Exhibit 10.2
AGREEMENT
AGREEMENT, dated this ________ day of _________ 1998, between CFS
Bancorp, Inc. (the "Corporation"), a Delaware corporation, and ________________
(the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
Citizens Financial Savings, FSB (the "Bank") (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's continued
active participation in the business of the Employers;
WHEREAS, the Corporation and the Bank desire to enter into separate
agreements with the Executive with respect to his employment by each of the
Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Corporation in the event that his
employment with the Corporation is terminated under specified circumstances;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. Definitions. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) Average Annual Compensation. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination and which was either (i) included in the Executive's gross income
for tax purposes, including but not limited to Base Salary, bonuses and amounts
taxable to the Executive under any qualified or non-qualified employee benefit
plans of the Employers, or (ii) deferred at the election of the Executive.
(b) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(c) Cause. Termination of the Executive's employment for "Cause"
shall mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful
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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.
(d) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean the occurrence of any of the following: (i) the
acquisition of control of the Corporation as defined in 12 C.F.R. Section 574.4,
unless a presumption of control is successfully rebutted or unless the
transaction is exempted by 12 C.F.R. Section 574.3(c)(vii), or any successor to
such sections; (ii) an event that would be required to be reported in response
to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A pursuant
to the Securities Exchange Act of 1934, as amended ("Exchange Act"), or any
successor thereto, whether or not any class of securities of the Corporation is
registered under the Exchange Act; (iii) any "person" (as such 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 Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities; or (iv)
during any period of three consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(g) Disability. Termination by the Corporation of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within
twenty-four (24) months following a Change in Control of the Corporation based
on:
(i) Without the Executive's express written consent, the failure
to elect or to re-elect or to appoint or to re-appoint the
Executive to the offices of Chairman and Chief Executive
Officer of the Employers or a material adverse change made by
the Employers in the Executive's functions, duties or
responsibilities as Chairman and Chief Executive Officer of
the Employers;
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(ii) Without the Executive's express written consent, a reduction
by either of the Employers in the Executive's Base Salary as
the same may be increased from time to time or, except to the
extent permitted by Section 3(b) hereof, a reduction in the
package of fringe benefits provided to the Executive, taken
as a whole;
(iii) The principal executive office of either of the Employers is
relocated outside of the Munster, Indiana area or, without
the Executive's express written consent, either of the
Employers require the Executive to be based anywhere other
than an area in which the Employers' principal executive
office is located, except for required travel on business of
the Employers to an extent substantially consistent with the
Executive's present business travel obligations;
(iv) Any purported termination of the Executive's employment for
Disability or Retirement which is not effected pursuant to a
Notice of Termination satisfying the requirements of
paragraph (j) below; or
(v) The failure by the Corporation to obtain the assumption of
and agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) Notice of Termination. Any purported termination of the
Executive's employment by the Corporation for any reason, including without
limitation for Cause Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
written "Notice of Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the case of the Corporation's termination of the Executive's
employment for Cause, which shall be effective immediately; and (iv) is given in
the manner specified in Section 10 hereof.
(k) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies, including early
retirement, generally applicable to their salaried employees.
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2. Term of Employment.
(a) The Corporation hereby employs the Executive as Chairman and
Chief Executive Officer, and the Executive hereby accepts said employment and
agrees to render such services to the Corporation on the terms and conditions
set forth in this Agreement. The term of this Agreement shall be a period of
three years commencing as of the date hereof (the "Commencement Date"), subject
to earlier termination as provided herein. Beginning on the day following the
Commencement Date, and on each day thereafter, the term of this Agreement shall
be extended for a period of one day in addition to the then-remaining term,
provided that the Corporation has not given notice to the Executive in writing
at least 60 days prior to such day that the term of this Agreement shall not be
extended further. Reference herein to the term of this Agreement shall refer to
both such initial term and such extended terms. The Board of Directors of the
Corporation shall review on a periodic basis (and no less frequently than
annually) whether to permit further extensions of the term of this Agreement.
As part of such review, the Board of Directors shall consider all relevant
factors, including the Executive's performance hereunder, and shall either
expressly approve further extensions of the time of this Agreement or decide to
provide notice to the contrary.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Corporation as may be consistent with his titles
and from time to time assigned to him by the Corporation's Board of Directors.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $______
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers and may
not be decreased without the Executive's express written consent. In addition
to his Base Salary, the Executive shall be entitled to receive during the term
of this Agreement such bonus payments as may be determined by the Boards of
Directors of the Employers.
(b) During the term of this Agreement, the Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock ownership,
or other plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Boards of Directors of the Employers. The Corporation shall not
make any changes in such plans, benefits or privileges which would adversely
affect the Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the Corporation
and does not result in a proportionately greater adverse change in the rights of
or benefits to the Executive as compared with any other executive officer of the
Corporation. Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the
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future shall be deemed to be in lieu of the salary payable to the Executive
pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be
entitled to paid annual vacation in accordance with the policies as established
from time to time by the Boards of Directors of the Employers. The Executive
shall not be entitled to receive any additional compensation from the Employers
for failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Boards of Directors of the Employers.
(d) In the event the Executive's employment is terminated due to
Disability or Retirement, the Employers shall provide continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Employers for the Executive immediately prior to his
termination. Such coverage such spouse attains shall cease upon the expiration
of the remaining term of this Agreement.
(e) In the event of the Executive's death during the term of this
Agreement, the Employers shall provide to the Executive's spouse continued
medical and dental coverage substantially identical to the coverage maintained
by the Employers for the Executive immediately prior to his death until such
spouse attains the age of 65.
(f) The Executive's compensation, benefits and expenses shall be paid
by the Corporation and the Bank in the same proportion as the time and services
actually expended by the Executive on behalf of each respective Employer.
4. Expenses. The Employers shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of or in connection with the business of the Employers,
including, but not by way of limitation, automobile expenses and other traveling
expenses, and all reasonable entertainment expenses (whether incurred at the
Executive's residence, while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the Boards of
Directors of the Employers. If such expenses are paid in the first instance by
the Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Corporation shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is terminated by
the Corporation for Cause or (ii) the Executive terminates his employment
hereunder other
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than for Disability, Retirement, death or Good Reason, the Executive shall have
no right pursuant to this Agreement to compensation or other benefits for any
period after the applicable Date of Termination.
(c) In the event that the Executive's employment is terminated as a
result of Disability, Retirement or the Executive's death during the term of
this Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination, except as provided for in Sections 3(d) and 3(e) hereof.
(d) In the event that (i) the Executive's employment is terminated by
the Corporation for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Corporation, which breach has not been
cured within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Employers, or (b) for Good Reason, then the
Corporation shall
(A) pay to the Executive, in either thirty-six (36) equal monthly
installments beginning with the first business day of the month
following the Date of Termination or in a lump sum within five business
days of the Date of Termination (at the Executive's election), a cash
severance amount equal to three (3) times that portion of the
Executive's Average Annual Compensation paid by the Corporation, and
(B) maintain and provide for a period ending at the earlier of (i)
the expiration of the remaining term of employment pursuant hereto prior
to the Notice of Termination or (ii) the date of the Executive's
full-time employment by another employer (provided that the Executive is
entitled under the terms of such employment to benefits substantially
similar to those described in this subparagraph (B)), at no cost to the
Executive, the Executive's continued participation in all group
insurance, life insurance, health and accident insurance, disability
insurance and other employee benefit plans, programs and arrangements
offered by the Corporation in which the Executive was entitled to
participate immediately prior to the Date of Termination (excluding
(x) stock option and restricted stock plans of the Employers,
(y) bonuses and other items of cash compensation included in Average
Annual Compensation, and (z) other benefits, or portions thereof,
included in Average Annual Compensation), provided that in the event
that the Executive's participation in any plan, program or arrangement
as provided in this subparagraph (B) is barred, or during such period
any such plan, program or arrangement is discontinued or the benefits
thereunder are materially reduced, the Corporation shall arrange to
provide the Executive with benefits substantially similar to those which
the Executive was entitled to receive under such plans, programs and
arrangements immediately prior to the Date of Termination.
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6. Payment of Additional Benefits under Certain Circumstances.
(a) If the payments and benefits pursuant to Section 5 hereof, either
alone or together with other payments and benefits which the Executive has the
right to receive from the Employers (including, without limitation, the payments
and benefits which the Executive would have the right to receive from the Bank
pursuant to Section 5 of the Agreement between the Bank and the Executive dated
December 19, 1997 ("Bank Agreement"), before giving effect to any reduction in
such amounts pursuant to Section 6 of the Bank Agreement), would constitute a
"parachute payment" as defined in Section 280G(b)(2) of the Code (the "Initial
Parachute Payment," which includes the amounts paid pursuant to clause (A)
below), then the Corporation shall pay to the Executive, in thirty-six (36)
equal monthly installments beginning with the first business day of the month
following the Date of Termination or in a lump sum within five business days of
the Date of Termination (at the Executive's election), a cash amount equal to
the sum of the following:
(A) the amount by which the payments and benefits that would have
otherwise been paid by the Bank to the Executive pursuant to Section 5
of the Bank Agreement are reduced by the provisions of Section 6 of the
Bank Agreement;
(B) twenty (20) percent (or such other percentage equal to the tax
rate imposed by Section 4999 of the Code) of the amount by which the
Initial Parachute Payment exceeds the Executive's "base amount" from the
Employers, as defined in Section 280G(b)(3) of the Code, with the
difference between the Initial Parachute Payment and the Executive's
base amount being hereinafter referred to as the "Initial Excess
Parachute Payment";
(C) such additional amount (tax allowance) as may be necessary to
compensate the Executive for the payment by the Executive of state and
federal income and excise taxes on the payment provided under clause (B)
above and on any payments under this clause (C). In computing such tax
allowance, the payment to be made under clause (B) above shall be
multiplied by the "gross up percentage" ("GUP"). The GUP shall be
determined as follows:
Tax Rate
GUP = -----------
1- Tax Rate
The Tax Rate for purposes of computing the GUP shall be the highest
marginal federal and state income and employment-related tax rate,
including any applicable excise tax rate, applicable to the Executive in
the year in which the payment under clause (B) above is made.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which the Executive is a party
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that the actual excess parachute payment as defined in Section 280G(b)(1) of the
Code is different from the Initial Excess Parachute Payment (such different
amount being hereafter referred to as the "Determinative Excess Parachute
Payment"), then the Corporation's independent tax counsel or accountants shall
determine the amount (the "Adjustment Amount") which either the Executive must
pay to the Corporation or the Corporation must pay to the Executive in order to
put the Executive (or the Corporation, as the case may be) in the same position
the Executive (or the Corporation, as the case may be) would have been if the
Initial Excess Parachute Payment had been equal to the Determinative Excess
Parachute Payment. In determining the Adjustment Amount, the independent tax
counsel or accountants shall take into account any and all taxes (including any
penalties and interest) paid by or for the Executive or refunded to the
Executive or for the Executive's benefit. As soon as practicable after the
Adjustment Amount has been so determined, the Corporation shall pay the
Adjustment Amount to the Executive or the Executive shall repay the Adjustment
Amount to the Corporation, as the case may be.
(c) In each calendar year that the Executive receives payments of
benefits under this Section 6, the Executive shall report on his state and
federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the
Corporation as described above. The Corporation shall indemnify and hold the
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorneys' fees, interest, fines and penalties)
which the Executive incurs as a result of so reporting such information. The
Executive shall promptly notify the Corporation in writing whenever the
Executive receives notice of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Section 6 is being
reviewed or is in dispute. The Corporation shall assume control at its expense
over all legal and accounting matters pertaining to such federal tax treatment
(except to the extent necessary or appropriate for the Executive to resolve any
such proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this Section 6) and the Executive shall cooperate fully with the
Corporation in any such proceeding. The Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Corporation may
have in connection therewith without the prior consent of the Corporation.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
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8. Withholding. All payments required to be made by the Corporation
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Corporation may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
9. Assignability. The Corporation may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Corporation may hereafter merge or
consolidate or to which the Corporation may transfer all or substantially all of
its assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the
Corporation hereunder as fully as if it had been originally made a party hereto,
but may not otherwise assign this Agreement or its rights and obligations
hereunder. The Executive may not assign or transfer this Agreement or any
rights or obligations hereunder.
10. Notice. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Corporation: Secretary
CFS Bancorp, Inc.
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
To the Bank: Secretary
Citizens Financial Savings, Inc.
000 Xxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
To the Executive: [Name]
[home address]
11. Amendment; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer or officers as
may be specifically designated by the Board of Directors of the Corporation to
sign on its behalf. No waiver by any party hereto at any time of any breach by
any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
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12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of Indiana.
13. Nature of Obligations. Nothing contained herein shall create or
require the Corporation to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Corporation hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Corporation.
14. Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Prohibition. Notwithstanding any other provision of
this Agreement to the contrary, any payments made to the Executive pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1828(k)) and the regulations promulgated thereunder, including 12 C.F.R.
Part 359. In the event of the Executive's termination of employment with the
Bank for Cause, all employment relationships and managerial duties with the Bank
shall immediately cease regardless of whether the Executive remains in the
employ of the Corporation following such termination. Furthermore, following
such termination for Cause, the Executive will not, directly or indirectly,
influence or participate in the affairs or the operations of the Bank.
18. Payment of Costs and Legal Fees and Reinstatement of Benefits.
In the event any dispute or controversy arising under or in connection with the
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, the Executive shall be entitled to the
payment of (a) all legal fees incurred by the Executive in resolving such
dispute or controversy, and (2) any back-pay, including Base Salary, bonuses and
any other cash compensation, fringe benefits and any compensation and benefits
due to the Executive under this Agreement.
19. Indemnification. The Corporation shall provide the Executive
(including his heirs, executors and administrators) with coverage under a
standard directors' and officers' liability insurance policy at its expense, or
in lieu thereof, shall indemnify the Executive (and
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his heirs, executors and administrators) to the fullest extent permitted under
Delaware 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
Corporation (whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities). Such expenses and liabilities shall
include, but shall not be limited to, judgments, court costs and attorneys' fees
and the cost of reasonable settlements.
20. Entire Agreement. This Agreement embodies the entire agreement
between the Corporation and the Executive with respect to the matters agreed to
herein. All prior agreements between the Corporation and the Executive with
respect to the matters agreed to herein are hereby superseded and shall have no
force or effect. Notwithstanding the foregoing, nothing contained in this
Agreement shall affect the agreement of even date being entered into between the
Bank and the Executive.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: CFS BANCORP, INC.
By:
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, Director
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EXECUTIVE
By:
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