SECOND AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT
SECOND AMENDED CHANGE IN
CONTROL SEVERANCE AGREEMENT
THIS
SECOND AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made
and entered into as of this 21st day of April, 2009 by and includes the
amendments made on December 21, 2007, between HOME FEDERAL BANK (which, together
with any successor thereto which executes and delivers the assumption agreement
provided for in Section 5(a) hereof or which otherwise becomes bound by all of
the terms and provisions of this Agreement by operation of law, is hereinafter
referred to as the "Savings Bank"), and Xxxxxx X. Xxxxxxx (the
"Employee").
WHEREAS,
the Employee is currently serving as Executive Vice President and Chief Lending
Officer
WHEREAS,
the Board of Directors of the Savings Bank (the "Board") recognizes that the
possibility of a change in control of the Savings Bank or of its holding
company, Home Federal Bancorp, Inc., a Maryland corporation (the "Company”), 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 to the detriment of the Savings Bank, the Company and its
stockholders; and
WHEREAS,
the Board believes it is in the best interests of the Savings Bank to enter into
this Agreement with the Employee in order to assure continuity of management of
the Savings Bank 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 Company and/or the Savings Bank, although no such
change is now contemplated; and
WHEREAS,
it is necessary to amend this Agreement to reflect a change in the Severance
Benefits to be provided under this Agreement; and
WHEREAS,
the Board has approved and authorized the execution of this Agreement with the
Employee;
NOW,
THEREFORE, in consideration of the foregoing and of the respective covenants and
agreements of the parties herein, it is AGREED as follows:
1. Certain
Definitions.
(a) The
term "Change in Control" means (i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than the Company, any Consolidated Subsidiaries (as
hereinafter defined), any person (as hereinabove defined) acting on behalf of
the Company as underwriter pursuant to an offering who is temporarily holding
securities in connection with such offering, any trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company),
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
the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person
becoming a director subsequent to the Commencement Date 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 nominating committee serving under an Incumbent Board or who
was appointed as a result of a change at the direction of the Office of Thrift
Supervision ("OTS") or the Federal Deposit Insurance Corporation ("FDIC"), shall
be considered a member of the Incumbent Board; (iii) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (as hereinabove defined) acquires more
than 25% of the combined voting power of the Company's then outstanding
securities; or (iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets (or any transaction
having a similar effect); provided that the
term "Change in Control" shall not include an acquisition of securities by an
employee benefit plan of the Savings Bank or the Company or a change in the
composition of the Board at the direction of the OTS or the FDIC.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
occurred in the event of a conversion of the Company's mutual holding company to
stock form or in connection with any reorganization or action used to effect
such conversion. Neither the conversion of Home Federal MHC from the
mutual to stock form of organization nor any transaction related to or occurring
in connection therewith, shall constitute a Change in Control event for purposes
of this Agreement.
The term
"Commencement Date" means December 1st, 2006, the original effective date of
this Agreement.
(b) The term
"Consolidated Subsidiaries" means any subsidiary or subsidiaries of the Company
(or its successors) that are part of the affiliated group (as defined in Section
1504 of the Internal Revenue Code of 1986, as amended (the "Code"), without
regard to subsection (b) thereof) that includes the Savings Bank, including but
not limited to the Company.
(c) The term
"Date of Termination" means the date upon which the Employee ceases to serve as
an employee of the Savings Bank.
(d) The term
"Involuntary Termination" means the termination of the employment of Employee
(i) by the Savings Bank, without the Employee's express written consent; or (ii)
by the Employee by reason of a material diminution of or interference with his
duties, responsibilities or benefits, including (without limitation) if the
termination of employment is within 30 days of any of the following actions
unless consented to in writing by
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the
Employee: (1) a requirement that the Employee be based at any place other than
Nampa, Idaho, or within a radius of 35 miles from the location of the Savings
Bank's administrative offices as of the Commencement Date, except for reasonable
travel on Company or Savings Bank business; (2) a material demotion of the
Employee; (3) a material reduction in the number or seniority of 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 Savings Bank- or Company-wide
reduction in staff; (4) a reduction in the Employee's salary or a material
adverse change in the Employee's 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 Savings Bank;
(5) a material permanent increase in the required hours of work or the workload
of the Employee; or (6) any purported termination of the Employee's employment,
except for Termination for Cause (and, if applicable, the requirements of
Section 1(0 hereof), which purported termination shall not be effective for
purposes of this Agreement. The term "Involuntary Termination" does not include
Termination for Cause, retirement or suspension or temporary or permanent
prohibition from participation in the conduct of the Savings 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 violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. No act or failure to act by the Employee shall be considered willful
unless the Employee acted or failed to act with an absence of good faith and
without a reasonable belief that his action or failure to act was in the best
interest of the Company or the Savings Bank. 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 Board of Directors
at a meeting of the Board duly 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 of Directors the Employee has engaged in conduct
described in the preceding sentence and specifying the particulars thereof in
detail.
2. Term. The
initial term of this Agreement shall be a period of one year, commencing on the
Commencement Date, subject to earlier termination as provided herein (the
“Initial Term”). Beginning on the first anniversary of the Commencement Date,
the term of this Agreement shall be extended for a period of two years, provided that prior
to the end of such two-year term, the Board of Directors, or a committee of the
Board of Directors which has been delegated authority to act on such matters by
the Board of Directors (“Committee”), explicitly reviews and approves the
extension (the “Second Term”). Assuming the Employee’s employment has
not been previously terminated, on the third anniversary of the Commencement
Date, and on each anniversary thereafter, the term of this Agreement shall be
extended for a period of one year, provided that prior
to such anniversary, the Board of Directors, or the Committee, explicitly
reviews and approves the extension (an “Extended Term”).
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3.
Severance
Benefits.
(a) If
after a Change in Control, the Savings Bank shall terminate the Employee's
employment other than Termination for Cause, or employment is terminated in the
event of Involuntary Termination by the Employee, within 12 months following a
Change in Control, the Savings Bank shall (i) pay the Employee his salary,
including the pro rata portion of any incentive award, through the Date of
Termination; (ii) continue to pay for the life, health and disability coverage
that is in effect with respect to the Employee and his/her eligible dependents
for (a) one year, if the Involuntary Termination occurs during the Initial Term
or (b) two years if the Involuntary Termination occurs during the Second Term or
(c) three years if the Involuntary Termination occurs during an Extended Term;
and (iii) pay to the Employee in a lump sum in cash, within 25 business days
after the later of the date of such Change in Control or the Date of
Termination, (a) an amount equal to one year’s Salary as in effect immediately
prior to the Date of Termination if the Involuntary Termination occurs during
the First Term, or (b) if the Involuntary Termination occurs during the Second
Term, an amount equal to two times the Employee’s Salary as in effect
immediately prior to the Date of Termination, or (c) if the Involuntary
Termination occurs during an Extended Term, an amount equal to 299% of the
Employee's "base amount" as determined under Section 280G of the Code; provided,
however, that no payment shall be made under this Section 3(a) that would cause
the Savings Bank to be "undercapitalized" for purposes of 12 C.F.R. 565.4 or any
successor provision.
Notwithstanding any other provision
of this Agreement, if payments and the value of benefits received or to be
received under this Agreement, together with any other amounts and the value of
benefits received or to be received by the Employee, would cause any amount to
be nondeductible by the Company or any of the Consolidated Subsidiaries for
federal income tax purposes pursuant to or by reason of Section 280G of the
Code, then payments 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 be received by the Employee without causing any amount to become
nondeductible pursuant to or by reason of Section 280G of the Code. The Employee
shall determine the allocation of such reduction among payments and benefits to
the Employee.
(b) The
Employee shall not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Agreement be
reduced by any compensation earned by the Employee as the result of employment
by another employer, by retirement benefits after the Date of Termination or
otherwise. This Agreement does not constitute a contract of employment or impose
on the Company or the Savings Bank any obligation to retain the Employee, to
change the status of the Employee's employment, or to change the Company's or
the Savings Bank's policies regarding termination of employment.
4. Attorneys' Fees. If
the Employee is purportedly Terminated for Cause and the Savings Bank denies
payments and/or benefits under Section 3(a) of this Agreement on the basis that
the Employee experienced Termination for Cause, but it is determined by a court
of competent jurisdiction or by an arbitrator pursuant to Section 12 that cause
as contemplated by Section 1(f) of this Agreement did not exist for termination
of the Employee's employment, or if in any event it is determined by any such
court or arbitrator that the Savings Bank has failed
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to make
timely payment of any amounts or provision of any benefits owed to the Employee
under this Agreement, the Employee shall be entitled to reimbursement for all
reasonable costs, including attorneys' fees, incurred in challenging such
termination of employment or collecting such amounts or benefits. Such
reimbursement shall be in addition to all rights to which the Employee is
otherwise entitled under this Agreement.
5. 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 Savings Bank shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation, operation of law or otherwise) to
all or substantially all of the business and/or assets of the Savings Bank, by
an assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Savings Bank would be required to perform it if no such
succession or assignment had taken place. Failure of the Savings 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 and benefits from the Savings Bank in the same amount and on the
same terms that Employee would be entitled to hereunder if an event of
Involuntary Termination occurred, in addition to any payments and benefits to
which the Employee is entitled under Section 3 hereof. For purposes of
implementing the provisions of this Section 5(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. In the event of the death of the Employee, unless otherwise provided
herein, all amounts payable hereunder shall be paid to the Employee's devisee,
legatee, or other designee or, if there be no such designee, to the Employee's
estate.
6. Referred Payments. If
following a termination of the Employee, the aggregate payments to be made by
the Savings Bank under this Agreement and all other plans or arrangements
maintained by the Company or any of the Consolidated Subsidiaries would exceed
the limitation on deductible compensation contained in Section 162(m) of the
Code in any calendar year, any such amounts in excess of such limitation shall
be mandatorily deferred with interest thereon at 8.0% per annum to a calendar
year such that the amount to be paid to the Employee in such calendar year,
including defered amounts, does not exceed such limitation.
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7. Required
Provisions.
(a) If the
Employee is suspended and/or temporarily prohibited from participating in the
conduct of the Savings Bank's affairs by a notice served under Section 8(e)(3)
or (g)(1) of the FDIA,12 U.S.C. Section 1818(e)(3) and (g)(1), the Savings
Bank'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 Savings Bank may in its discretion (i) pay the Employee all
or part of the payments under this Agreement that were withheld while its
obligations under this Agreement were suspended and (ii) reinstate in whole or
in part any of its obligations which were suspended.
(b) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Savings Bank's affairs by an order issued under Section 8(e)(4)
or (g)(1) of the FDIA, 12 U.S.C. Section 1818(e)(4) and (g)(1), all obligations
of the Savings Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.
(c) If the
Savings 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.
(d) 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 Savings Bank: (1) by the Director of the OTS (the "Director")
or his or her designee, at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Savings 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 Savings Bank or when the Savings
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.
(e) 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 FDIC
regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification
Payments.
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8. Delivery of Notices.
For the purposes of this Agreement, all notices and other communications to any
party hereto shall be in writing and shall be deemed to have been duly given
when delivered or sent by certified mail, return receipt requested, postage
prepaid, addressed as follows:
| If to the Employee: | Xxxxxx X. Xxxxxxx | ||
| At the address last appearing on the | |||
| personnel records of the Employee | |||
| If to the Savings Bank: | Home Federal Bank | ||
| 000 00xx Xxxxxx Xxxxx | |||
| Xxxxx, Xxxxx 00000 | |||
| Attention: Secretary | |||
|
or
to such other address as such party may have furnished to the
other
in
writing in accordance herewith, except that a notice of change of
address
shall be effective only upon receipt.
|
|||
9. Amendments. No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties, except as herein otherwise provided.
10. 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.
11. 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.
12. Governing Law. This
Agreement shall be governed by the laws of the State of Idaho to the extent that
federal law does not govern.
13. Arbitration. Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by binding arbitration, conducted before a panel of three
arbitrators in a location selected by the Employee within 100 miles of such
Employee's job location with the Savings Bank, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrators' 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.
| Attest: | HOME FEDERAL BANK | ||
| ____________________ | ____________________ | ||
| ____________________ | By: | Xxx X. Xxxxxxxx | |
| Its: | President | ||
| EMPLOYEE | |||
| ____________________ | |||
| Xxxxxx X. Xxxxxxx | |||
| Chief Lending Officer |
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