EXHIBIT 10.1
CHANGE OF CONTROL SEVERANCE AGREEMENT
Xxxxx X. Xxxxxxx
President
United Savings Bank, F.A.
000 Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Dear Xxxxx:
United Savings Bank, F.A. (the "Company") recognizes the possibility of
a change in control of the Company, which can result in significant distractions
of its key executives and management because of uncertainties inherent in such a
situation. The Company also recognizes that your contribution to the growth and
success of the Company has been substantial and desires to assure the Company of
your continued employment despite such possibility.
The Board of Directors of the Company has determined that it is in the
best interest of the Company and its shareholders to take appropriate steps to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (this "Agreement") in the event your employment with the
Company is terminated subsequent to a "Change in Control" (as defined in Section
2 hereof) under the circumstances described below:
1. Term of Agreement. This Agreement will commence on the date hereof and
shall continue in effect until December 31, 1993; provided, however,
that commencing on January 1, 1994 and each January 1 thereafter, the
term of this Agreement shall automatically be extended for one
additional year unless not later than October 1 of the preceding year,
the Company shall have given notice that it does not wish to extend
this Agreement; provided, further, if a Change in Control (as defined
in Section 2 hereof) shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in
effect for a period of 24 months beyond the month in which such Change
in Control occurred.
2. Change in Control. No benefits shall be payable hereunder unless there
shall have been a Change in Control, as hereinafter defined. For
purposes of this Agreement, a "Change in Control" shall mean that an
acquiror has been deemed to have acquired control of the Company, or a
company or person shall be deemed to control the Company, as determined
in accordance with 12 C.F.R. ss. 574.4(a), as amended, promulgated
pursuant to 12 U.S.C. 1817(j) and 12 U.S.C. 1467a.
3. Termination Following a Change in Control. If a Change in Control shall
have occurred, you shall be entitled to the benefits provided in
Section 4(d) hereof upon any termination of your employment during the
term of this Agreement unless such termination is (i) because of your
death or Mandatory Retirement
(as defined below), (ii) by the Company for Cause (as defined below) or
Disability (as defined below) or (iii) by you other than for Good
Reason (as defined below).
(a) Disability; Mandatory Retirement. If, as a result of your
incapacity due to physical or mental illness, you shall have
been absent from your duties with the Company on a full-time
basis for 6 consecutive months, and within 30 days after
written notice of termination is given you shall not have
returned to the full-time performance of your duties, the
Company may, in accordance with Company policy as to
termination of employees on long-term disability, terminate
your employment for "Disability." Termination of your
employment based on "Mandatory Retirement" shall mean a
termination by the Company or you in accordance with any
mandatory Company retirement policy generally applicable to
its salaried employees or any retirement in accordance with
any retirement arrangement established with your consent with
respect to you.
(b) Cause. Termination by the Company of your employment for
'Cause" shall mean termination upon (i) the willful and
continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from
your disability or from termination by you for Good Reason),
after a demand for substantial performance is delivered to you
that specifically identifies the manner in which the Company
believes that you have not substantially performed your
duties, and you have failed to resume substantial performance
of your duties on a continuous basis within 14 days of
receiving such demand, (ii) the willful engaging by you in
conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise or (iii) your conviction of a
felony which impairs your ability substantially to perform
your duties with the Company. For purposes of this Subsection
3(b), no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in
good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Failure to
perform your duties with the Company during any period of
disability shall not constitute Cause. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to you
a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the
Board at a meeting of the Board (after reasonable notice to
you and the opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set forth
above in clauses (i), (ii) or (iii) of the first sentence of
this Subsection 3(b) and specifying the particulars thereof in
detail.
(c) Good Reason. You shall be entitled to terminate your
employment for Good Reason, as hereinafter defined.
Termination by you of your employment for "Good Reason" shall
mean termination by you upon the occurrence, without your
express written consent, within 24 months following a Change
in Control of any one or more of the following:
(i) the assignment to you of any duties inconsistent
in any respect with your position (including status,
offices, titles, and reporting requirements),
authorities, duties, or other responsibilities as in
effect immediately prior to the Change in
Control or any other action of the Company which
results in a diminishment in such position,
authority, duties, or responsibilities, other than an
insubstantial and inadvertent action which is
remedied by the Company promptly after receipt of
notice thereof given by you;
(ii) a reduction by the Company in your base salary
as in effect on the date hereof or as the same shall
be increased from time to time;
(iii) the Company's requiring you to be based at a
location in excess of 30 miles from the location of
your principal office immediately prior to the Change
in Control;
(iv) the failure by the Company to (a) continue in
effect any material compensation or benefit plan,
program, policy or practice in which you were
participating at the time of the Change in Control or
(b) provide you with compensation and benefits at
least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each
employee benefit plan, program, policy and practice
as in effect immediately prior to the Change in
Control;
(v) the failure of the Company to obtain a
satisfactory agreement from any successor to the
Company to assume and agree to perform this
Agreement, as contemplated in Section 7 hereof; and
(vi) any purported termination by the Company of your
employment that is not effected pursuant to a Notice
of Termination (as defined below) satisfying the
requirements of Subsection 3(d) below (and, if
applicable, Subsection 3(b) above); and for purposes
of this Agreement, no such purported termination
shall be effective.
Your right to terminate your employment pursuant to this
Subsection 3(c) shall not be affected by your incapacity due
to physical or mental illness. Your continued employment shall
not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.
(d) Notice of Termination. Any purported termination of your
employment by the Company or by you for Good Reason within 24
months following the month in which a Change in Control
occurs, shall be communicated by Notice of Termination to the
other party hereto in accordance with Section 8 hereof. No
purported termination of your employment by the Company shall
be effective if it is not pursuant to a Notice of Termination.
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 the
Date of Termination (as defined below) and shall set forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated.
(e) Date of Termination. 'Date of Termination" shall mean the
date specified in the Notice of Termination where required or
in any other
case upon ceasing to perform services to the Company; provided
that if within thirty (30) days after any Notice of
Termination one party notifies the other party that a dispute
exists concerning the termination, the Date of Termination
shall be the date finally determined to be the Date of
Termination, either by mutual written agreement of the
parties, by a binding and final arbitration award or judgment
of a court of competent jurisdiction.
4. Compensation Upon Termination. Following a Change in Control, upon
termination of your employment during the term of this Agreement you
shall be entitled to the following benefits:
(a) During any period that you fail to perform your full-time
duties with the Company as a result of incapacity due to
physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any
such period, until your employment is terminated pursuant to
Subsection 3(a) hereof. Thereafter, your benefits shall be
determined in accordance with the Company's long-term
disability, retirement, insurance, and other applicable
programs and plans then in effect.
(b) If your employment shall be terminated by the Company for
Cause, or by you other than for Good Reason, the Company shall
pay you your full base salary through the Date of Termination
at the rate in effect at the time Notice of Termination is
given or on the Date of Termination if no Notice of
Termination is required hereunder, plus all other amounts to
which you are entitled under any compensation plan of the
Company at the time such payments are due, and the Company
shall have no further obligations to you under this Agreement.
(c) If your employment terminates by reason of your Mandatory
Retirement, or by reason of your death, your benefits shall be
determined in accordance with the Company's retirement,
survivor's benefits, insurance, and other applicable programs
and plans then in effect.
(d) If your employment by the Company shall be terminated (i)
by the Company for any reason other than Cause, Mandatory
Retirement or Disability, or (ii) by you for Good Reason, you
shall be entitled to the benefits, to be funded from the
general assets of the Company, provided below:
(A) the Company shall pay you your full base salary
through the Date of Termination at the rate in effect
immediately prior to the occurrence of the
circumstances giving rise to the Notice of
Termination given in respect thereof;
(B) the Company will pay as severance benefits to
you, not later than 30 days following the Date of
Termination, a lump sum severance payment equal to
two times the sum of (i) your annual base salary in
effect immediately prior to the occurrence of the
circumstances giving rise to the Notice of
Termination given in respect thereof, and (ii) annual
target bonus potential available to you at the time
Notice of Termination is given or immediately prior
to the date of the Change in Control, whichever is
greater
(or if there is no such target bonus, the bonus
earned in the last fiscal year prior to the Change in
Control);
(C) for a 24-month period after the Date of
Termination, the Company will arrange to provide you
with welfare benefits (including life and health
insurance benefits), perquisites and other employee
benefits of substantially similar design and cost (to
you) as the welfare benefits, perquisites and other
employee benefits available to you immediately prior
to the Notice of Termination; but benefits otherwise
receivable by you pursuant to this Subsection 4(d)(C)
shall be reduced to the extent comparable benefits
are actually received by you during the 24month
period following the Date of Termination, and any
such benefits actually received by you shall be
reported to the Company; and
(D) the full amount of any long-term incentive award
for any plan periods then in progress to the extent
not provided for in such plan or plans.
(e) The payments provided for in Subsection 4(d) above shall
be made not later than 30 days following the Date of
Termination; provided, however, that if the amounts of such
payments cannot be finally determined on or before such day,
the Company shall pay to you on such day an estimate as
determined in good faith by the Company of the minimum amount
of such payments and shall pay the remainder of such payments
(together with interest from the date of such estimated
payment at the rate provided in Section 1274(b)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code")) as
soon as the amount thereof can be determined- but in no event
later than 45 days after the Date of Termination.
In the event that the amount of the estimated payment exceeds
the amount subsequently determined to have been due, such
excess shall constitute a loan by the Company to you payable
no later than 30 days after demand by the Company (together
with interest from the date of such estimated payment at the
rate provided in Section 1274(b)(2)(B) of the Code).
(f) The Company shall also pay to you any reasonable legal
fees and expenses incurred by you as a result of successful
litigation against the Company for nonpayment of any benefit
claimed under this Agreement. If you utilize arbitration to
resolve any such dispute, the Company will pay any reasonable
legal fees and expenses incurred by you in connection
therewith.
(g) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Section 4 be reduced by any compensation
earned by you as the result of employment by another employer
after the Date of Termination, or otherwise, except as set
forth in Subsection 4(d)(C) hereof.
(i) In addition to all other amounts payable to you under this
Section 4 you shall be entitled to receive all benefits
payable or distributable to you under any Company pension
plan, and any other plan or agreement
relating to retirement benefits, as well as all amounts for
unused vacation in accordance with standard Company policy.
(j) It is intended that base salary, amounts calculated with
reference to base salary and incentive awards are to be based
on such salary and objectives established in good faith and,
as a principle, kept current as of the Date of Termination,
without reduction by the Company prior to such Date of
Termination for the primary purpose of reducing the benefit to
you under this Agreement.
5. 28OG Limitation. The amount of any cash payment to be received by you
pursuant to Section 4 of this Agreement shall be reduced (but not below
zero) by the amount, if any, necessary to prevent any part of any
payment or benefit received or to be received by you in connection with
a Change in Control or the termination of your employment (whether
payable pursuant to the terms of this Agreement or any other plan,
contract, agreement or arrangement with the Company, with any person
whose actions result in a Change in Control of the Company or with any
person constituting a member of an ",'affiliated group" (as defined in
section 28OG(d)(5) of the Code)), with the Company or with any person
whose actions result in a Change in Control of the Company (such
foregoing payments or benefits referred to collectively as the "Total
Payments") from being treated as an "excess parachute payment" within
the meaning of section 28OG(b)(1) of the Code, but only if and to the
extent such reduction will also result in, after taking into account
all applicable state or federal taxes (computed at the highest marginal
rate) including any taxes payable pursuant to section 4999 of the Code,
a greater after-tax benefit to you than the after-tax benefit to you of
the Total Payments computed without regard to any such reduction. For
purposes of the foregoing, (a) no portion of the Total Payments shall
be taken into account which in the opinion of tax counsel selected by
the Company and acceptable to you does not constitute a "parachute
payment" within the meaning of section 28OG(b)(2) of the Code; (b) any
reduction in payments pursuant to the Agreement shall be computed by
taking into account that portion of Total Payments which constitute
reasonable compensation within the meaning of section 28OG(b)(4)(B) of
the Code in the opinion of such tax counsel; (c) the value of any
non-cash benefit or of any deferred cash payment included in the Total
Payments shall be determined by the Company in accordance with the
principles of section 28OG(d)(3)(iv) of the Code; and (d) in the event
of any uncertainty as to whether a reduction in Total Payments to you
is required pursuant to the Agreement, the Company shall initially make
the payment to you and you hereby agree to refund to the Company any
amounts ultimately determined not to have been payable under the terms
hereof.
6. Nonexclusivity of Rights. Nothing in this Agreement shall prevent or
limit your continuing or future participation in any benefit, bonus,
incentive, retirement or other plan or program provided by the Company
and for which you may qualify, nor shall anything herein limit or
reduce such rights as you may have under any other agreement with, or
plan, program, policy or practice of, the Company. Amounts which are
vested benefits or which you are otherwise entitled to receive under
any agreement with, or plan, program, policy or practice of, the
Company (including, without limitation, the cash-out of unused vacation
days upon termination of employment) shall be payable in accordance
with such agreement, plan, program, policy or practice, except as
explicitly modified by this Agreement.
7. Successors.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to
all or substantially all of the business and/or assets of the
Company or of any division or subsidiary thereof employing you
to expressly assume and agree to perform this Agreement.
Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as
you would be entitled hereunder if you terminated your
employment for Good Reason following a Change in Control,
except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be
deemed the Date of Termination and Notice of Termination shall
be deemed to have been given on such date.
(b) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees, and legatees. If you should die while any amount
would still be payable to you hereunder if you had continued
to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement,
to your devisee, legatee or other designee or, if there is no
such designee, to your estate or, if no estate, in accordance
with applicable law.
8. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, postage prepaid, addressed to the other
party as follows:
If to the Company, to:
United Savings Bank, F.A.
Attention: Chairman Board of Directors
000 Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
If to you, to:
Xxxxx X. Xxxxxxx
0000 0xx Xxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Either party to this Agreement may change its address for purposes of
this Section 8 by giving 15 days' prior notice to the other party
hereto.
9. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by you and such officer as -may be
specifically designated by the Board. The validity, interpretation,
construction, and performance of this Agreement shall be governed by
the laws of the State of Montana.
10. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Arbitration. Upon the election of either party, any dispute or
controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration 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 you shall be entitled to seek specific
performance of your 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. In the event neither party elects
arbitration, the parties may pursue any and all legal remedies
available.
13. Effective Date. This Agreement shall become effective as of the date
set forth above.
14. Employment. This Agreement does not constitute a contract of employment
or impose on the Company any obligation to retain you as an employee,
to continue your current employment status or to change any employment
policies of the Company.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
UNITED SAVINGS BANK, F.A.
By /s/Xxxx X. Mart
------------------
Xxxx X. Mart
Senior Vice President - Lending
Agreed to the 30th day
Of September, 1993
By /s/ Xxxxx X. Xxxxxxx
-----------------------
Xxxxx X. Xxxxxxx
President
