AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT
("Agreement") entered into on September 16, 2008 ("Effective Date"), by and
between CHEVIOT SAVINGS BANK ("Bank") and XXXXXXX XXXXXX ("Employee").
WHEREAS, Bank and Employee entered into a change in control severance
agreement dated on the 5th day of January, 2004 (the "Prior Agreement"); and
WHEREAS, Section 409A of the Internal Revenue Code (the "Code"), effective
January 1, 2005, requires deferred compensation arrangements, including those
set forth in change in control severance agreements, to comply with its
provisions and restrictions and limitations on payments of deferred
compensation; and
WHEREAS, the Bank desires to amend and restate the Prior Agreement in order
to make changes to comply with Section 409A of the Code; and
WHEREAS, Employee has agreed to such changes.
NOW THEREFORE, it is agreed as follows:
1. Employment. Employee is employed in the capacity as the Vice President of
Operations of the Bank. Employee will render such administrative and
management services to Bank and Cheviot Financial Corp. ("Parent") as are
currently rendered and as are customarily performed by persons situated in
a similar executive capacity. Employee will promote to the extent permitted
by law the business of Bank and Parent Employee's other duties will be such
as the Board of Directors for Bank (the "Board of Directors" or "Board")
may from time to time reasonably direct, including normal duties as an
officer of Bank.
2. Terms of Agreement. The term of this Agreement will be for the period
commencing on the Effective Date and ending thirty-six (36) months
thereafter, provided that all changes intended to comply with Section 409A
of the Code shall be retroactively effective to January 1, 2005. On or
before, each annual anniversary date from the Effective Date, the term of
this Agreement will be extended for an additional one-year period beyond
the then effective expiration date upon a determination and resolution of
the Board of Directors that the performance of Employee has met the
requirements and standards of the Board, and that the term of such
Agreement will be extended.
3. Termination of Employment in Connection with or Subsequent to a Change in
Control.
3.1 Involuntary Termination. Notwithstanding any provision herein to the
contrary, in the event of the involuntary termination of Employee's
employment under this Agreement, absent Cause, in connection with, or
within twelve (12) months after, a Change in Control, Employee will be
paid an amount equal to two times the prior calendar year's cash
compensation paid to Employee by Bank (whether said amounts were
received or deferred by Employee). Said sum will be paid in a single
cash lump sum distribution within thirty (30) days of such termination
of employment, and such payments will be in lieu of any other future
payments which Employee would be otherwise entitled to receive.
Notwithstanding the foregoing, all sums payable hereunder will be
reduced in such manner and to such extent so that no such payments
made hereunder when aggregated with all other payments to be made to
Employee by Bank or the Parent will be deemed an "excess parachute
payment" in accordance with Code Section 280G and be subject to the
excise tax provided under Code Section 4999. In the event that a
reduction of payment is necessary, the cash severance payable pursuant
to Section 3 hereof shall be reduced by the minimum amount necessary
to result in no portion of the payments and benefits payable by the
Bank under Section 3 being non-deductible to the Bank pursuant to
Section 280G of the Code and subject to excise tax imposed under
Section 4999 of the Code.
"Change in Control" will refer to the ownership, holding or power to
vote more than 25% of the Parent's or Bank's voting stock, the control
of the election of a majority of the Parent's or Bank's directors, or
the exercise of a controlling influence over the management or
policies of the Parent or Bank by any person or by persons acting as a
group within the meaning of Section 13(d) of the Securities Exchange
Act of 1934. The term "person" means an individual other than
Employee, or a corporation, partnership, trust, Bank, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein.
3.2 Termination for Good Reason.
(a) Notwithstanding any other provision of this Agreement to the contrary,
in the event of the Employee's termination of employment for Good
Reason within twelve (12) months following a Change in Control, the
Employee will be entitled to receive the payments described in Section
3.1 of this Agreement, within thirty (30) days following such
termination of employment.
(b) Termination for "Good Reason" shall mean termination by the Employee
following a Change in Control based on the following:
(i) (1) a material diminution in the Employee's base compensation
as in effect immediately prior to the date of the Change in Control or
as the same may be increased from time to time thereafter, (2) a
material diminution in the Employee's authority, duties or
responsibilities as in effect immediately prior to the Change in
Control, or (3) a material diminution in the authority, duties or
responsibilities of the officer (as in effect immediately prior to the
date of the Change in Control) to whom the Employee is required to
report,
(ii) any material breach of this Agreement by the Bank, or
2
(iii) any material change in the geographic location at which the
Employee must perform his services for the Bank;
provided, however, that prior to any termination of employment for
Good Reason, the Employee must first provide written notice to the
Bank within ninety (90) days of the initial existence of the
condition, describing the existence of such condition, and the Bank
shall thereafter have the right to remedy the condition within thirty
(30) days of the date the Bank received the written notice from the
Employee. If the Bank 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 Bank does not remedy the condition
within such thirty (30) day cure period, then the Employee may deliver
a notice of Termination for Good Reason at any time within sixty (60)
days following the expiration of such cure period.
3.3 Arbitration. Any controversy or claim arising out of, or relating to,
this Agreement, or the breach thereof, will be settled by arbitration
in accordance with the rules then in effect of the district office of
the American Arbitration Bank ("AAA") nearest to the home office of
Bank, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may
otherwise reach a mutual settlement of such issue. Bank will incur the
cost of all fees and expenses associated with filing a request for
arbitration with the AAA, whether such filing is made on behalf of
Bank or Employee, and the costs and administrative fees associated
with employing the arbitrator and related administrative expenses
assessed by the AAA. Bank will reimburse Employee for all costs and
expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, notwithstanding the ultimate outcome
thereof, following the delivery of the decision of the arbitrator
finding in favor of Employee or settlement of the matter; provided
that if such finding of the Arbitrator is not in favor of Employee,
then such Employee will reimburse Bank for the initial filing fee paid
by Bank to the AAA. Such settlement to be approved by the Board of
Bank or the Parent may include a provision for the reimbursement by
Bank or Parent to Employee for all costs and expenses, including
reasonable attorneys' fees, arising from such dispute, proceedings or
actions, or the Board of Bank or the Parent may authorize such
reimbursement of such costs and expenses by separate action upon a
written action and determination of the Board. Such reimbursement will
be paid within ten (10) days of Employee furnishing to Bank or Parent
evidence, which may be in the form, among other things, of a canceled
check or receipt, of any costs or expenses incurred by Employee.
3.4 Separation from Service. Notwithstanding the foregoing, termination of
employment under this Section 3 shall be construed to require a
"Separation from Service" in accordance with Code Section 409A and the
Treasury Regulations promulgated thereunder, such that the Bank and
Employee reasonably anticipate that the level of bona fide services
Employee would perform after termination would permanently decrease to
3
a level that is less than 50% of the average level of bona fide
services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period.
4. Other Changes in Employment Status.
4.1 Notwithstanding the provisions of Section 3 herein, the Board of
Directors may terminate Employee's employment at any time, but any
termination by the Board of Directors other than termination for
Cause, will not prejudice Employee's right to compensation or other
benefits under the Agreement. Employee will have no right to receive
compensation or other benefits for any period after termination for
Cause. Termination for "Cause" will include termination because of
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of
the Agreement.
4.2 If Employee is removed and/or permanently prohibited from
participating in the conduct of Bank's affairs by an order issued
under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act
("FDIA") (12 U.S.C. 1818(e)(4) and (g)(l)), all obligations of Bank
under this Agreement will terminate, as of the effective date of the
order, but the vested rights of the parties will not be affected.
4.3 If this Bank is in default (as defined in Section 3(x)(1) of FDIA),
all obligations under this Agreement will terminate as of the date of
default, but this Section will not affect any vested rights of the
contracting parties.
4.4 All obligations under this Agreement will be terminated, except to the
extent determined that continuation of this Agreement is necessary for
the continued operation of Bank: (i) by the Director of the Office of
Thrift Supervision (`Director of OTS") or his or her designee, at the
time that the Federal Deposit Insurance Corporation ("FDIC") enters
into an agreement to provide assistance to or on behalf of Bank under
the authority continued in Section 13(c) of FDIA; or (ii) by the
Director of the OTS, or his or her designee, at the time that the
Director of the OTS, or his or her designee approves a supervisory
merger to resolve problems related to operation of Bank or when Bank
is determined by the Director of the OTS to be in an unsafe or unsound
condition. Any rights of the parties that have already vested,
however, will not be affected by such action.
4.5 Notwithstanding anything herein to the contrary, any payments made to
Employee pursuant to the Agreement, or otherwise, will be subject to
and conditioned upon compliance with 12 U.S.C. ss.1828(k) and any
regulations promulgated thereunder.
5. Suspension of Employment. If Employee is suspended and/or temporarily
prohibited from participating in the conduct of Bank's affairs by a notice
served under Section 8(e(3) or (g)(1) of the FDIA (12 U.S.C. 1818 (e)(3)
4
and (g(l)), Bank's obligations under the Agreement shall be suspended as of
the date of service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, Bank may in its discretion, (i) pay
Employee all or part of the compensation withheld while its contract
obligations were suspended, and (ii) reinstate (in whole or in part) any of
its obligations which were suspended.
6. Successors and Assigns.
6.1 This Agreement will inure to the benefit of and be binding upon any
corporate or other successor of Bank which will acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of Bank.
6.2 Employee will be precluded from assigning or delegating his rights or
duties hereunder without first obtaining the written consent of Bank.
7. Amendments. No amendments or additions to this Agreement will be binding
upon the parties hereto unless made in writing and signed by both parties,
except as herein otherwise specifically provided.
8. Applicable Law. This Agreement will be governed by all respects whether as
to validity, construction, capacity, performance or otherwise, by the laws
of the State of Ohio, except to the extent that Federal law will be deemed
to apply.
9. Severability. The provisions of this Agreement will be deemed severable and
the invalidity or enforceability of any provision will not affect the
validity or enforceability of the other provisions hereof.
10. Entire Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, will
constitute the entire agreement between the parties hereto.
CHEVIOT SAVINGS BANK
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx
President and CEO
EMPLOYEE
/s/ Xxxxxxx Xxxxxx
---------------------------
Xxxxxxx Xxxxxx
