AJS BANCORP, INC. AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE AGREEMENT
Exhibit
10.1
AJS
BANCORP, INC.
AMENDED
AND RESTATED
WHEREAS,
Xxxxxx X. Xxxxxx (“Executive”) and AJS Bancorp, Inc. (the “Company”) entered
into this Supplemental Executive Agreement (“Supplemental Agreement”) to
supplement the Employment Agreement entered into between the Executive and
the
X. X. Xxxxx Federal Savings Bank (the “Bank”), the wholly-owned subsidiary of
the Company, on June 21, 2005, and
WHEREAS,
tax law provisions relating to “golden parachute payments” could have the effect
of reducing the benefits otherwise provided to Executive under the Employment
Agreement and/or other benefit plans or arrangements to which Executive is
a
party (the “Benefit Plans”) as a result of a change in control of the Company or
the Bank; and
WHEREAS,
the Board believes that this Supplemental Agreement is in the best interests
of
the Company and its shareholders and will provide the benefits intended to
be
provided to Executive in the event of a change in control of the Company or
the
Bank, without any reduction because of tax code “penalties” or excise taxes
relating to a change in control; and
WHEREAS,
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and
the final regulations promulgated thereunder provide that certain tax gross-up
payments may be considered nonqualified deferred compensation that must comply
with Code Section 409A; and
WHEREAS,
the Company and the Executive now desire to amend and restate this Supplemental
Agreement effective as of July 1, 2007, for the purpose of providing further
incentive to the Executive to achieve successful results in the management
and
operations of the Company and to conform the Supplemental Agreement to the
provisions of Code Section 409A.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. In
the event of a Change in Control (as defined in the Employment Agreement) of
the
Bank or the Company, the Executive shall be entitled to receive, pursuant to
this Supplemental Agreement, an amount, payable by the Company, in addition
to
any compensation or benefits payable by the Company pursuant to the Employment
Agreement and/or the Benefit Plans, which amount shall equal the difference,
if
any, between (i) the amount that would be paid under the Employment Agreement
and/or the Benefit Plans, and (ii) the amount that is actually paid under the
terms of the Employment Agreement and/or the Benefit Plans (assuming that such
Benefit Plans requires a cut-back to avoid an excess parachute payment (as
defined in Section 4999 of the Internal Revenue Code of 1986, as
amended). Any payments payable under this Section 1 shall be paid
at the time and in the same manner as such payments would be paid
under the Employment Agreement or applicable Benefit Plan, as if paid under
such
agreement or plan.
2. In
addition, in each calendar year that Executive is entitled to receive payments
or benefits under the provisions of the Employment Agreement and/or the Benefit
Plan and this Supplemental Agreement, the independent accountants of the Company
shall determine if an excess parachute payment (as defined in Section 4999
of
the Internal Revenue Code of 1986, as amended (the “Code”))
exists. Such determination shall be made after taking any reductions
permitted pursuant to Section 280G of the Code and the regulations
thereunder. Any amount determined to be an excess parachute payment
after taking into account such reductions shall be hereafter referred to as
the
“Initial Excess Parachute Payment.” As soon as practicable after a
Change in Control, the Initial Excess Parachute Payment shall be
determined. Such Initial Excess Parachute Payment shall be paid to
Executive or on his behalf to the applicable taxing authority, subject to
applicable withholding requirements under applicable state or federal law,
in an
amount equal to:
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(i)
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twenty
(20) percent of the Initial Excess Parachute Payment (or such other
amount
equal to the tax imposed under Section 4999 of the Code),
and
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(ii)
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such
additional amount (tax allowance) as may be necessary to compensate
Executive for the payment by Executive of state and federal income,
employment and excise taxes on the payment provided under Clause
(i) and
on any payments under this Clause (ii). In computing such tax
allowance, the payment to be made under Clause (i) shall be multiplied
by
the “gross up percentage” (“GUP”). The GUP shall be determined
as follows:
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GUP
=
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Tax
Rate
1-
Tax Rate
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The
Tax
Rate for purposes of computing the GUP shall be the highest marginal federal
and
state income and employment-related tax rate, including any applicable excise
tax rate, applicable to the Executive in the year in which the payment under
Clause (i) is made.
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(iii)
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Such
Initial Excess Parachute Payment and such tax allowance shall be
paid to
the applicable taxing authority for the benefit of the Executive
when due,
or if such Initial Excess Parachute Payment and/or tax allowance
are paid
by Executive, then to the Executive no later than the end of the
Executive’s taxable year next following the Executive’s taxable year in
which the related taxes are remitted to the required taxing
authority.
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3. Notwithstanding
the foregoing, if it shall subsequently be determined in a final judicial
determination or a final administrative settlement to which Executive is a
party
that the excess parachute payment as defined in Section 4999 of the Code,
reduced as described 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 accountants shall
determine the amount (the “Adjustment Amount”) 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 as 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
2
Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or
for
Executive or refunded to Executive or for Executive's benefit. As
soon as practicable after the Adjustment Amount has been so determined, but
no
later than two and one-half months after the end of the year in which the
Adjustment Amount has been so determined, the Company shall pay the Adjustment
Amount to Executive or the Executive shall repay the Adjustment Amount to the
Company, as the case may be. The purpose of this paragraph is to
assure that (i) the Executive is not paid more as reimbursement for the golden
parachute excise tax than it may ultimately be determined is necessary to make
him whole, and (ii) if it is subsequently determined that additional golden
parachute excise tax is owed by him, additional reimbursement payments will
be
made to him to make him whole for the additional excise tax.
4. In
each calendar year that Executive receives payments or benefits under the
Employment Agreement, Executive shall report on his state and federal income
tax
returns such information as is consistent with the determination made by the
independent accountants of the Company as described above. The
Company shall indemnify and hold Executive harmless from any and all losses,
costs and expenses (including without limitation, reasonable attorney's fees,
interest, fines and penalties) that Executive incurs as a result of so reporting
such information. 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 Supplemental Agreement 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 Executive to resolve any such proceeding with respect to
any
matter unrelated to amounts paid or payable pursuant to this
contract). 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 prior consent to the Company.
IN
WITNESS WHEREOF, AJS Bancorp, Inc. has caused this Amended and Restated
Supplemental Agreement to be executed by the duly authorized members of the
board of directors, and Executive has signed this Amended and Restated
Supplemental Agreement as of the 21st day of
August
2007.
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ATTEST:
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AJS
BANCORP, INC.
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/s/
Jo Xxxx Xxxx
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/s/
Xxx X. Xxxxxx
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WITNESS:
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EXECUTIVE
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/s/Xxxxx
X. Xxxxxx
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/s/
Xxxxxx X. Xxxxxx
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