___ day of _______ 1998, between CFS
Bancorp, Inc. (the "Corporation"), Citizens Financial Services, FSB, a federally
chartered stock savings bank and a wholly owned subsidiary of the Corporation
(the "Bank"), and ______________ (the "Executive").
WITNESSETH
WHEREAS, in connection with the acquisition of SuburbFed Financial
Corp. and Suburb Federal Savings Bank, A Federal Savings Bank (the "Former
Employers") by the Corporation and the Bank, the Executive will become an
officer of the Corporation and the Bank (together the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to serve in the employ of the
Employers, and in consideration of the Executive's agreeing to serve in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall mean the Executive's annual salary
exclusive of any pension or other retirement plan, profit sharing plan, stock
option plan, employee stock ownership plan, or other plans, benefits and
privileges given to employees and executives of the Employers.
(b) Cause. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.
For
purposes of this paragraph, no act or failure to act on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive's
action or omission was in the best interest of the Employers.
(c) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A or
Item 1 of Form 8-K promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), or any successor thereto, whether or not the
Corporation is registered under Exchange Act; provided that, without limitation,
such a change in control shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing 25%
or more of the combined voting power of the Corporation's then outstanding
securities; or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at least a majority thereof
unless the election, or the nomination for election by stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination. "Date of Termination" shall mean the date the
Executive's employment is terminated for any reason, as specified in the Notice
of Termination.
(f) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following a
Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the offices of Vice
Chairman of the Board and Senior Executive Vice
President of the Employers or a material adverse
change made by the Employers in the Executive's
functions, duties or responsibilities as Vice
Chairman of the Board and Senior Executive Vice
President of the Employers;
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(ii) Without the Executive's express written consent, a
material reduction by the Employers in the
Executive's Base Salary as the same may be increased
from time to time or, except to the extent permitted
by Section 3(b) hereof, a material reduction in the
package of fringe benefits provided to the Executive,
taken as a whole;
(iii) Without the Executive's express written consent, the
Employers require the Executive to work in an office
which is more than 50 miles from the location of the
Employers' current principal executive office, except
for required travel on business of the Employers to
an extent substantially consistent with the
Executive's present business travel obligations;
(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which
is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (i) below;
or
(v) The failure by the Employers to obtain the assumption
of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(h) IRS. IRS shall mean the Internal Revenue Service.
(i) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of the Employers' termination of the Executive's employment for
Cause, which shall be effective immediately; and (iv) is given in the manner
specified in Section 10 hereof.
(j) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to the Employers' salaried employees.
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2. Term of Employment.
(a) Each of the Employers hereby employ the Executive as Vice Chairman
of the Board and Senior Executive Vice President, and the Executive hereby
accepts said employment and agrees to render such services to the Employers on
the terms and conditions set forth in this Agreement. The term of this Agreement
shall be a period of one year commencing on _________ ___, 1998 (the
"Commencement Date"), subject to earlier termination as provided herein.
Beginning on the day following the Commencement Date, and on each day
thereafter, the term of this Agreement shall be extended for a period of one day
in addition to the then-remaining term, provided that the Employers have not
given notice to the Executive in writing at least 60 days prior to such day that
the term of this Agreement shall not be extended further. Reference herein to
the term of this Agreement shall refer to both such initial term and such
extended terms. The Boards of Directors of the Employers shall review on a
periodic basis (and no less frequently than annually) whether to permit further
extensions of the term of this Agreement. As part of such review, the Boards of
Directors shall consider all relevant factors, including the Executive's
performance hereunder, and shall either expressly approve further extensions of
the time of this Agreement or decide to provide notice to the contrary.
Effective upon the Commencement Date, any and all prior agreements with the
Former Employers shall terminate, with no obligations to the Executive
thereunder on the part of the Employers.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as is consistent with his titles of Vice
Chairman of the Board and Senior Executive Vice President. Such duties shall
include managing or assisting in the management of the Bank's loan operations
and secondary market operations, serving on the Bank's loan committee, and
assisting in stockholder relations.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum Base Salary of $______ per year,
which may be increased from time to time in such amounts as may be determined by
the Boards of Directors of the Employers. In addition to his Base Salary, the
Executive shall be entitled to receive during the term of this Agreement such
bonus payments as may be determined by the Boards of Directors of the Employers.
During the first year of the term of this Agreement, the sum of the Executive's
Base Salary and bonus shall aggregate $_______.
(b) During the term of this Agreement, the Executive shall be entitled
to participate in and receive the benefits of any tax-qualified pension benefit
plan (including any employee stock ownership plan), and health and welfare plans
provided to employees and executives of the Employers.
(c) During the term of this Agreement, the Executive shall be entitled
to five weeks paid annual vacation in accordance with the policies as
established from time to time
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by the Boards of Directors of the Employers. The Executive shall not be entitled
to receive any additional compensation from the Employers for failure to take a
vacation, nor shall the Executive be able to accumulate unused vacation time
from one year to the next, except to the extent authorized by the Boards of
Directors of the Employers.
[(d) During the term of this Agreement, the Employers will pay the
Executive's annual membership dues at the _______ Country Club.]
(e) During the term of this Agreement, the Executive will be entitled
to participate in the supplemental executive retirement plan of the Employers
established in connection with the Corporation's employee stock ownership plan.
4. Expenses. The Employers shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of or in connection with the business of the Employers, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses, subject to such reasonable documentation and
other limitations as may be established by the Boards of Directors of the
Employers. If such expenses are paid in the first instance by the Executive, the
Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon 60 days' prior Notice
of Termination, to terminate his employment hereunder for any reason.
(b) In the event that the (i) the Executive's employment is terminated
by the Employers for Cause, Disability or Retirement or in the event of the
Executive's death, or (ii) the Executive terminates his employment hereunder
other than for Good Reason, the Executive shall have no right pursuant to this
Agreement to compensation or other benefits for any period after the applicable
Date of Termination.
(c) In the event that (i) the Executive's employment is terminated by
the Employers for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Employers, which breach has not been
cured within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Employers, or (b) for Good Reason, then the
Employers shall, subject to the provisions of Section 6 hereof, if applicable,
(A) Pay to the Executive the Executive's Base Salary at the rate in
effect immediately prior to the Date of Termination for the remaining term of
this Agreement,
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payable in such manner and at such times as such salary would have been payable
to the Executive if the Executive had continued to be employed, and
(B) Maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time employment
by another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and accident,
disability and other employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination (other than stock option plans and other stock benefit plans of the
Employers), provided that in the event that the Executive's participation in any
plan, program or arrangement as provided in this subparagraph (B) is barred or
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Employers shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination.
6. Limitation of Benefits under Certain Circumstances. If the payments
and benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits pursuant to Section 5 hereof shall be reduced,
in the manner determined by the Executive, by the amount, if any, which is the
minimum necessary to result in no portion of the payments and benefits under
Section 5 being non-deductible to either of the Employers pursuant to Section
280G of the Code and subject to the excise tax imposed under Section 4999 of the
Code. The determination of any reduction in the payments and benefits to be made
pursuant to Section 5 shall be based upon the opinion of independent tax counsel
selected by the Employers and paid by the Employers. Such counsel shall promptly
prepare the foregoing opinion, but in no event later than thirty (30) days from
the Date of Termination, and may use such actuaries as such counsel deems
necessary or advisable for the purpose. Nothing contained herein shall result in
a reduction of any payments or benefits to which the Executive may be entitled
upon termination of employment under any circumstances other than as specified
in this Section 6, or a reduction in the payments and benefits specified in
Section 5 below zero.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise (except as provided in Section 5(c)(B) hereof).
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(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
8. Withholding. All payments required to be made by the Employers
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employers may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
9. Assignability. The Employers may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
their assets, if in any such case said corporation, bank or other entity shall
by operation of law or expressly in writing assume all obligations of the
Employers hereunder as fully as if it had been originally made a party hereto,
but may not otherwise assign this Agreement or their rights and obligations
hereunder. The Executive may not assign or transfer this Agreement or any rights
or obligations hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: Boards of Directors
Citizens Financial Services, FSB
CFS Bancorp, Inc.
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
To the Executive: [Name]
[Home Address]
11. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Employers to sign on
their behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of Indiana.
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13. Nature of Obligations. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employers hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employers.
14. Interpretation and Headings. This agreement shall be interpreted in
order to achieve the purposes for which it was entered into. The section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Actions. The following provisions shall be applicable to
the parties to the extent that they are required to be included in employment
agreements between a savings association and its employees pursuant to Section
563.39(b) of the Regulations Applicable to all Savings Associations, 12 C.F.R.
Section 563.39(b), or any successor thereto, and shall be controlling in the
event of a conflict with any other provision of this Agreement, including
without limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employers' affairs pursuant
to notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act ("FDIA") (12 U.S.C. Sections 1818(e)(3) and 1818(g)(1)), the
Employers' obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Employers may, in their discretion: (i) pay the Executive all
or part of the compensation withheld while its obligations under this Agreement
were suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
(b) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Employers' affairs by an
order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
Sections 1818(e)(4) and (g)(1)), all obligations of the Employers under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive and the Employers as of the date of termination shall
not be affected.
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(c) If the Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. Section 1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Employers as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated pursuant
to 12 C.F.R. Section 563.39(b)(5) (except to the extent that it is determined
that continuation of the Agreement for the continued operation of the Employers
is necessary): (i) by the Director of the Office of Thrift Supervision ("OTS"),
or his/her designee, at the time the Federal Deposit Insurance Corporation
("FDIC") 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 (12 U.S.C.
Section 1823(c)); or (ii) by the Director of the OTS, or his/her designee, at
the time the Director or his/her 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, but vested
rights of the Executive and the Employers as of the date of termination shall
not be affected.
18. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. Section 1828(k)) and the regulations
promulgated thereunder.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: CFS BANCORP, INC.
By:
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Attest: CITIZENS FINANCIAL SERVICES, FSB
By:
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EXECUTIVE
By:
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