EMPLOYMENT AGREEMENT
Exhibit
99
THIS
AGREEMENT is entered into this 16th day of June, 2009 (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, Employee’s employment
agreement was updated, effective June 20, 2006, to comply with Code Section
409A; and
WHEREAS,
final regulations issued under Code Section 409A in April 2007 necessitate
further changes to said employment 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 ninety-four thousand
four hundred and 00/100 Dollars ($194,400) per annum (the “Base Salary”). The
Board shall review, not less often than 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 (i) 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
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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 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.
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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:
(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, in accordance with its regular payroll
practice.
(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
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coverage. Notwithstanding
anything to the contrary herein, no payments shall be made hereunder which would
violate Code Section 409A. Accordingly, any payments required
hereunder shall commence within thirty (30) days from the date of determination
of Employee’s Disability, and shall be payable in accordance with the Bank’s
payroll practices.
“Disability”
or “Disabled” shall be construed to comply with Section 409A of the Internal
Revenue Code and shall be deemed to have occurred if: (i) Employee is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death, or last for a continuous period of not less than 12 months; (ii) by
reason of any medically determinable physical or mental impairment that can be
expected to result in death, or last for a continuous period of not less than 12
months, Employee is receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of
the Bank or the Company; or (iii) Employee is determined to be totally disabled
by the Social Security Administration.
(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 (i) 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 xxxxx
0
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.
(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
6
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 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) 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) Definition
of Termination of Employment
For purposes of this Section 9,
“termination of employment” or “Retirement” as used herein or in Section 10
hereof shall mean “Separation from Service” as defined in Code Section 409A and
the Treasury Regulations promulgated thereunder, provided, however, that the
Bank and Employee reasonably anticipate that the level of bona fide services the
Employee would perform after termination would permanently decrease to a level
that is less than 50% of the average level of bona fide services performed
(whether as an employee or an independent contractor) over the immediately
preceding 36-month period.
(f) 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.
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(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 his
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 the charges in the notice are
dismissed, the Bank shall (i) 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.
(g) 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, payable as
set forth in the documents governing such payments.
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 thirty (30) days 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
8
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
an automobile provided by the Bank and shall also receive reimbursement for his
membership fees and expenses associated with his use of the Midlothian Country
Club for a period of twenty-four (24) months following termination of
employment.
(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
9
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 (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
10
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 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
11
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 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. Reimbursements. Reimbursement
by the Bank of any expenses, fees, dues or other obligation of the Employee
under any Section of this Agreement, including but not limited to Section 4, 9
or 10) shall be permitted provided that the amount of expenses, fees, dues or
other obligation paid in a calendar year that are eligible for reimbursement
equals only the amount actually expended during such calendar year,
and the maximum amount available for reimbursement in any calendar year will not
be increased or decreased to reflect the amount expended or reimbursed in a
prior or subsequent calendar year, and further, any reimbursement must be paid
to the Employee by December 31 of the calendar year following the year in which
the Employee pays such expenses, fees, dues or other obligation.
13. 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 (i) the Employee from
designating a beneficiary to
12
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.
14. 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.
15. 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.
16. 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.
17. 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 X.
Xxxxxx
|
/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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