EMPLOYMENT AGREEMENT
Exhibit
10.3
AGREEMENT,
dated this 27th day of September, 2007, among First Defiance Financial Corp.
("First Defiance") an Ohio-chartered corporation and savings and loan holding
company, First Federal Bank of the Midwest ("First Federal"), a federally
chartered stock savings bank, both of which are located in Defiance, Ohio,
and
Xxxx X. Xxxx (the "Executive"). First Defiance and First Federal are referred
to
jointly herein as the "Companies."
WITNESSETH:
WHEREAS,
the Executive is presently Executive Vice President and chief Financial Officer
of First Defiance and Executive Vice President and Chief Financial Officer
of
First Federal;
WHEREAS,
the Companies desire to continue to retain the Executive's services in such
capacities; and
WHEREAS,
the Executive is serving the Companies pursuant to the terms of a previous
Agreement dated September 29, 1997 (the “Prior Agreement”);
WHEREAS,
parties desire to amend and restate the Prior Agreement;
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) Annual
Compensation. The Executive's "Annual Compensation" for purposes of this
Agreement shall be deemed to mean the average annual Compensation paid to
the
Executive by the Companies during the five most recent taxable years ending
prior to the date of termination.
(b) Base
Salary. "Base Salary" shall have the meaning set forth in Section
3(a) hereof.
(c) Bonus. "Bonus"
shall have the meaning set forth in Section 3(a) hereof.
(d) Cause. "Cause"
shall mean 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 Companies.
1
Exhibit
10.3
(e) Change
in Control of First Defiance. "Change in Control" of First Defiance shall
have
the meaning set forth in Section 409A(a)(2)(A)(v) of the
Code.
(f) Code. "Code"
shall mean the Internal Revenue Code of 1986, as amended.
(g) Compensation. "Compensation"
shall have the meaning set forth in Section 3(a) hereof.
(h) Date
of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by the Companies for any reason, the
date
on which a Notice of Termination is given or such later date as may be specified
by the Companies in such Notice, or (ii) if the Executive's employment is
terminated by the Executive, the date of termination shall be a date not
less
than 30 days from the date the Notice of Termination is delivered by the
Executive to the Companies, unless the Companies, in their sole discretion,
designate an earlier date.
(i) Disability.
"Disability" shall mean any physical or mental impairment that qualifies
the
Executive for disability benefits under the applicable long-term disability
plan
maintained by the Companies or any subsidiary or, if no such plan applies,
which
would qualify the Executive for disability benefits under the Federal Social
Security System.
(j) Good
Reason. "Good Reason" shall mean:
(i) Without
the Executive's express written consent:
(a) the
assignment by the Companies to the Executive of any duties that, in the
Executive's good faith determination, are materially inconsistent with the
Executive's positions, duties, responsibilities and status with the Companies
immediately prior to such assignment, or in the event of a Change in Control,
immediately prior to such a Change in Control of First
Defiance;
(b) in
the Executive's good faith determination, a material change in the Executive's
reporting responsibilities, titles or offices as an employee and as in effect
immediately prior to such change or, in the event of a Change in Control,
immediately prior to such a Change in Control of First Defiance;
or
(c) any
removal of the Executive from or any failure to re-elect the Executive to
the
offices of Executive Vice President of First Defiance and Executive Vice
President of First Federal, except in connection with cause, Disability,
Retirement, or the Executive's death;
(ii) Without
the Executive's express written consent, a reduction by the Companies in
the
Executive's Base Salary, as the same may be increased
2
Exhibit
10.3
from
time
to time, or fringe benefits;
(iii) The
principal executive office of the Companies is relocated outside of the
Defiance, Ohio area or, without the Executive's express written consent,
the
Companies require the Executive to be based anywhere other than an area in
which
the Companies' principal executive office is located, except for required
travel
on business of the Companies to an extent substantially consistent with the
Executive's present business travel obligations;
(iv) Without
the Executive's express written consent, the Companies fail to provide the
Executive with the same fringe benefits that were provided to the Executive
immediately prior to a Change in Control of First Defiance, or with a package
of
fringe benefits (including paid vacations) that, though one or more of such
benefits may vary from those in effect immediately prior to such Change in
Control, is substantially comparable in all material respects to such fringe
benefits taken as a whole;
(v) Any
purported termination of the Executive's employment for Cause, Disability
or
Retirement that is not effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (1) below; or
(vi) The
failure by First Defiance to obtain the assumption of and agreement to perform
this Agreement by any successor as contemplated in Section 10
hereof.
(k) IRS. “IRS”
shall mean the Internal Revenue Service.
(l) Notice
of Termination. "Notice of Termination" shall mean a dated notice
that (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 Executive's employment under the provision
so indicated, (iii) specifies a Date of Termination, and (iv) is given in
the
manner specified in Section 11 hereof.
(m) Retirement. "Retirement"
shall mean voluntary termination by the Employee in accordance with the
Companies' retirement policies, including early retirement, generally applicable
to their salaried employees.
2. Term
of Employment.
(a) The
Companies hereby employ the Executive as Executive Vice President of First
Defiance and Executive Vice President of First Federal. Executive
hereby accepts said employment and agrees to render such services to the
Companies on the terms and conditions set forth in this Agreement. The term
of
employment under this Agreement shall be a three-year term, which shall be
deemed to have commenced on January 1, 2007. However, at a meeting of the
Companies' Board of Directors no later than 30 days prior to the first
anniversary of the date
3
Exhibit
10.3
of
this
Agreement and each anniversary thereafter, the Board of Directors of the
Companies shall consider and review (with appropriate corporate documentation
thereof, and after taking into account all relevant factors including the
Executive's performance and the merits of a three-year agreement) a one-year
extension of the term under this Agreement, and the term shall continue to
extend, unless either the Board of Directors does not approve such extension
and
provides written notice to the Executive of such event or the Executive gives
written notice to the Companies of the Executive's election not to extend
the
term, in each case, with such written notice to be given not less than thirty
(30) days prior to any such anniversary date. References herein to the term
of
this Agreement shall refer both to the initial term and successive
terms.
(b) During
the term of this Agreement, the Executive shall perform such executive services
for the Companies as may be consistent with his titles and from time to time
assigned to him by the Companies' Board of Directors; provided, however,
that
the Executive shall not be precluded from (i) vacations and other leave time
in
accordance with section 3(c) below; (ii) reasonable participation in community,
civic, charitable, or similar organizations; (iii) reasonable participation
in
industry-related activities; or (iv) pursuing personal investments that do
not
interfere or conflict with the performance of Executive's duties to the
Companies.
3. Compensation
and Benefits.
(a) The
Companies shall compensate and pay Executive for his services during the
term of
this Agreement at a minimum base annual salary of $161,400.00 ("Base Salary"),
which may be increased from time to time in such amounts as may be determined
by
the Companies' Board of Directors and may not be decreased without the
Executive's express written consent. In addition to his Base Salary, the
Executive shall be entitled to receive during the term of this Agreement
a bonus
based on such terms and conditions as are set forth from time to time in
the
Companies' incentive bonus program (the "Bonus"). The Executive's Base Salary
and Bonus are referred to herein as his "Compensation."
(b) During
the term of the Agreement, Executive shall be entitled to participate in
and
receive the benefits of any pension or other retirement benefit plan, deferred
compensation, profit sharing, stock option, management recognition, employee
stock ownership, or other plans, benefits and privileges given to employees
and
executives of the Companies, to the extent commensurate with his then duties
and
responsibilities, as fixed by the Board of Directors of the Companies including,
but not limited to, the following: (i) the Companies shall pay membership
dues
for the Executive for membership in such organizations, including country
clubs
and professional organizations, as are approved by the Companies from time
to
time; and (ii) the Companies shall, at their discretion, provide the use
of an
automobile (the terms and conditions for the Executive's use and possession
of
the automobile and the quality of the automobile provided for the Executive's
use shall be consistent with, or not less favorable than, the past practices
of
the Companies) or an automobile expense reimbursement. The Companies shall
not
make any changes in such plans, benefits or privileges that would adversely
affect Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Companies
and
does not result in a proportionately greater adverse change in the rights
of or
benefits to Executive as compared with any other
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Exhibit
10.3
executive
officer of the Companies. Nothing paid to Executive under any plan or
arrangement presently in effect or made available in the future shall be
deemed
to be in lieu of the salary payable to Executive pursuant to Section 3(a)
hereof.
(c) During
the term of this Agreement, Executive shall be entitled to paid annual vacation
in accordance with the policies as established from time to time by the Board
of
Directors of the Companies, which shall in no event be less than four weeks
per
annum. Executive shall not be entitled to receive any additional compensation
from the Companies for failure to take a vacation, nor shall Executive be
able
to accumulate unused vacation time from one year to the next, except to the
extent authorized by the Board of Directors of the Companies.
4. Expenses. The
Companies shall reimburse Executive or otherwise provide for or pay for all
reasonable expenses incurred by Executive in furtherance or in connection
with
the business of the Companies, including, but not by way of limitation,
traveling expenses and all reasonable entertainment expenses (whether incurred
at the Executive's residence, while traveling or otherwise), subject to such
reasonable documentation and other limitations as may be established by the
Board of Directors of the Companies. If such expenses are paid in the first
instance by Executive, the Companies shall reimburse the Executive
therefor.
5. Termination.
(a) The
Companies 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.
(b) Executive
shall have the right, upon prior Notice of Termination, to terminate his
employment hereunder for any reason.
(c) In
the event that (i) Executive's employment is terminated by the Companies
for
Cause, Disability or Retirement or in the event of the Executive's death,
or
(ii) Executive terminates his employment hereunder other than for Good Reason,
Executive shall have no right pursuant to this Agreement to compensation
or
other benefits for any period after the applicable Date of
Termination.
(d) In
the event that Executive's employment is terminated by the Companies for
other
than Cause, Disability, Retirement or the Executive's death or such employment
is terminated by the Executive (i) due to failure by the Companies to comply
with any material provision of this Agreement, or (ii) for Good Reason, in
either case which failure or Good Reason has not been cured within a period
of
thirty (30) days after a written notice of non-compliance has been given
by
Executive to the Companies, then the Companies shall, subject to the provisions
of Section 6 hereof, if applicable;
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(1)
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pay
to the Executive, in a lump sum payment on the first business day
of the
month following the Date of Termination, an amount equal to 2.00
times the
Annual Compensation but not more than twice the annual compensation
limitation in effect under Section 401(a)(17) for the year which
includes
the Date of Termination; and
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5
Exhibit
10.3
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(2)
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pay
to the Executive, in a lump sum payment on the first business day
of the
seventh month following the Date of Termination, an amount equal
to the
excess of 2.99 times the Annual Compensation over the amount of
the
payment made to the Executive under subparagraph (d)(i);
and
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(3)
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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, (ii) the end of the second full calendar year following
the
year which includes the date of termination, or (iii) 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 (3)),
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 retirement plans or stock compensation
plans of
the Companies), provided that in the event that the Executive's
participation in any plan, program or arrangement as provided in
this
subparagraph (3) is barred, or during such period any such plan,
program
or arrangement is discontinued or the benefits thereunder are materially
reduced, the Companies shall arrange to provide the Executive with
benefits substantially similar to those that the Executive was
entitled to
receive under such plans, programs and arrangements immediately
prior to
the Date of Termination. Notwithstanding the forgoing, the
Companies may in lieu of providing for continuation of the forgoing
benefits, pay to the Executive in a lump sum cash payment an amount
equal
to the Companies’ cost of providing such benefits to Executive during the
month immediately prior to the Executive’s termination of employment,
times the number of months that were remaining in the term of Executive’s
employment prior to the Notice of
Termination.
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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 that Executive has the right to receive from the Companies, 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, that is the minimum
necessary to result in no portion of the payments and benefits under Section
5
being non-deductible to either of the Companies 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 Companies' independent public accountants and paid by the
Companies. Such counsel shall be reasonably acceptable to the
Companies and
6
Exhibit
10.3
Executive;
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. In the event that the
Companies and/or the Executive do not agree with the opinion of such counsel,
(i) the Companies shall pay to the Executive the maximum amount of payments
and
benefits pursuant to Section 5, as selected by the Executive, which such
opinion
indicates that there is a high probability do not result in any payments
and
benefits being non-deductible to the Companies and subject to the imposition
of
the excise tax imposed under Section 4999 of the Code (the “Permitted Amount”),
and (ii) the Companies may request, and provided that the amount not paid
to the
Executive because it was above the Permitted Amount exceeds 5% of the total
amount of payments and benefits owed to Executive by the Companies pursuant
to
the terms of this Agreement, Executive shall have the right to demand that
the
Companies request, a ruling from the IRS as to whether the disputed payments
and
benefits pursuant to Section 5 hereof have such consequences. Any such request
for a ruling from the IRS shall be promptly prepared and filed by the Companies,
but in no event later than thirty (30) days from the date of the opinion
of
counsel referred to above, and shall be subject to the Executive's approval
prior to filing, which shall not be unreasonably withheld. The Companies
and
Executive agree to be bound by any ruling received from the IRS and to make
appropriate payments to each other to reflect any such rulings, together
with
interest at the applicable federal rate provided for in Section 7872(f)(2)
of
the Code. 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.
(b) The
specific arrangements referred to herein are not intended to exclude any
other
benefits that may be available to the Executive upon a termination of employment
with the Companies pursuant to employee benefit plans of the Companies or
otherwise.
8. Withholding.
All payments required to be made by the Companies hereunder to the Executive
shall be subject to the withholding of such amounts, if any, relating to
tax and
other payroll deductions as the Companies may reasonably determine should
be
withheld pursuant to any applicable law or regulation.
9. Covenant
Not to Compete and Confidential Information
(a) Throughout
the employment of Executive under this Agreement and for a period of one year
after termination of employment for any reason, Executive agrees that he will
not, except on behalf of the Companies or with the written consent of the
Companies:
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(1)
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engage
in any business activity, directly or indirectly, on his
own
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7
Exhibit
10.3
behalf
or
as a partner, stockholder (except by ownership of less than 1% of the
outstanding stock of a publicly held corporation), director, trustee, principal,
agent, employee, consultant or otherwise of any person, firm or corporation,
which is engaged in any activity in which the Companies or any parent,
subsidiary or affiliate of the Companies is engaged at the time;
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(2)
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allow
the use of his name by or in connection with any business that is
competitive with any activity in which the Companies or any parent,
subsidiary or affiliate of the Companies is engaged,
or
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(3)
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offer
employment to or employ, for himself or on behalf of any competitor
of the
Companies or any parent, subsidiary or affiliate, any person who
at any
time within the prior three years shall have been employed by the
Companies or any parent, subsidiary or affiliate of the
Companies.
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(b) The
parties acknowledge that this Section 9 is fair and reasonable under the
circumstances. It is the desire and intent of the parties that the
provisions of this Section 9 shall be enforced to the fullest extent permitted
by law. Accordingly, if any particular portion of this Section 9
shall be adjudicated to be invalid or unenforceable, this Section 9 shall be
deemed amended to:
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(1)
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reform
the particular portion to provide for such maximum restrictions as
will be
valid and enforceable, or if that is not
possible,
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(2)
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delete
the portion found invalid or unenforceable, such reformation or deletion
to apply only with respect to the operation of this Section 9 in
the
particular jurisdiction in which such adjudication is
made.
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(c) During
the term of Executive’s employment, the covenants contained in this Section 9
shall apply without regard to geographic location. Upon the
termination of Executive’s employment, the covenants contained in this Section 9
shall be limited to a twenty-five (25) mile radius of any office of the
Companies.
(d) Notwithstanding
any other provision of this Agreement to the contrary, in the event Executive
violates the above restrictive covenants, all amounts otherwise owing to
Executive by the Companies shall be forfeited by Executive and the Companies,
in
addition to any other remedy, shall be under no further obligation to
Executive.
(e) Executive
shall not at any time, in any manner, while employed by the Companies or
thereafter, either directly or indirectly, except in the course of carrying
out
the Companies business or as previously authorized in writing on behalf of
the
Companies, disclose or communicate to any person, firm, or corporation, any
information of any kind concerning any matters affecting or relating to the
Companies’ business or any of its data, figures, projections, estimates,
customer lists, tax records, personnel histories, and accounting procedures,
without
8
Exhibit
10.3
regard
to
whether any or all of such information would otherwise be deemed confidential
or
material.
10. Assignability.
The Companies may assign this Agreement and their rights hereunder in whole,
but
not in part, to any corporation, bank or other entity with or into which
either
of the Companies may hereafter merge or consolidate or to which either of
the
Companies may transfer all or substantially all of their respective 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 Companies hereunder
as
fully as if it had been originally made a party hereto, but may not otherwise
assign this Agreement or its rights hereunder. The Executive may not assign
or
transfer this Agreement or any rights or obligations
hereunder.
11. 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 address set forth
below:
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To
First Defiance:
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First
Federal Financial Corp.
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000
Xxxxxxx Xxxxxx
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Xxxxxxxx,
Xxxx 00000
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To
First Federal:
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First
Federal Bank of the Midwest
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000
Xxxxxxx Xxxxxx
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Xxxxxxxx,
Xxxx 00000
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To
the Executive:
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Xxxx
X. Xxxx
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0000
Xxxxxxxxx Xx.
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Xxxxxxxx,
XX 00000
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12. Supersedes
Prior Agreement; Amendment; Waiver. This Agreement supersedes the
Prior Agreement. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Companies 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.
13. 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
Ohio.
14. Nature
of Obligations. Nothing contained herein shall create or require the
Companies to create a trust of any kind to fund any benefits that may be
payable
hereunder, and to the extent that the Executive acquires a right to receive
benefits from the Companies hereunder, such right shall be no greater than
the
right of any unsecured general creditor of the Companies.
9
Exhibit
10.3
15. Headings. 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.
16. 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.
17. 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.
18. Regulatory
Actions. The following provisions shall be applicable to the parties
to the extent that they are required to be included in the 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. 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
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Companies' 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. 1818 (e)(3) and 1818(g)(1)), the Companies' 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 Companies may, in their discretion: (i)
pay
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
Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Companies' affairs by an order issued
under
Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. 1818(e)(4)
and (g)(1)), all obligations of the Companies under this Agreement shall
terminate as of the effective date of the order, but vested rights of Executive
and the Companies as of the date of termination shall not be
affected.
(c) If
the Companies are in default, as defined in Section 3(x)(1) of the FDIA (12
U.S.C. 1813(x)(l)), all obligations under this Agreement shall terminate
as of
the date of default, but vested rights of Executive and the Companies 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.
563.39(b)(5) (except to the extent that it is determined that continuation
of
the Agreement for the continued operation of the Companies is
necessary): (i) by the Director of the Office of Thrift Supervision
("OTS"),
10
Exhibit
10.3
or
his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
or Resolution Trust Corporation enters into an agreement to provide assistance
to or on behalf of First Federal under the authority contained in Section
13 (c)
of the FDIA (12 U.S.C. 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 Companies or when
the
Companies are determined by the Director of the OTS to be in an unsafe or
unsound condition, but vested rights of Executive and the Companies as of
the
date of termination shall not be affected.
19. Regulatory
Prohibition. Notwithstanding any other provision of this Agreement to
the contrary, any payment made to the Executive pursuant to this Agreement,
or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(K) and any regulations promulgated thereunder.
20. Additional
Restriction on Distributions to Key Employees.
(a) Notwithstanding
the provisions of this Agreement providing for payment of benefits upon
termination of employment, if at the time a benefit would otherwise be payable,
Executive is a “specified employee” [as defined below], and the payment provided
for would be deferred compensation with the meaning of Code section 409A,
the
distribution of the Executive’s benefit may not be made until six months after
the date of the Executive’s separation from service with the Company [as that
term may be defined in Section 409A(a)(2)(A)(i) of the Code and relevant
regulations], or, if earlier the date of death of the Executive. This
requirement shall remain in effect only for periods in which the stock of
the
Company is publicly traded on an established securities
market.
(b) For
purposes of this Section 20 a “specified employee” shall mean any Executive of
the Company who is a “key employee” of the Company within the meaning of Code
section 416(i) as of the last day of the calendar year preceding the date
of the termination of employment. This shall include any Executive who is
(i) a 5-percent owner of the Company’s common stock, or (ii) an
officer of the Company with annual compensation from the Company of $130,000.00
or more, or (iii) a 1-percent owner of Company’s common stock with annual
compensation from the Company of $150,000.00 or more (or such higher annual
limit as may be in effect for years subsequent to 2005 pursuant to indexing
section 416(i) of the Code).
(c) The
provisions of this Section 20 have been adopted only in order to comply with
the
requirements added by Code section 409A. These provisions shall be
interpreted and administered in a manner consistent with the requirements of
Code section 409A, together with any regulations or other guidance which
may be published by the Treasury Department or Internal Revenue Service
interpreting such Code section 409A.
11
Exhibit
10.3
IN
WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.
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Attest:
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/s/
Xxxx X. Xxxxxxxx
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By:
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/s/
Xxxxxxx X. Small
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Xxxx
X. Xxxxxxxx, Secretary
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Name:
Xxxxxxx X. Small
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Title: Chairman,
President and C.E.O.
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Attest:
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FIRST
FEDERAL BANK
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OF
THE MIDWEST
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/s/
Xxxx X. Xxxxxxxx
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By:
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/s/
Xxxxxxx X. Small
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Xxxx
X. Xxxxxxxx, Secretary
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Name:
Xxxxxxx X. Small
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Title: Chairman
and C.E.O.
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Witness:
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/s/
Xxxxxxxx Xxxxxx
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/s/
Xxxx X. Xxxx
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Xxxx
X. Xxxx
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12
