EMPLOYMENT AGREEMENT
This Agreement is made by and between First Federal Savings & Loan
Association of Edwardsville, a federal savings and loan association (the
"Bank"), with its principal office in Edwardsville, Illinois, and Xxxxxx X.
Xxxxx ("Executive") and shall be effective as of the effective date (the
"Effective Date") of that certain Agreement and Plan of Reorganization by and
between First Federal Financial Services, MHC, First Federal Financial Services,
Inc., First Clover Leaf Financial Corp., the Bank and Clover Leaf Financial
Corp. ("CLFC") and Clover Leaf Bank (the "Merger Agreement"). References to the
"Company" mean First Federal Financial Services, Inc., a federal corporation
that owns 100% of the common stock of the Bank. The Company shall be a signatory
to this Agreement for the sole purpose of guaranteeing the Bank's performance
hereunder.
WHEREAS, Executive has served as an officer of Clover Leaf Bank, an
Illinois state bank ("CLB"), which was merged with and into the Bank pursuant to
the Merger Agreement; and
WHEREAS, in order to induce Executive to enter into and remain in the
employ of the Bank following the closing of the Merger and to provide further
incentive to achieve the financial and performance objectives of the Bank and
the Company, the parties desire to enter into this Agreement upon the terms and
conditions hereof; and
WHEREAS, the Executive agrees that this Agreement supersedes and replaces
that certain Executive Employment Agreement dated as of December 8, 2003 and
that certain Change in Control Agreement dated as of December 8, 2003 (both as
amended on May 24, 2005) with CLB and CLFC.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period from the date hereof through October 1, 2006, Executive
agrees to serve as Chief Operating Officer of the Company and the Bank and,
effective October 1, 2006 (the "Appointment Date"), the Executive agrees to
serve as the President and Chief Executive Officer of the Company and of the
Bank; provided, however, in their sole discretion, the Boards of Directors of
the Company and of the Bank may extend the Appointment Date to January 1, 2007.
Upon the Appointment Date, Executive shall be responsible for the overall
management of the Company and the Bank, and shall be responsible for
establishing the business objectives, policies and strategic plan of the Company
and the Bank in conjunction with the Board of Directors of the Bank (the
"Board"). Upon the Appointment Date, Executive shall also be responsible for
providing leadership and direction to all departments or divisions of the
Company and the Bank, and shall be the primary contact between the Board and the
staff of the Company and the Bank. During such periods, Executive also agrees to
serve, if elected, as an officer and director of any subsidiary or affiliate of
the Bank. Following the Appointment Date, failure to reappoint Executive as
President and Chief Executive Officer of the Bank and the Company without the
consent of Executive during the term of this Agreement (except for any
termination for Just Cause or Retirement, as defined herein) shall constitute a
breach of this Agreement.
2. TERM AND DUTIES.
(a) The period of Executive's employment under this Agreement begins as of
the Effective Date and continues through the end of the calendar year in which
the Effective Date occurs and then continues for a period of thirty-six (36)
full calendar months thereafter, with January 1, 2008 being treated as the first
anniversary date of this Agreement. Commencing on January 1, 2008, and
continuing at each January 1st thereafter, this Agreement shall renew for an
additional year such that the remaining term shall be thirty-six (36) full
calendar months; unless a written notice of non-renewal (a "Non-Renewal Notice")
is provided to Executive at least sixty (60) days and not more than ninety (90)
days prior to any January 1st, that the term of this Agreement shall not so
renew. On an annual basis prior to the deadline for the notice period referenced
above, the Board shall conduct a performance review of Executive for purposes of
determining whether to provide a Non-Renewal Notice.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence approved by the Board, Executive shall devote substantially
all his business time, attention, skill, and efforts to the faithful performance
of his duties hereunder including activities and services related to the
organization, operation and management of the Bank; provided, however, that,
with the approval of the Board, as evidenced by a resolution of such Board, from
time to time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, business companies or
business organizations, which, in such Board's judgment, will not present any
conflict of interest with the Bank, or materially affect the performance of
Executive's duties pursuant to this Agreement, it being understood that
membership in and service on boards or committees of social, religious,
charitable or similar organizations does not require Board approval pursuant to
this Section 2(b).
3. COMPENSATION, BENEFITS AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 2(b). The Bank
shall pay Executive as compensation a salary of not less than $152,000 per year
("Base Salary"). Such Base Salary shall be payable biweekly, or with such other
frequency as officers and employees are generally paid. During the period of
this Agreement, Executive's Base Salary shall be reviewed at least annually.
Such review shall be conducted by a committee designated by the Board, and the
Bank may increase, but not decrease (except a decrease that is generally
applicable to all employees) Executive's Base Salary (with any increase in Base
Salary to become "Base Salary" for purposes of this Agreement). Within a
reasonable period of time after the Appointment Date (but no later than February
1, 2007), the Board shall commission a compensation study by a mutually agreed
upon compensation expert of persons who are both presidents and chief executive
officers at peer financial institutions located in a comparable geographic area
and shall report its findings to the Executive, with the understanding that the
Executive's compensation shall be increased to the extent necessary to be
competitive, in the judgment of the Board, with the compensation offered to
persons who are both presidents and chief executive officers of such peer
organizations. The compensation increase, if any, attributable to the 2007
compensation study shall be retroactive to the Appointment Date and any "catch
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up" payment shall be made to Executive in a lump sum within two months after the
Executive is notified of the increase. In addition to the Base Salary provided
in this Section 3(a), the Bank shall provide Executive at no cost to Executive
with all such other benefits as are provided uniformly to permanent full-time
employees of the Bank. Base Salary shall include any amounts of compensation
deferred by Executive under qualified and nonqualified plans maintained by the
Bank. Base Salary shall not include any director's fees that the Executive is
entitled to receive as a director of the Bank or the Company. Such director's
fees shall be separately paid to the Executive.
(b) Executive will be entitled to participate in or receive benefits under
any employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident insurance plans, medical coverage or any other employee
benefit plan or arrangement made available by the Bank or the Company in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. Executive will be entitled to participate in any
incentive compensation and bonus plans offered by the Bank or the Company in
which Executive is eligible to participate. Nothing paid to Executive under any
such plan or arrangement will be deemed to be in lieu of other compensation to
which Executive is entitled under this Agreement. Executive shall receive a
monthly automobile allowance of not less than $460 each month, which shall be
increased from time to time by the Board of the Bank to be commensurate with
automobile allowances received by persons who are both presidents and chief
executive officers of peer financial institutions.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Bank or the Company shall pay or reimburse Executive for all
reasonable travel and other reasonable expenses incurred by Executive performing
his obligations under this Agreement and may provide such additional
compensation in such form and such amounts as the Board may from time to time
determine. The Bank shall reimburse Executive for his ordinary and necessary
business expenses, including, without limitation, fees for memberships in such
clubs and organizations as Executive and the Board shall mutually agree are
necessary and appropriate for business purposes, and travel and entertainment
expenses, incurred in connection with the performance of his duties under this
Agreement.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any of the following:
(i) the termination by the Bank of Executive's full-time employment
hereunder for any reason other than termination governed by
Section 5 (Termination for Cause) or termination governed by
Section 6 (termination due to Disability or death); or
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(ii) Executive's resignation from the Bank's employ for any of the
following reasons:
(A) the failure to elect or reelect or to appoint or reappoint
Executive to the position set forth under Section 1;
(B) a material change in Executive's functions, duties, or
responsibilities with the Bank, which change would cause
Executive's position to become one of lesser responsibility,
importance, or scope from the position and attributes
thereof described in Section 1, above;
(C) a relocation of Executive's principal place of employment by
more than thirty (30) miles from its location at the
Effective Date of this Agreement;
(D) a material reduction in the benefits and perquisites to
Executive from those being provided as of the Effective Date
of this Agreement, other than an employee-wide reduction in
pay or benefits;
(E) a liquidation or dissolution of the Company or the Bank; or
(F) a material breach of this Agreement by the Bank.
Upon the occurrence of any event described in clauses (A), (B),
(C), (D), (E) or (F), above, Executive shall have the right to
elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written
Notice of Termination, as defined in Section 9(a), given within
six (6) full calendar months after the event giving rise to said
right to elect. Notwithstanding the preceding sentence, in the
event of a continuing breach of this Agreement by the Bank,
Executive, after giving due notice within the prescribed time
frame of an initial event specified above, shall not waive any of
his rights under this Agreement and this Section solely by virtue
of the fact that Executive has submitted his resignation,
provided Executive has remained in the employment of the Bank and
is engaged in good faith discussions to resolve any occurrence of
an event described in clauses (A), (B), (C), (D) or (F) above.
(iii) (A) Executive's involuntary termination by the Bank or the
Company (or any successor thereto) on the effective date of, or
at any time following, a Change in Control, or (B) Executive's
resignation from the employment with the Bank or the Company (or
any successor thereto) following a Change in Control as a result
of any event described in Section 4(a)(ii)(A), (B), (C), (D), or
(F) above. For these purposes, a Change in Control of the Bank or
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the Company shall mean a change in control of a nature that: (i)
would be required to be reported in response to Item 5.01 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"); or (ii) without limitation such a
Change in Control shall be deemed to have occurred at such time
as (a) any "person" (as the term is used in Sections 13(d) and
14(d) of the Exchange Act), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more
of the combined voting power of Company's outstanding securities
except for any securities purchased by the Bank's employee stock
ownership plan or trust; or (b) individuals who constitute the
Board of Directors of the 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 a majority of the directors of the 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 is distributed 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 or financial
institutions, and as a result of such proxy solicitation, a plan
of reorganization, merger consolidation or similar transaction
involving the Company is approved by the requisite vote of the
Company's stockholders; 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 to the contrary herein, a Change in Control shall not be
deemed to have occurred in the event that the Company sells less
than 50% of its outstanding common stock in one or more stock
offerings.
(b) Upon the occurrence of an Event of Termination under Sections 4(a) (i)
or (ii), on the Date of Termination, as defined in Section 9(b), the Bank shall
be obligated to pay Executive, 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, an amount equal to the sum of: (i) his
earned but unpaid salary as of the date of his termination of employment with
the Bank; (ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation plans
and programs maintained for the benefit of the Bank or Company's officers and
employees; (iii) the remaining payments that Executive would have earned, in
accordance with Sections 3 (a) and 3(b), if he had continued his employment with
the Bank for the remainder of the term of this Agreement (but in any event, such
term shall not exceed thirty-six (36) months), and had earned the maximum bonus
or incentive award in each calendar year that ends during such term; and (iv)
the annual contributions or payments that would have been made on Executive's
behalf to any employee benefit plans of the Bank or the Company as if Executive
had continued his employment with the Bank for the remainder of the term of this
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Agreement (but in any event, such term shall not exceed thirty-six (36) months),
based on contributions or payments made (on an annualized basis) at the Date of
Termination. Any payments hereunder shall be made in a lump sum within thirty
(30) days after the Date of Termination, or in the event that Section 409A of
the Internal Revenue Code of 1986, as amended ("Code") applies, no later than
the first day of the seventh month following the Date of Termination. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination under Section 4(a)(iii),
on the Date of Termination, as defined in Section 9(b), the Bank shall be
obligated to pay Executive, 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, an amount equal to the sum of: (i) his
earned but unpaid salary as of the date of his termination of employment with
the Bank; (ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation plans
and programs maintained for the benefit of the Bank or Company's officers and
employees; (iii) the remaining payments that Executive would have earned, in
accordance with Sections 3 (a) and (b), if he had continued his employment with
the Bank for a thirty-six (36) month period following his termination of
employment, and had earned the maximum bonus or incentive award in each calendar
year that ends during such term; and (iv) the annual contributions or payments
that would have been made on Executive's behalf to any employee benefit plans of
the Bank or the Company as if Executive had continued his employment with the
Bank for a thirty-six (36) month period following his termination of employment,
based on contributions or payments made (on an annualized basis) at the Date of
Termination. Any payments hereunder shall be made in a lump sum within thirty
(30) days after the Date of Termination, or in the event that Section 409A of
the Internal Revenue Code of 1986, as amended ("Code") applies, no later than
the first day of the seventh month following the Date of Termination. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(d) Upon the occurrence of an Event of Termination, the Bank will cause to
be continued life, medical and disability coverage substantially identical to
the coverage maintained by the Bank for Executive and his family prior to
Executive's termination. Such coverage shall continue at the Bank's expense for
a period of twelve (12) months from the Date of Termination.
(e) Notwithstanding anything in this Agreement to the contrary, in no event
shall the aggregate payments or benefits to be made or afforded to Executive
under this Section constitute an "excess parachute payment" under Section 280G
of the Internal Revenue Code of 1986, as amended, ("Code") or any successor
thereto, and in order to avoid such a result, Executive's benefits hereunder
shall be reduced, if necessary, to an amount, the value of which is one dollar
($1.00) less than an amount equal to three (3) times Executive's "base amount,"
as determined in accordance with Section 280G. The allocation of the reduction
required hereby shall be determined by Executive.
(f) Notwithstanding anything in this Agreement to the contrary, in the
event the Executive resigns for any reason other than an Event of Termination
(as described in Section 4), Termination for Just Cause (as described in Section
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5), Termination for Disability or Death (as described in Section 6) or
Termination Upon Retirement (as described in Section 7), all obligations of the
Bank and the Company hereunder shall immediately cease upon the date of such
resignation.
5. TERMINATION FOR JUST CAUSE.
(a) The term "Termination for Just Cause" shall mean termination because
of: (i) Executive's being convicted of a felony or of any lesser criminal
offense involving moral turpitude; (ii) the willful commission by the Executive
of a criminal or other act that, in the judgment of the Board, would likely
cause substantial economic damage to the Company or the Bank or substantial
injury to the business reputation of the Company or Bank; (iii) the commission
by the Executive of any act of fraud in the performance of his duties on behalf
of the Company or Bank or a material violation of the Company's or the Bank's
code of ethics; (iv) the continuing willful failure of the Executive to perform
his duties to the Company or the Bank (other than any such failure resulting
from the Executive's incapacity due to physical or mental illness) after written
notice thereof has been given to Executive by the Board (specifying the
particulars thereof in reasonable detail) and Executive has been given a
reasonable opportunity to be heard and cure such failure; or (v) an order of a
federal or state regulatory agency or a court of competent jurisdiction
requiring the termination of the Executive's employment by the Company or the
Bank. For purposes of this Section, no act, or the failure to act, on
Executive's part shall be "willful" unless done, or omitted to be done, in bad
faith and without reasonable belief that the action or omission was in the best
interests of the Bank or its affiliates.
(b) Notwithstanding Section 5(a), neither the Company nor the Bank may
terminate Executive for Just Cause unless and until there shall have been
delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
that purpose, finding that in the good faith opinion of the Board, Executive was
guilty of conduct justifying Termination for Just Cause and specifying the
particulars thereof in detail. Executive shall not have the right to receive
compensation or other benefits for any period after Termination for Just Cause.
During the period beginning on the date of the Notice of Termination for Just
Cause pursuant to Section 5 hereof through the Date of Termination, any unvested
stock options and related limited rights granted to Executive under any stock
option plan shall not be exercisable nor shall any unvested awards granted to
Executive under any stock benefit plan of the Bank, the Company or any
subsidiary or affiliate thereof, vest. At the Date of Termination, any such
unvested stock options and related limited rights and any such unvested awards
shall become null and void and shall not be exercisable by or delivered to
Executive at any time subsequent to such Termination for Just Cause. In the
Event of Executive's Termination for Just Cause, Executive shall resign as a
director of the Company and the Bank, and as a director and/or officer of any
subsidiary or affiliate of the Company and/or the Bank.
6. TERMINATION FOR DISABILITY OR DEATH.
(a) The Bank or Executive may terminate Executive's employment after having
established Executive's Disability. For purposes of this Agreement, "Disability"
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means a physical or mental infirmity that impairs Executive's ability to
substantially perform his duties under this Agreement and that results in
Executive's becoming eligible for long-term disability benefits under a
long-term disability plan of the Company or the Bank (or, if the Company or the
Bank has no such plan in effect, that impairs Executive's ability to
substantially perform his duties under this Agreement for a period of one
hundred eighty (180) consecutive days). The Board shall determine in good faith,
based upon competent medical advice and other factors that they reasonably
believe to be relevant, whether or not Executive is and continues to be disabled
for purposes of this Agreement. As a condition to any benefits, the Board may
require Executive to submit to such physical or mental evaluations and tests as
it deems reasonably appropriate, at the Bank's expense.
(b) In the event of such Disability, Executive's obligation to perform
services under this Agreement will terminate. In the event of such termination,
Executive shall continue to receive (x) his Base Salary, as defined in Section
3(a), at the rate in effect on the Date of Termination for period of one (1)
year following the Date of Termination by reason of Disability, and (y)
sixty-six and two-thirds percent (66 2/3%) of Executive's Base Salary each
successive year after the first year following termination through the earliest
to occur of (i) the date of Executive's death; (ii) the date the Executive
recovers from such Disability; or (iii) the date Executive attains age 65. Such
payments shall be reduced by the amount of any short- or long-term disability
benefits payable to Executive under any disability program sponsored by the
Company or the Bank.
(c) In the event of Executive's death during the term of this Agreement,
his estate, legal representatives or named beneficiary or beneficiaries (as
directed by Executive in writing) shall be paid Executive's Base Salary, as
defined in Section 3, at the rate in effect at the time of Executive's death for
a period of one (1) year from the date of Executive's death.
7. TERMINATION UPON RETIREMENT
Termination of Executive's employment based on "Retirement" shall mean
termination of Executive's employment at age 65, unless extended by the Board.
Upon termination of Executive's employment based on Retirement, no amounts or
benefits shall be due Executive under this Agreement, and Executive shall be
entitled to all benefits under any retirement plan of the Bank and other plans
to which Executive is a party.
8. RESIGNATION FROM BOARDS OF DIRECTORS
In the event of Executive's termination of employment for any reason other
than upon a Change in Control, Executive shall resign as a director of the
Company and the Bank, and as a director and/or officer of any subsidiary or
affiliate of the Company and/or the Bank.
9. NOTICE.
(a) Any notice required hereunder shall be in writing and hand-delivered to
the other party. Hand delivery to the Bank and the Company shall be made to the
Chairman or the Secretary of the Board of Directors of either entity. Any
termination by the Bank or by Executive shall be communicated by Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a written notice which shall indicate the specific
8
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination.
(c) If the party receiving a Notice of Termination desires to dispute or
contest the basis or reasons for termination, the party receiving the Notice of
Termination must notify the other party within thirty (30) days after receiving
the Notice of Termination that such a dispute exists, and shall pursue the
resolution of such dispute in good faith and with reasonable diligence pursuant
to Section 16 of this Agreement. During the pendency of any such dispute,
neither the Company nor the Bank shall be obligated to pay Executive
compensation or other payments beyond the Date of Termination.
10. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, however, guarantees
payment and provision of all amounts and benefits due hereunder to Executive,
and if such amounts and benefits due from the Bank are not timely paid or
provided by the Bank, such amounts and benefits shall be paid or provided by the
Company.
11. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, including, without limitation, that
certain Executive Employment Agreement dated as of December 8, 2003 and that
certain Change in Control Agreement dated as of December 8, 2003 (both as
amended on May 24, 2005), except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to Executive of a kind elsewhere
provided. No provision of this Agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
12. NO ATTACHMENT; BINDING ON SUCCESSORS.
(a) Except as required by law or as otherwise provided in this Agreement,
no right to receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation, or to execution, 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.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Bank and their respective successors and assigns.
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13. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
14. REQUIRED PROVISIONS.
(a) The Company may terminate Executive's employment at any time, but any
termination by the Board other than Termination for Retirement as defined in
Section 7 hereof and Termination for Just Cause as defined in Section 5 hereof
shall not prejudice Executive's right to compensation or other benefits under
this Agreement. Executive shall have no right to receive compensation or other
benefits for any period after Termination for Cause or Termination for
Retirement.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) [12 USC ss.1818(e)(3)] or 8(g)(1) [12 USC ss.1818(g)(1)] of the
Federal Deposit Insurance Act (the FDI Act"), the 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 Bank
may in its discretion (i) pay Executive 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.
(c) If Executive 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) [12 USC ss.1818(e)(4)] or 8(g)(1) [12 USC ss.1818(g)(1)] of the
FDI Act, all obligations of the 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.
(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC
ss.1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement
shall terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(e) All obligations under this contract shall be terminated, except to the
extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank, (i) by the Director of the OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) [12 USC
ss.1823(c)] of the FDI Act; or (ii) 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
10
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 such action.
(f) Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Company, whether pursuant to this Agreement or otherwise,
are subject to and conditioned upon their compliance with Section 18(k) of the
FDI Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder
in 12 C.F.R. Part 359.
15. NON-COMPETITION AND POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b), (c) and (d) of this
Section 15.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Bank as may reasonably be required by the Bank in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party; provided, however, that Executive shall not be required to
provide information or assistance with respect to any litigation between the
Executive and the Bank or any of its subsidiaries or affiliates.
(c) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank, the Company
and affiliates thereof, as it may exist from time to time, is a valuable,
special and unique asset of the business of the Bank, the Company and affiliates
thereof. Executive will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered business
activities of the Bank, Company or affiliates thereof to any person, firm,
corporation, or other entity for any reason or purpose whatsoever (except for
such disclosure as may be required to be provided to the Office of Thrift
Supervision ("OTS"), the Federal Deposit Insurance Corporation ("FDIC"), or
other regulatory agency with jurisdiction over the Company, the Bank or
Executive). Notwithstanding the foregoing, Executive may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Bank, and Executive may disclose any information regarding the Bank which is
otherwise publicly available or which Executive is otherwise legally required to
disclose. In the event of a breach or threatened breach by Executive of the
provisions of this Section 15, the Bank and the Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, his
knowledge of the past, present, planned or considered business activities of the
Bank or the Company or any of their affiliates, or from rendering any services
to any person, firm, corporation, other entity to whom such knowledge, in whole
or in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting the Bank and the Company from pursuing any
other remedies available to them for such breach or threatened breach, including
the recovery of damages from Executive.
(d) Upon any termination of Executive's employment hereunder, Executive
agrees not to compete with the Bank and the Company and any of their
subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Bank has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
11
date of such termination, except as agreed to pursuant to a resolution duly
adopted by the Board. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Bank. The parties hereto, recognizing that irreparable injury will result to
the Bank, its business and property in the event of Executive's breach of this
Section 15(d) agree that in the event of any such breach by Executive, the Bank
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive, Executive's partners,
agents, servants, employers, employees and all persons acting for or with
Executive. Executive represents and admits that Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Bank, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood. Nothing herein will be construed as prohibiting the Bank
and the Company from pursuing any other remedies available to them for such
breach or threatened breach, including the recovery of damages from Executive.
Executive further agrees that Executive will not, in any manner whatsoever,
during his employment with the Company and the Bank and for a period of one (1)
year following the termination of Executive's employment, either as an
individual or as a partner, stockholder, director, officer, principal, employee,
agent, consultant, or in any other relationship or capacity, with any person,
firm, corporation or other business entity, either directly or indirectly,
solicit or induce or aid in the solicitation or inducement of any employees of
the Company of the Bank to leave their employment with the Company or the Bank.
Executive further agrees that the Executive will not, in any manner whatsoever,
during Executive's employment with the Company of the Bank and for a period of
one (1) year following the termination of Executive's employment with the
Company or the Bank, either as an individual or as a partner, stockholder,
director, officer, principal, employee, agent, consultant or in any other
relationship or capacity with any person, firm, corporation or other business
entity, either directly or indirectly, solicit the business of any customers or
clients of the Company or the Bank at the time of the termination of Executive's
employment with the Company or the Bank.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
18. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois but
only to the extent not superseded by federal law.
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19. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by binding arbitration, conducted before
a single arbitrator selected by the Bank and Executive sitting in a location
selected by the Bank and Executive within twenty-five (25) miles of
Edwardsville, Illinois 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.
20. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Executive and the Bank or resolved in Executive's favor.
21. INDEMNIFICATION.
(a) The Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, and shall indemnify Executive (and
his heirs, executors and administrators) to the fullest extent permitted under
applicable law against all expenses and liabilities reasonably incurred by him
in connection with or arising out of any action, suit or proceeding in which he
may be involved by reason of his having been a director or officer of the Bank
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements (such settlements must be approved by the
Board); provided, however, the Bank shall not be required to indemnify or
reimburse Executive for legal expenses or liabilities incurred in connection
with an action, suit or proceeding arising from any illegal or fraudulent act
committed by Executive. Any such indemnification shall be made consistent with
OTS Regulations and Section 18(K) of the Federal Deposit Insurance Act, 12
U.S.C. ss.1828(K), and the regulations issued thereunder in 12 C.F.R. Part 359.
(b) Notwithstanding the foregoing, no indemnification shall be made unless
the Bank gives the OTS at least 60 days' notice of its intention to make such
indemnification. Such notice shall state the facts on which the action arose,
the terms of any settlement, and any disposition of the action by a court. Such
notice, a copy thereof, and a certified copy of the resolution containing the
required determination by the Board shall be sent to the Regional Director of
the OTS, who shall promptly acknowledge receipt thereof. The notice period shall
run from the date of such receipt. No such indemnification shall be made if the
OTS advises the Bank in writing within such notice period, of its objection
thereto.
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SIGNATURES
IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to
be executed by their duly authorized representatives, and Executive has signed
this Agreement, effective as of the day and date first above written. The
Company has become a party to this Agreement for the sole purpose of binding
itself to the duties and obligations set forth in Sections 10 and 21 hereof.
ATTEST: FIRST FEDERAL SAVINGS & LOAN ASSOCIATION
OF EDWRDSVILLE
/s/ Xxxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
--------------------------------- -----------------------------------
Xxxxx Xxxxxx, Corporate Secretary Xxxxxx Xxxxx
Chairman of the Board
ATTEST: FIRST FEDERAL FINANCIAL SERVICES, INC.
/s/ Xxxxx Xxxxxx By: /s/ Xxxxxx Xxxxx
--------------------------------- ----------------------------------
Xxxxx Xxxxxx, Corporate Secretary Xxxxxx Xxxxx
Chairman of the Board
WITNESS: EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxxxx /s/ Xxxxxx X. Xxxxx
-------------------------------- --------------------------------------
Xxxxxx X. Xxxxx
