EMPLOYMENT AGREEMENT
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THIS
AGREEMENT is entered into this 20th day of June, 2006 (the “Effective Date”) by
and between X. X. Xxxxx Federal Savings Bank (the “Bank”), a corporation
organized under the laws of the State of Illinois, with its office at 00000
X.
Xxxxxx Xxxxxx, Xxxxxxxxxx, XX, and Xxxxxx X. Xxxxxx (the “Employee”). Any
reference to the “Company” herein shall refer to AJS Bancorp, Inc. the holding
company of the Bank.
WHEREAS,
the Bank and the Employee entered into an employment agreement dated the
19th
day of
August 2003, pursuant to which the Employee was employed by the Bank as its
Chairman of the Board and Chief Executive Officer; and
WHEREAS,
Section 409A of the Internal Revenue Code (“Code”), effective January 1, 2005,
requires deferred compensation arrangements, including those set forth in
employment agreements, to comply with its provisions and restrictions and
limitations on payments of deferred compensation; and
WHEREAS,
it is understood that certain payments under employment agreements and severance
agreements may be subject to the provisions of Code Section 409A and the Board
of Directors of the Bank desires to modify the Agreement to ensure compliance
with Code Section 409A and to make certain other changes to the Agreement;
and
WHEREAS,
the Employee has agreed to such changes; and
WHEREAS,
the Board of Directors of the Bank and the Employee believe it is in the best
interests of the Bank to enter into a new employment agreement (the “Agreement”)
in order to reinforce and reward the Employee for his service and dedication
to
the continued success of the Bank and to incorporate the changes required by
the
new tax laws; and
WHEREAS,
the parties hereto desire by this writing to set forth the terms of the revised
Agreement and the continuing employment relationship of the Bank and the
Employee.
NOW,
THEREFORE, it is AGREED as follows:
1. Employment.
During
the term of his employment hereunder, the Employee shall serve as the Chairman
of the Board and Chief Executive Officer of the Bank. The Employee shall render
such administrative and management services for the Bank as are currently
rendered and as are customarily performed by persons situated in a similar
executive capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Bank.
The
Employee’s other duties shall be such as the Board of Directors (the “Board”) of
the Bank may from time to time reasonably direct, including normal duties as
an
officer of the Bank.
2. Base
Compensation.
The
Bank agrees to pay the Employee during the term of this Agreement a salary
at
the rate of One Hundred Eighty-Five Thousand and 00/100 Dollars ($185,000.00)
per annum (the “Base Salary”). The Board shall review, not less often
than
99
annually,
the rate of the Employee’s salary, and in its sole discretion may decide to
increase (but not decrease) his Base Salary. Any such increase in the Base
Salary shall become the Base Salary for all purposes under this Agreement.
Such
Base Salary shall be payable in cash no less frequently than monthly (the
monthly amount shall be referred to as the “monthly Base Salary”) or in
accordance with the normal payroll practices of the Bank, as such may be changed
from time to time. Notwithstanding the foregoing, following a Change in Control
(as defined in Section 10(a)(3) of this Agreement), the Board shall continue
to
annually review the rate of the Employee’s Base Salary, and shall increase said
rate of Base Salary by a percentage which is not less than the average annual
percentage increase in Base Salary that the Employee received over the three
calendar years immediately preceding the year in which the Change in Control
occurs.
3. Discretionary
Bonuses.
The
Employee shall participate in an equitable manner with all other senior
management employees of the Bank in discretionary bonuses that the Board may
award from time to time to the Bank’s senior management employees. No other
compensation provided for in this Agreement shall be deemed a substitute for
the
Employee’s right to participate in such discretionary bonuses. Notwithstanding
the foregoing, following a Change in Control, the Employee shall receive
discretionary bonuses that are made no less frequently than, and in annual
amounts not less than, the average annual discretionary bonuses paid to the
Employee during each of the three calendar years immediately preceding the
year
in which such Change in Control occurs.
4. Benefit
Plans and Expenses.
(a) Participation
in Retirement, Medical and Other Plans.
During
the term of this Agreement, the Employee shall participate in any plan that
the
Bank maintains for the benefit of its employees if the plan relates to (1)
pension, profit-sharing, or other retirement benefits, or (ii) medical insurance
or the reimbursement of medical or dependent care expenses. If the Employee
ceases employment with the Bank for any reason other than death or “Just Cause”
(as defined in Section 9(c) hereof), then notwithstanding termination of the
Employee’s employment or of this Agreement, the Bank shall provide the Employee
and his dependents with coverage under the Bank’s group health insurance plan
(and if the Bank maintains more than one plan for its employees, any one of
such
plans selected by the Employee in accordance with the general procedures by
which the Bank’s full-time employees make such elections). The Bank shall bear
the full cost for said coverage, which shall continue until the Employee’s
death, with the terms and conditions thereof being determined from time to
time
as though the Employee had remained a full-time employee of the Bank (but with
the Bank in all events paying the full cost for such insurance). The Bank shall
also provide the Employee’s spouse with continued health insurance coverage
(with the Bank paying the full cost for such insurance) for her
lifetime.
(b) Employee
Benefits; Expenses.
The
Employee shall be eligible to participate in any fringe benefits which are
or
may become available to the Bank’s senior management employees, including for
example: any stock option or incentive compensation plans, and any other
benefits which are commensurate with the responsibilities and functions to
be
performed by the Employee under this Agreement. The Bank shall provide the
Employee with an automobile suitable to the position of Chairman of the Board
and Chief Executive Officer of the Bank, and such automobile may be used by
the
Employee in carrying out his duties under
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this
Agreement and for his personal use such as commuting between his residence
and
his principal place of employment. The Bank shall reimburse the Employee for
the
cost of maintenance, use and servicing of such automobile. The Bank shall
reimburse the Employee for his reasonable out-of-pocket expenses incurred in
connection with the performance of his duties under this Agreement, including,
without limitation, fees for memberships in such clubs and organization that
the
Employee and the Board mutually agree are necessary and appropriate to further
the business of the Bank, including membership in the Midlothian Country Club,
or upon substantiation of such expenses in accordance with the policies of
the
Bank.
5. Term.
The
Bank hereby employs the Employee, and the Employee hereby accepts such
employment under this Agreement, for the period commencing on the Effective
Date
and ending thirty-six months thereafter (or such earlier date as is determined
in accordance
with
Section 9). Additionally, on each annual anniversary date from the Effective
Date, the Employee’s term of employment shall be extended for an additional
one-year period beyond the then effective expiration date provided the Board
determines in a duly adopted resolution that the performance of the Employee
has
met the Board’s requirements and standards, and that this Agreement shall be
extended. Only those members of the Board of Directors who have no personal
interest in this Employment Agreement shall discuss and vote on the approval
and
subsequent renewal of this Agreement.
6. Loyalty:
Noncompetition.
(a) During
the period of his employment hereunder and except for illnesses, reasonable
vacation periods, and reasonable leaves of absence, the Employee shall devote
all his full business time and attention to the performance of his duties
hereunder; provided, however, from time to time, Employee may serve on the
boards of directors of, and hold any other offices or positions in, companies
or
organizations, which will not present any conflict of interest with the Bank
or
any of its subsidiaries or affiliates, or unfavorably affect the performance
of
Employee’s duties pursuant to this Agreement, or will not violate any applicable
statute or regulation. During the term of his employment under this Agreement,
the Employee shall not engage in any business or activity contrary to the
business affairs or interests of the Bank, or be gainfully employed in any
other
position or job other than as provided above.
(b) Nothing
contained in this Paragraph 6 shall be deemed to prevent or limit the Employee’s
right to invest in the capital stock or other securities of any business
dissimilar from that of the Bank, or, solely as a passive or minority investor,
in any business.
7. Standards.
The
Employee shall perform his duties under this Agreement in accordance with such
reasonable standards as the Board may establish from time to time. The Bank
will
provide Employee with the working facilities and staff customary for similar
executives and necessary for him to perform his duties.
8. Vacation,
Sick and Other Leave.
At such
reasonable times as the Board shall in its discretion permit, the Employee
shall
be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment under this Agreement, all such voluntary absences
to count as vacation time, provided that:
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(a) The
Employee shall be entitled to an annual vacation in accordance with the policies
that the Board periodically establishes for senior management employees of
the
Bank. The Employee shall not receive any additional compensation from the Bank
on account of his failure to take vacation leave, and the Employee shall not
accumulate unused vacation leave from one fiscal year to the next, except to
the
extent authorized by the Board.
(b) In
addition, the Employee shall be entitled to an annual sick leave benefit as
established by the Board. In the event any sick leave benefit shall not have
been used during any year, such leave shall not accrue to subsequent years,
except to the extent authorized by the Board.
(c) In
addition to the aforesaid paid vacations, the Employee shall be entitled without
loss of pay, to absent himself voluntarily from the performance of his
employment with the Bank for such additional periods of time and for such valid
and legitimate reasons as the Board may in its discretion determine. Further,
the Board may grant to the Employee a leave or leaves of absence, with or
without pay, at such time or times and upon such terms and conditions as such
Board in its discretion may determine.
9. Termination
and Termination Pay.
Subject
to Section 10 hereof, the Employee’s employment hereunder may be terminated
under the following circumstances:
(a) Death.
The
Employee’s employment under this Agreement shall terminate upon his death during
the term of this Agreement, in which event the Employee’s beneficiary or
beneficiaries, or his estate, shall be entitled to receive the compensation
due
the Employee through the last day of the calendar month in which his death
occurred. Notwithstanding any provision of this Agreement to the contrary,
in
the event that the Employee dies while employed by the Bank, the Bank shall
pay
the Employee’s beneficiary or beneficiaries, or his estate, the Employee’s Base
Salary then in effect pursuant to Section 2 hereof for a period of one (1)
year
from the date of the Employee’s death.
(b) Disability.
(1) In
the
event of Employee’s disability (as hereinafter defined), the Employee shall
receive any disability insurance for which the Employee shall be eligible under
any disability insurance or similar program maintained by the Bank. For the
first twelve (12) months of the Employee’s disability, the Bank shall pay the
Employee the difference between the Employee’s monthly Base Salary in Section 2
and the amount that is paid to the Employee pursuant to any disability insurance
or similar program which the Bank has provided or may provide on behalf of
its
employees pursuant to any xxxxxxx’x or social security disability program, it
being understood that such program or insurance shall have primary
responsibility of coverage. Notwithstanding anything to the contrary herein,
no
payments shall be made hereunder which would violate Code Section 409A.
Accordingly if required under Code Section 409A (i.e., in the event Employee’s
disability does not conform to the definition of disability under Code Section
409A(2)(C)), any payments required hereunder shall be withheld until Employee’s
Separation from Service (as defined in Code Section 409A) and shall be paid
in
a
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lump
sum
upon Separation from Service, or if Employee is a Specified Employee (as defined
in Code Section 409A), in the seventh month following his Separation from
Service.
As
used
in this Agreement, the term “disability” shall mean the complete inability of
the Employee to perform his duties under this Agreement as determined by an
independent physician selected with the approval of the Bank and the
Employee.
(2) In
the
event Employee is disabled for a continuous period exceeding twelve (12)
calendar months, the Bank may, at its election, terminate this Agreement and
Employee’s employment (if not previously terminated). In such event, the
Employee shall be entitled to receive from the Bank the difference between
fifty
(50%) percent of his Base Salary in Section 2 and the amount that is paid to
the
Employee pursuant to any disability insurance or similar program sponsored
by
the Bank.
Payment
of such disability benefit shall commence on the last day of the month following
the month for which the final payment under Section 9(b)(1) was made, and cease
on the earliest of the month in which the Employee (1) dies, (ii) attains age
65, or (iii) returns to full-time employment with the Bank. Payments required
hereunder shall be made consistent with the requirements of Code Section 409A,
in the same manner contemplated by Section 9(b)(1) hereof.
(3) During
the period the Employee is entitled to receive payments under Section 9(b)(1)
and 9(b)(2) hereof, the Employee shall, to the extent that he is physically
and
mentally able to do so, furnish information and assistance to the Bank, and,
in
addition, upon reasonable request in writing on behalf of the Board, or an
executive officer designated by such Board, from time to time, make himself
available to the Bank to undertake reasonable assignments consistent with the
dignity, importance and scope of his prior position and his physical and mental
health. During
such period of service, the Employee shall be responsible and report to, and
be
subject to the supervision of, the Board or an executive officer designated
by
the Board, as to the method and manner in which he shall perform such
assignments, subject always to the provisions of this Section 9(b)(3), and
shall
keep such Board or such executive officer appropriately informed of his progress
in each such assignment.
(c) Just
Cause.
The
Board may, by written notice to the Employee, immediately terminate his
employment at any time, for Just Cause. The Employee shall have no right to
receive compensation or other benefits for any period after termination for
Just
Cause. Termination for “Just Cause” shall mean termination because of, in the
good faith determination of the Board, the 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 this
Agreement. Any stock options or restricted stock awards granted to the Employee
under any stock plan of the Bank, the Company or any subsidiary or affiliate
thereof, shall become null and void effective upon the Employee’s receipt of
notice of termination for Just Cause pursuant to section 9 hereof, and shall
not
be exercisable by the Employee at any time subsequent to such termination for
Just Cause.
(d) Without
Just Cause; Constructive Discharge.
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(1) The
Board
may, by written notice to the Employee, immediately terminate his employment
at
any time for a reason other than Just Cause, in which event the Employee, or
in
the event of his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, as severance pay or liquidated damages, or both,
shall be entitled to receive an amount equal to three (3) times the sum of
(i)
his Base Salary provided pursuant to Section 2 hereof, and (ii) the highest
rate
of bonus awarded to the Employee, pursuant to Section 3 hereof, at any time
during the prior three years. In addition, the Employee shall be entitled to
a
lump sum payment in an amount equal to the present value of the Bank’s
contributions that would have been made on Employee’s behalf under the Bank’s
tax-qualified retirement plans (including the 401(k) Plan, the profit sharing
plan and the employee stock ownership plan) if he had continued working for
the
Bank for a thirty-six (36) month period following his termination of employment
earning the Base Salary that would have been achieved during the remaining
unexpired term of this Agreement and making the maximum amount of employee
contributions permitted, if any, under such plans. Upon an event of termination
at any time for a reason other than Just Cause, the Employee will vest on the
date of termination of employment in any outstanding unvested stock options
or
shares of restricted stock of the Company that have been awarded to him.
Notwithstanding the foregoing, in the event such termination occurs after a
Change in Control and within the time period set forth in Section 10(a)(1)
hereof, the benefits and compensation provided for in that Section 10 shall
apply. All amounts payable to the Employee in cash shall be paid in one lump
sum
(adjusted to reflect the present value of such accelerated payment) within
thirty (30) days of such termination, or if Employee is a “Specified Employee”
(as defined in Code Section 409A) on the first day of the seventh month
following Employee’s Separation from Service.
(2) The
Employee may voluntarily terminate his employment under this Agreement within
ninety (90) days following the occurrence of an event which constitutes
“Constructive
Discharge,” and shall thereupon be entitled to receive the compensation and
benefits payable under Section 9(d)(1) hereof (unless such voluntary termination
occurs following a Change in Control as set forth under Section 10(b) in which
event the benefits and compensation provided for in Section 10 shall apply).
For
purposes of this Section 9, a Constructive Discharge shall include the
occurrence of any of the following events which has not been consented to in
advance in writing by the Employee: (1) the requirement that the Employee move
his personal residence, or perform his principal executive functions, more
than
thirty-five (35) miles from his primary office; (ii) a material reduction in
the
Employee’s base compensation; (iii) the failure to increase the Employee’s Base
Salary or to pay the Employee discretionary bonuses pursuant to Sections 2
and 3
of this Agreement; (iv) the failure by the Bank to continue to provide the
Employee with compensation and benefits provided for under this Agreement,
as
the same may be increased from time to time, or with benefits substantially
similar to those provided to him under any of the employee benefit plans in
which the Employee now or hereafter becomes a participant, or the taking of
any
action by the Bank which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by
him;
(v) the requirement that the Employee report directly to a person or persons
other than the Board; (vi) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position as referenced at Section 1; (vii) a failure to elect or reelect the
Employee to the Board of Directors of the Bank; (viii) a material diminution
or
reduction in the Employee’s responsibilities or authority
(including
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reporting
responsibilities) in connection with his employment with the Bank. All amounts
payable to the Employee in cash under this Section 9(d)(2) shall be paid in
a
lump sum (adjusted for the present value of such accelerated payment) within
thirty (30) days of such termination, or if Employee is a Specified Employee,
on
the first day of the seventh month following Employee’s Separation from
Service.
(3) Any
termination of employment under Section 9(d)(1) or 9(d)(2) hereof which would
entitle Employee to a payment hereunder must satisfy also satisfy the definition
of Separation from Service set forth in Code Section 409A and the guidance
issued thereunder. Notwithstanding the foregoing, but only to the extent
required under federal banking law, the amount payable under clause (d)(1)
hereof shall be reduced to the extent that on the date of the Employee’s
termination of employment, the present value of the benefits payable thereunder
exceeds the limitation on severance benefits that is set forth in Regulatory
Bulletin 27b of the Office of Thrift Supervision (“OTS”) and the OTS Thrift
Activities Handbook Section 310, as in effect on the Effective Date. In the
event that Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”) becomes applicable to payments made under this Section 9(d), and the
payments exceed the “Maximum Amount” as defined in Section 10(a)(2) hereof, the
payments shall be reduced in accordance with Section 10(a)(2) of this
Agreement.
|
(e)
|
Termination
or Suspension Under Federal Law.
|
(1) If
the
Employee is removed and/or permanently prohibited from participating in the
conduct of the 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)(1)), all obligations of the Bank under this Agreement shall terminate,
as of
the effective date of the order. No such order shall affect the vested rights
of
the parties.
(2) If
the
Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations
under this Agreement shall terminate as of the date of default; however, this
Paragraph shall not affect the vested rights of the parties.
(3) All
obligations under this Agreement shall terminate, except to the extent that
continuation of this Agreement is necessary for the continued operation of
the
Bank: (1) by the Director of the Office of Thrift Supervision (“Director of
OTS”), or his designee, at the time that the Federal Deposit Insurance
Corporation (“FDIC”) or the Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of FDIA; or (ii) by the Director of the OTS, or
her
designee, at the time that the Director of the OTS, or his 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. Such action shall not affect any vested rights of the
parties.
(4) If
a
notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3)
or (g)(1)) suspends and/or temporarily prohibits the Employee from participating
in the conduct of the Bank’s affairs, the Bank’s obligations under this
Agreement shall be suspended as of the date of such service, unless stayed
by
appropriate proceedings. If
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the
charges in the notice are dismissed, the Bank shall (1) pay the 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.
(f) Voluntary
Termination by Employee.
Subject
to Sections 9(d)(2) and 10 hereof, the Employee may voluntarily terminate
employment with the Bank during the term of this Agreement, upon at least sixty
(60) days’ prior written notice to the Board of Directors, in which case the
Employee shall receive only his compensation, vested rights (including
continuing group health benefits as provided in Section 4(a) hereof) and
employee benefits up to the date of his termination.
Notwithstanding
any contrary provision of this Agreement, in the event that the Employee elects
to retire from employment with the Bank (such event being referred to herein
as
“Retirement”), the Employee (or in the event of his death after Retirement but
prior to payment pursuant to this Section 9(f), his estate) shall be paid within
six months of Retirement a lump sum payment equal to fifty-percent (50%) of
the
Base Salary provided pursuant to Section 2 hereof as of such date of Retirement
or, if Code Section 409A is applicable and the Employee is a Specified Employee,
on the first day of the seventh full month following the Employee’s Separation
from Service.
10. Change
in Control.
|
(a)
|
Change
in Control; Involuntary Termination.
|
(1) Notwithstanding
any provision herein to the contrary, if the Employee’s employment under this
Agreement is terminated by the Bank, without the Employee’s prior written
consent and for a reason other than Just Cause, in connection with or within
twelve (12) months after any Change in Control of the Bank or the Company,
the
Employee shall, subject to paragraph (2) of this Section 10(a), be paid an
amount equal to three (3) times the sum of (i) the Employee’s Base Salary
provided pursuant to Section 2 hereof, as in effect on the date of such Change
in Control, and (ii) the highest rate of bonus awarded to the Employee at any
time during the prior three years. In addition, the Employee shall be entitled
to a lump sum payment in an amount equal to the present value of the Bank’s
contributions that would have been made on Employee’s behalf under the Bank’s
tax-qualified retirement plans (including the 401(k) Plan, the profit sharing
plan and the employee stock ownership plan) if he had continued working for
the
Bank for a thirty-six (36) month period following his termination of employment
earning the Base Salary that would have been achieved during the remaining
unexpired term of this Agreement and making the maximum amount of employee
contributions permitted, if any, under such plans. Upon
termination of employment following a Change in Control, the Employee will
immediately vest in any outstanding unvested stock options or shares of
restricted stock of the Company that have been awarded to him. All amounts
payable to the Employee in cash shall be paid in one lump sum (adjusted for
the
present value of such accelerated payment) within thirty (30) days following
such termination, or if Employee is a Specified Employee and the following
is
required by Code Section 409A, on the first business day of the seventh month
following Separation from Service. In the event of termination of employment
following a Change in Control, Employee shall have continued use of the
automobile provided by the Bank with
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such
automobile allowance as was provided during the most recently completed 12
month
period ending on the last day of the month prior to termination of employment
and shall continue to receive payment for his Midlothian Country Club for a
period of thirty-six (36) months following termination of employment, provided,
however that if required by Code Section 409A, no reimbursement for Country
Club
expenses nor payment of any automobile allowance shall occur during the first
six months following Employee’s Separation from Service. All reimbursements
withheld during such period shall be paid to Employee on the first day of the
seventh month following his Separation from Service. Employee’s use of the
automobile can continue during such first six month period, provided that the
aggregate value of such use does not exceed Five Thousand Dollars ($5,000.00).
Following said thirty-six (36) month period, the Employee shall be permitted
to
purchase the automobile for its then fair market value.
(2) Notwithstanding
the foregoing paragraph (a)(1), in the event that the Bank’s independent
accountants determine that the total payments receivable under Section 10(a)(1)
hereof, when added to any other payments contingent on a Change in Control
of
the Bank or the Company, exceed 2.999 times the Employee’s “base amount” as
defined in Section 280G(b)(3) of the Code and regulations promulgated thereunder
(the “Maximum Amount”), then such payments shall be reduced to avoid an “excess
parachute payment”, as defined in Section 280G(b)(1) of the Code. The Employee
shall determine which and how much, if any, of the payments to which he is
entitled shall be eliminated or reduced so that the total payments to be
received by the Employee do not exceed the Maximum Amount. If the Employee
does
not make his determination within ten business days after receiving a written
request from the Bank, the Bank may make such determination, and shall notify
the Employee promptly thereof. Within five business days of the earlier of
the
Bank’s receipt of the Employee’s determination pursuant to this paragraph or the
Bank’s determination in lieu of a determination by the Employee, the Bank shall
pay to or distribute to or for the benefit of the Employee such amounts as
are
then due the Employee under this Agreement.
(3) The
term
“Change in Control” shall mean an event of a nature that: (i) would be required
to be reported in response to Item 1(a) of the current report on Form 8-K,
as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a Change in
Control of the Bank or the Company within the meaning of the Home Owners’ Loan
Act, as amended (“HOLA”), and applicable rules and regulations promulgated
thereunder, as in effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (a) any “person” (as the 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 Company
representing 25% or more of the combined voting power of Company's outstanding
securities except for any securities purchased by the Bank's employee stock
ownership plan or trust; or (b) individuals who constitute the Company’s Board
on the date hereof (the “Incumbent Board”) cease for any reason to constitute at
least a majority thereof, provided
that any
person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Company's stockholders
was approved by the same nominating committee serving under an Incumbent Board,
shall be, for purposes of this clause
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(b),
considered as though he were a member of the Incumbent Board; or (c) a plan
of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction in which the Bank
or
Company is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Company, by someone other than
the
current management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar transaction
with one or more corporations as a result of which the outstanding shares of
the
class of securities then subject to the Plan are to be exchanged for or
converted into cash or property or securities not issued by the Company; or
(e)
a tender offer is made for 25% or more of the voting securities of the Company
and the shareholders owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell their
shares pursuant to such tender offer and such tendered shares have been accepted
by the tender offeror. Notwithstanding anything in this paragraph to the
contrary, a change in control shall not be deemed to have occurred in the event
of a conversion of the Company's or the Bank's mutual holding company to stock
form, or in connection with any reorganization used to effect such a
conversion.
(b) Change
in Control; Voluntary Termination.
Notwithstanding any other provision of this Agreement to the contrary, but
subject to Sections 10(a)(2), 10(c), and 10(e) hereof, the Employee may
voluntarily terminate his employment under this Agreement within ninety (90)
days following a Change in Control as defined in paragraph (a)(4) of this
Section 10, and the Employee shall thereupon be entitled to receive the payment
described in Section 10(a) of this Agreement. Alternatively, the Employee may
voluntarily terminate his employment under this Agreement if, within twelve
(12)
months following such Change in Control of the Bank or the Company an event
constituting a Constructive Discharge shall occur. If an event constituting
a
Constructive Discharge shall occur, the Employee shall be entitled to
voluntarily terminate employment within ninety (90) days of such Constructive
Discharge and shall be entitled to the payments and benefits set forth in
Section 10(a) hereof. For purposes of this Section 10, a Constructive Discharge
includes any of the following events which has not been consented to in advance
by the Employee in writing: (i) the requirement that the Employee move his
personal residence, or perform his principal executive functions, more than
thirty-five (35) miles from his primary office as of the date of the Change
in
Control; (ii) a material reduction in the Employee’s base compensation as in
effect on the date of the Change in Control or as the same may be changed by
mutual agreement from time to time; (iii) the failure to increase the Employees
Base Salary or to pay the Employee discretionary bonuses pursuant to Sections
2
and 3 of this Agreement; (iv) the failure by the Bank to continue to provide
the
Employee with compensation and benefits provided for under this Agreement,
as
the same may be increased from time to time, or with benefits substantially
similar to those provided to him under any of the employee benefit plans in
which the Employee now or hereafter becomes a participant, or the taking of
any
action by the Bank which would directly or indirectly reduce any of such
benefits or deprive the Employee of any material fringe benefit enjoyed by
him
at the time of the Change in Control; (v) the requirement that the Employee
report directly to a person or persons other than the Board; (vi) the assignment
to the Employee of duties and responsibilities materially different from those
normally associated with his position as referenced at Section 1; (vii) a
failure to elect or reelect the Employee to the Board of Directors of the Bank,
if the Employee is serving on the Board on the date of the Change in Control;
(viii) a material diminution or
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reduction
in the Employee’s responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Bank. All amounts
payable to the Employee under this Section 10(b) shall be paid in the same
manner as required under Section 10(a) hereof.
(c) Compliance
with 12 U.S.C. Section 1828(k).
Any
payments made to the Employee 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.
(d) Trust.
(1) Within
five business days before or after a Change in Control (as defined in Section
10(a) of this Agreement), the Bank shall (i) deposit, or cause to be deposited,
in a grantor trust (the “Trust”) substantially in the form described in Revenue
Procedure 92-64, as issued by the Internal Revenue Service and as amended or
superseded thereby, an amount equal to 2.99 times the Employee’s “base amount”
as defined in Section 280G(b)(3) of the Code, and (ii) provide the trustee
of
the Trust, who shall be an independent corporation having corporate trust
powers, with a written direction to hold said amount and any investment return
thereon in a segregated account for the benefit of the Employee, and to follow
the procedures set forth in the next paragraph as to the payment of such amounts
from the Trust.
(2) Immediately
following Employee’s Separation from Service for one of the reasons set forth in
Section 10(a) or 10 (b) hereof, or in the event Employee is a Specified
Employee, on the first day of the seventh month after Employee’s Separation from
Service, the Employee shall provide the trustee of the Trust with a written
notice requesting that the trustee pay to the Employee the amount designated
in
said notice. Within three business days after receiving said notice, the trustee
of the Trust shall send a copy of the notice to the Bank via overnight and
registered mail return receipt requested. On the tenth (10th)
business day after mailing said notice to the Bank, the trustee of the Trust
shall pay the Employee the amount designated therein in immediately available
funds, unless prior thereto the Bank provides the trustee with a written notice
directing the trustee to withhold such payment. In the latter event, the trustee
shall submit the dispute to non-appealable binding arbitration for a
determination of the amount payable to the Employee pursuant to Section 10(a)
or
(b) hereof, and the party responsible for the payment of the costs of such
arbitration (which may include any reasonable legal fees and expenses incurred
by the Employee) shall be determined by the arbitrator. The trustee shall choose
the arbitrator to settle the dispute, and such arbitrator shall be bound by
the
rules of the American Arbitration Association in making her determination.
The
parties and the trustee shall be bound by the results of the arbitration and,
within 3 days of the determination by the arbitrator, the trustee shall pay
from
the Trust the amounts required to be paid to the Employee and/or the Bank,
and
in no event shall the trustee be liable to either party for making the payments
as determined by the arbitrator.
(e) Regulatory
Limitation.
Notwithstanding the foregoing, but only to the extent required under federal
banking law, the amount payable under Subsections (a) and (b) of this Section
10
shall be reduced to the extent that on the date of the Employee’s termination of
employment, the amount payable under Subsection (a) or (b) of this Section
10
exceeds the
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99
limitation
on severance benefits that is set forth in Regulatory Bulletin 27b of the OTS
and OTS Thrift Activities Handbook Section 310, as in effect on the Effective
Date.
(f) In
the
event that any dispute arises between the Employee and the Bank as to the terms
or interpretation of this Agreement, including this Section 10, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Section 10 or to defend against
any action taken by the Bank, the Employee shall be reimbursed for all costs
and
expenses, including reasonable attorneys’ fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final judgment
by a court of competent jurisdiction in favor of the Employee. Such
reimbursement shall be paid within ten (10) days of Employee’s furnishing to the
Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the
Employee.
11. Federal
Income Tax Withholding.
The
Bank may withhold all Federal and State income or other taxes from any benefit
payable under this Agreement as shall be required pursuant to any law or
government regulation or ruling.
12. Successors
and Assigns.
(a) Bank.
This
Agreement shall not be assignable by the Bank, provided that this Agreement
shall inure to the benefit of and be binding upon any corporate or other
successor of the Bank which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets
or
stock of the Bank.
(b) Employee.
Since
the Bank is contracting for the unique and personal skills of the Employee,
the
Employee shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank; provided,
however, that nothing in this paragraph shall preclude (1) the Employee from
designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators, or other legal representatives
of
the Employee or his estate from assigning any rights hereunder to the person
or
persons entitled thereunto.
(c) Attachment.
Except
as required by law, no right to receive payments under this Agreement shall
be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to exclusion, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no
effect.
13. Amendments.
No
amendments or additions to this Agreement shall be binding unless made in
writing and signed by all of the parties, except as herein otherwise
specifically provided.
14. Applicable
Law.
Except
to the extent preempted by Federal law, the laws of the State of Illinois shall
govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.
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15. Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
16. Entire
Agreement.
This
Agreement, together with any understanding or modifications thereof as agreed
to
in writing by the parties, shall constitute the entire agreement between the
parties hereto, and shall completely supersede any prior agreements between
the
parties (including but not limited to their agreement dated July 20, 1992 and
the employment agreements dated December 18, 1995, and August 19,
2003).
[signature
page follows]
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first hereinabove written.
|
ATTEST:
|
X.
X. XXXXX FEDERAL SAVINGS BANK
|
|
/s/
Xxxxx Xxxxxx
|
By:
/s/ Xxx X. Xxxxxx
|
|
Secretary
|
Xxx
X. Xxxxxx, President
|
|
WITNESS:
|
EMPLOYEE:
|
|
/s/
Xxxxxxxx Xxxxx
|
/s/
Xxxxxx X. Xxxxxx
|
|
Xxxxxxxx
Xxxxx
|
Xxxxxx
X. Xxxxxx
|
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