EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this ___ day of __________, 1998, by and between Ben Franklin Financial, Inc.
(the "Holding Company") and Xxxxxx X. Xxxxxxxx (the "Employee").
WHEREAS, the Employee is currently serving as President and Chief
Executive Officer of Ben Franklin Bank of Illinois (the "Bank") pursuant to an
employment agreement between the Bank and the Employee dated ____________ ___,
1998 (the "Prior Employment Agreement"); and
WHEREAS, the Bank has adopted a plan of conversion whereby the Bank
will convert to capital stock form as the subsidiary of the Holding Company
subject to the approval of the Bank's members and the Office of Thrift
Supervision (the "Conversion"); and
WHEREAS, the Employee has agreed that the Prior Employment Agreement
shall terminate when this Agreement becomes effective; and
WHEREAS, the board of directors of the Holding Company ("Board of
Directors") recognizes that, as is the case with publicly held corporations
generally, the possibility of a change in control of the Holding Company and/or
the Bank may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of key management personnel to the detriment of the Bank, the Holding Company
and their respective stockholders; and
WHEREAS, the Board of Directors believes it is in the best interests of
the Holding Company to enter into this Agreement with the Employee in order to
assure continuity of management of the Holding Company and to reinforce and
encourage the continued attention and dedication of the Employee to the
Employee's assigned duties without distraction in the face of potentially
disruptive circumstances arising from the possibility of a change in control of
the Holding Company or the Bank, although no such change is now contemplated;
and
WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 2 hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means (1) an event of a
nature that (i) results in a change in control of the Bank or the Holding
Company within the meaning of the Home Owners' Loan Act of 1933 and 12 C.F.R.
Part 574 as in effect on the date hereof; or (ii) would be required to be
reported in response to Item 1 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 0000 (xxx "Xxxxxxxx Xxx"); (2) 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),
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directly or indirectly of securities of the Bank or the Holding Company
representing 20% or more of the Bank's or the Holding Company's outstanding
securities; (3) individuals who are members of the board of directors of the
Bank or the Holding Company 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 Holding Company's stockholders
was approved by the nominating committee serving under an Incumbent Board, shall
be considered a member of the Incumbent Board; or (4) a reorganization, merger,
consolidation, sale of all or substantially all of the assets of the Bank or the
Holding Company or a similar transaction in which the Bank or the Holding
Company is not the resulting entity. The term "Change in Control" shall not
include an acquisition of securities by an employee benefit plan of the Bank or
the Holding Company or the acquisition of securities of the Bank by the Holding
Company in connection with the Conversion. In the application of 12 C.F.R. Part
574 to a determination of a Change in Control, determinations to be made by the
OTS or its Director under such regulations shall be made by the Board of
Directors.
(b) The term "Commencement Date" means the date of completion
of the Conversion.
(c) The term "Date of Termination" means the date upon which
the Employee ceases to serve as an employee of the Holding Company.
(d) The term "Involuntary Termination" means termination of
the employment of Employee without the Employee's express written consent, and
shall include a material diminution of or interference with the Employee's
duties, responsibilities and benefits as President and Chief Executive Officer
of the Holding Company and the Bank, including (without limitation) any of the
following actions unless consented to in writing by the Employee: (1) a change
in the principal workplace of the Employee to a location outside of a 30 mile
radius from the Bank's headquarters office as of the date hereof; (2) a material
demotion of the Employee; (3) a material reduction in the number or seniority of
other personnel reporting to the Employee or a material reduction in the
frequency with which, or in the nature of the matters with respect to which,
such personnel are to report to the Employee, other than as part of a Bank- or
Holding Company-wide reduction in staff; (4) a material adverse change in the
Employee's salary, perquisites, benefits, contingent benefits or vacation, other
than as part of an overall program applied uniformly and with equitable effect
to all members of the senior management of the Bank or the Holding Company; and
(5) a material permanent increase in the required hours of work or the workload
of the Employee. The term "Involuntary Termination" does not include Termination
for Cause or termination of employment due to retirement, death, disability or
suspension or temporary or permanent prohibition from participation in the
conduct of the Bank's affairs under Section 8 of the Federal Deposit Insurance
Act ("FDIA").
(e) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee because of the
Employee's personal dishonesty, incompetence, willful misconduct, breach of a
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than traffic
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violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. The Employee shall not be deemed to
have been Terminated for Cause unless and until there shall have been delivered
to the Employee a copy of a resolution, duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board of Directors at a
meeting of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with the
Employee's counsel, to be heard before the Board), stating that in the good
faith opinion of the Board the Employee has engaged in conduct described in the
preceding sentence and specifying the particulars thereof in detail.
2. Term. The term of this Agreement shall be the period of three years
commencing on the Commencement Date unless extended as provided herein and
subject to earlier termination as provided herein. Beginning on the first
anniversary of the Commencement Date and on each anniversary thereafter, the
term of this Agreement shall be extended for a period of one year in addition to
the then-remaining term, provided that (1) the Holding Company has not given
notice to the Employee in writing at least 60 days prior to such date that the
term of this Agreement shall not be extended further; and (2) prior to such
date, the Board of Directors explicitly reviews and approves the extension.
Reference herein to the term of this Agreement shall refer to both such initial
term and such extended terms. Notwithstanding the foregoing, in the event that
there is no net increase in operating profits of the Bank for two consecutive
years, the Board of Directors may terminate this Agreement with no obligation to
the Employee on the part of the Holding Company. The Employee agrees that, in
consideration of the Holding Company's entering into this Agreement, immediately
prior to the Commencement date, the Prior Employment Agreement shall terminate
with no obligation to the Employee thereunder on the part of the Bank.
3. Employment. The Employee is employed as President and Chief
Executive Officer of the Holding Company and the Bank. As such, the Employee
shall render administrative and management services for the Holding Company and
its subsidiaries as are customarily performed by persons situated in similar
executive capacities, and shall have such other powers and duties the Board of
Directors may prescribe from time to time. To the extent that the Bank provides
salary and other compensation and benefits to the Employee which he is entitled
to receive under this Agreement, the Holding Company shall have no such
obligation to the Employee.
4. Compensation.
(a) Salary. The Holding Company agrees to pay the Employee
during the term of this Agreement an annual salary of $135,000. The amount of
the Employee's salary shall be reviewed annually by the Board of Directors.
Adjustments in salary or other compensation shall not limit or reduce any other
obligation of the Holding Company under this Agreement. The Employee's salary in
effect from time to time during the term of this Agreement shall not thereafter
be reduced.
(b) Bonuses. The Employee shall be entitled to an annual bonus
for fiscal years 1998, 1999 and 2000 payable within 30 days after the filing
with the Securities and Exchange Commission of the Holding Company's Annual
Report on Form 10-K (the "10-K") equal to 5% of the excess of (A) the Holding
Company's net income for any such year as reported in the
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related 10-K over (B) $781,000 as calculated without regard to (i) any change in
accounting principals after Xxxxx 00, 0000, (xx) any extraordinary items, (iii)
any gain or loss from the sale of securities, physical assets or deposits or
(iv) any other item, which, in the reasonable judgment of the Board of
Directors, did not arise in the ordinary course of business.
(c) Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures
applicable to the executive officers, provided that the Employee accounts for
such expenses as required under such policies and procedures.
5. Benefits.
(a) Participation in Retirement and Employee Benefit Plans.
The Employee shall be entitled to participate in all plans relating to pension,
thrift, profit-sharing, group life insurance, medical and dental coverage,
education, and other retirement or employee benefits or combinations thereof, in
which all executive officers participate; provided, however, that this section
shall not require the Holding Company or the Bank to provide benefits which are
duplicate of those already provided to the Employee by the Bank.
(b) Fringe Benefits. The Employee shall be eligible to
participate in, and receive benefits under, any fringe benefit plans which are
or may become applicable to all executive officers.
6. Vacations; Leave. The Employee shall be entitled to four
non-consecutive weeks of paid vacation, no more than two of which shall be
consecutive.
7. Termination of Employment.
(a) Involuntary Termination. The Board of Directors may
terminate the Employee's employment at any time, but, except in the case of
Termination for Cause, termination of employment shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. Except
as provided in section 2 of this Agreement, in the event of Involuntary
Termination other than in connection with or within 12 months after a Change in
Control, the Holding Company shall, during the nine months following the Date of
Termination, (1) pay to the Employee the Employee's salary at the rate in effect
immediately prior to the Date of Termination, in such manner and at such times
as such salary would have been payable if the Employee had continued to be
employed under this Agreement, and (2) provide to the Employee health benefits
as maintained for the benefit of executive officers from time to time during
such periods; provided that, the Holding Company's obligations under this
section 7(a) shall be reduced to the extent that the Employee earns salary and
receives substantially similar health benefits from another employer during such
period.
(b) Termination for Cause. In the event of Termination for
Cause, the Holding Company shall pay the Employee the Employee's salary through
the Date of Termination, and the Holding Company shall have no further
obligation to the Employee under this Agreement.
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(c) Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon 60 days' written notice
or such shorter period as may be agreed upon between the Employee and the Board
of Directors. In the event of such voluntary termination, the Holding Company
shall be obligated to continue to pay to the Employee the Employee's salary and
benefits only through the Date of Termination, at the time such payments are
due, and the Holding Company shall have no further obligation to the Employee
under this Agreement.
(d) Change in Control. Except as provided in section 2 of this
Agreement, in the event of Involuntary Termination in connection with or within
12 months after a Change in Control which occurs at any time while the Employee
is employed under this Agreement, the Holding Company shall, subject to Section
8 of this Agreement, (1) pay to the Employee in a lump sum in cash within 25
business days after the Date of Termination an amount equal to 299% of the
Employee's "base amount" as defined in Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"); and (2) provide to the Employee during the
remaining term of this Agreement such health benefits as are maintained for
executive officers from time to time during the remaining term of this Agreement
or substantially the same health benefits as were maintained for its executive
officers immediately prior to the Date of Termination.
(e) Death; Disability. In the event of the death of the
Employee while employed under this Agreement and prior to any termination of
employment, the Employee's estate, or such person as the Employee may have
previously designated in writing, shall be entitled to receive the salary of the
Employee through the day on which the Employee died. If the Employee becomes
disabled as defined in the Holding Company's or the Bank's then current
disability plan, if any, or if the Employee is otherwise unable to serve as
President and Chief Executive Officer of the Holding Company and the Bank, the
Employee shall be entitled to receive group and other disability income benefits
of the type, if any, then provided for executive officers.
(f) Temporary Suspension or Prohibition. If the Employee is
suspended and/or temporarily prohibited from participating in the conduct of the
Bank's affairs by a notice served under Section 8(e)(3) or (g)(1) of the FDIA,
12 U.S.C. ss. 1818(e)(3) and (g)(1), the Holding Company's 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 Holding
Company may in its discretion (i) pay the Employee 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.
(g) Permanent Suspension or Prohibition. If the Employee is
removed and/or permanently prohibited from participating in the conduct of the
Bank's affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA,
12 U.S.C. ss. 1818(e)(4) and (g)(1), all obligations of the Holding Company
under this Agreement shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.
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(h) Default of the Bank. If the Bank is in default (as defined
in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties.
(i) Termination by Regulators. All obligations under this
Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (1) by
the Director of the Office of Thrift Supervision (the "Director") or his or her
designee, at the time the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the FDIA; or (2) by the Director or his or her
designee, at the time the Director or his or her designee approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition. Any rights
of the parties that have already vested, however, shall not be affected by any
such action.
8. Certain Reduction of Payments by the Bank.
(a) Notwithstanding any other provision of this Agreement, if
the value and amounts of benefits under this Agreement, together with any other
amounts and the value of benefits received or to be received by the Employee in
connection with a Change in Control would cause any amount to be nondeductible
by the Bank or the Holding Company for federal income tax purposes pursuant to
Section 280G of the Code, then amounts and benefits under this Agreement shall
be reduced (not less than zero) to the extent necessary so as to maximize
amounts and the value of benefits to the Employee without causing any amount to
become nondeductible by the Bank or the Holding Company pursuant to or by reason
of such Section 280G. The Employee shall determine the allocation of such
reduction among payments and benefits to the Employee.
(b) 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. 1828(k) and any regulations promulgated thereunder.
9. Confidential Information, Covenant Not to Compete and
Non-Solicitation.
(a) Confidential Information. The Employee acknowledges that
in the course of his employment, he will have access to and become informed of
confidential and secret information which is a competitive asset of the Holding
Company and its subsidiaries ("Confidential Information"), including, without
limitation, (i) the terms of any agreement between the Holding Company or any
subsidiary thereof and any employee, customer or supplier, (ii) pricing
strategy, (iii) merchandising and marketing methods, (iv) product development
ideas and strategies, (v) financial results, (vi) strategic plans and
demographic anaylses, and (vii) any non-public information concerning the
Holding Company or any of its subsidiaries, or their respective employees,
suppliers or customers. The Employee agrees that he will keep all Confidential
Information in strict confidence and will not make known, divulge, reveal,
furnish, make available, or use any Confidential Information that could
materially affect the operations,
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profitability or reputation of the Holding Company or any of its subsidiaries
(except in the course of his regular authorized duties). The Employee may
disclose information as required by law (after giving the Holding Company notice
and opportunity to contest such requirement). The Employee's obligations under
this Section 8 are in addition to, and not in limitation of or preemption of,
all other obligations of confidentiality which the Employee may have to the
Holding Company and its subsidiaries under general legal or equitable
principles.
(b) Return of Confidential Information. Except in the ordinary
course of the business of the Holding Company and its subsidiaries, the Employee
has not made, nor shall at any time following the date of this Agreement, make
or cause to be made, any copies, pictures, duplicates, facsimiles or other
reproductions or recordings or any abstracts or summaries including or
reflecting Confidential Information. All such documents and other property
furnished to the Employee by the Holding Company or any of its subsidiaries or
otherwise acquired or developed by the Holding Company or any of its
subsidiaries shall at all times be the property of the Holding Company or such
subsidiary. Upon termination of the Employee's employment by the Bank, the
Employee will return to the Holding Company or such subsidiary any such
documents or other property of the Holding Company or such subsidiary which are
in the possession, custody or control of the Employee.
(c) Non-Solicitation of Employees and Customers. Without the
prior written consent of the Holding Company (which may not be unreasonably
withheld), the Employee shall not at any time during the term of this agreement
and during the two years following the Date of Termination in any capacity, on
his own behalf or on behalf of any other firm, person or entity, undertake or
assist in the solicitation (i) of any employee to terminate his or her
employment with the Holding Company or any of its subsidiaries, or (ii) of any
customer of the Holding Company or any subsidiary thereof to cease doing
business with Holding Company or any of its subsidiaries.
(d) Non-Competition. In the event Employee voluntarily
resigns, the Employee shall not, for a period equal to the lesser of one year
from the date of termination, directly or indirectly, own, manage, operate or
control, or participate in the ownership, management, operation or control of,
or be employed by or connected in any manner with, any financial institution
having an office located within five miles of any office of the Bank or any
certificate thereof as of the date of termination. The provisions of this
Section shall not prevent the Employee from purchasing, solely for investment,
not more than five percent of any financial institution's stock or other
securities which are traded on any national or regional securities markets.
10. No Assignments.
(a) This Agreement is personal to each of the parties hereto,
and neither party may assign or delegate any of its rights or obligations
hereunder without first obtaining the written consent of the other party;
provided, however, that the Holding Company shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Holding Company or the Bank, by an assumption agreement in form and substance
satisfactory to the Employee, to expressly assume
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and agree to perform this Agreement in the same manner and to the same extent
that the Holding Company would be required to perform it if no such succession
or assignment had taken place. Failure of the Bank to obtain such an assumption
agreement prior to the effectiveness of any such succession or assignment shall
be a breach of this Agreement and shall entitle the Employee to compensation in
the same amount and on the same terms as the compensation pursuant to Section
7(d) hereof. For purposes of implementing the provisions of this Section 1(a),
the date on which any such succession becomes effective shall be deemed the Date
of Termination.
(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the Employee had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Employee's devisee,
legatee or other designee or if there is no such designee, to the Employee's
estate.
11. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, to the Holding Company at its
home office, to the attention of the Board of Directors with a copy to the
Secretary of the Holding Company, or, if to the Employee, to such home or other
address as the Employee has most recently provided in writing to the Holding
Company.
12. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
13. Headings. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. 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.
15. Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Illinois.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
HOLDING COMPANY
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By:
Its:
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Xxxxxx X. Xxxxxxxx
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