1
EXHIBIT 99.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXXX X. XXXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
1
2
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
2
3
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
3
4
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
4
5
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
5
6
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
6
7
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
7
8
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
8
9
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
9
10
11. 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 Executive: Xxxxxx X. Xxxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
10
11
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
----------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
XXXXXX X. XXXXXX, Individually
11
12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXX X. XXXXXXXXXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
12
13
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
13
14
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
14
15
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
15
16
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
16
17
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
17
18
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
18
19
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
19
20
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
20
21
11. 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 Executive: Xxxxx X. Xxxxxxxxxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
21
22
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
---------------------- -----------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxxxxxx
-------------------------------
XXXXX X. XXXXXXXXXXXX, Individually
22
23
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXX X. XXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
and Legal Counsel of the Company and the Company's wholly-owned subsidiary,
Citizens Federal Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
23
24
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
24
25
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
25
26
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President and
Legal Counsel of the Company and/or the Bank. As such, the Executive shall
render administrative and management services as are customarily performed by
persons situated in similar executive capacities, and shall have such other
powers and duties as the Board or the Board of Directors of the Bank may
prescribe from time to time. The Executive shall also render services to any
Consolidated Subsidiary as requested by the Company or the Bank from time to
time consistent with his executive position. The Executive shall devote his
best efforts and reasonable time and attention to the business and affairs of
the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Executive may serve on corporate or charitable
boards or committees and manage personal investments, so long as such
activities do not interfere materially with the performance of his
responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
26
27
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
27
28
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
28
29
7(a), 7(b) or 7(c) hereof, or the Executive terminates his
employment for Good Reason, and (ii) the Executive offers to continue to
provide services as contemplated by this Agreement and such offer is declined
("Involuntary Termination"), then, subject to Section 7(e) of this Agreement,
the Company shall, during the lesser period of the Date of Termination through
the remaining term of this Agreement or three years following the Date of
Termination, as liquidated damages pay to the Executive monthly one-twelfth of
the Company Salary at the annual rate in effect at the time the Notice of
Termination is given and one-twelfth of the average annual amount of cash bonus
and cash incentive compensation of the Executive, based on the average amounts
of such compensation earned by the Executive for the three full fiscal years
preceding the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
29
30
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank,
or both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
30
31
notice is delivered, except in the case of Termination for
Cause. In the event that the Executive determines in good faith that he has
experienced an Involuntary Termination of his employment, he shall send a
written notice to the Company stating the circumstances that constitute such
Involuntary Termination and the date upon which his employment shall have
ceased due to such Involuntary Termination. In the event that the Executive
desires to effect a Voluntary Termination, he shall deliver a written notice to
the Company, stating the date upon which employment shall terminate, which date
shall be at least 30 days after the date upon which the notice is delivered,
unless the parties agree to a date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
31
32
11. 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 Executive: Xxxx X. Xxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
32
33
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxxx X. Xxxxxxxxxxxx /s/ Xxxxx X. Xxxx
-------------------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxx X. Xxxx
----------------------------------------
XXXX X. XXXX, Individually
33
34
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXX X. XXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the President, Chief
Executive Officer and Chairman of the Board of the Company and the Company's
wholly-owned subsidiary, Citizens Federal Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
34
35
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
35
36
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the
Executive's express written consent, of a material diminution of or
interference with the Executive's duties, responsibilities or benefits,
including (without limitation) any of the following circumstances unless such
circumstances are fully corrected prior to the Date of Termination given in
respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
36
37
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of three years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Chairman of the Board,
President and Chief Executive Officer of the Company and/or the Bank. As such,
the Executive shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties as the Board or the Board of Directors
of the Bank may prescribe from time to time. The Executive shall also render
services to any Consolidated Subsidiary as requested by the Company or the Bank
from time to time consistent with his executive position. The Executive shall
devote his best efforts and reasonable time and attention to the business and
affairs of the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Executive may serve on corporate or charitable
boards or committees and manage personal investments, so long as such
activities do not interfere materially with the performance of his
responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
37
38
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
38
39
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
39
40
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the
remaining term of this Agreement or three years following the Date of
Termination, as liquidated damages pay to the Executive monthly one-twelfth of
the Company Salary at the annual rate in effect at the time the Notice of
Termination is given and one-twelfth of the average annual amount of cash bonus
and cash incentive compensation of the Executive, based on the average amounts
of such compensation earned by the Executive for the three full fiscal years
preceding the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or three years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
40
41
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
41
42
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to
the Company stating the circumstances that constitute such Involuntary
Termination and the date upon which his employment shall have ceased due to
such Involuntary Termination. In the event that the Executive desires to
effect a Voluntary Termination, he shall deliver a written notice to the
Company, stating the date upon which employment shall terminate, which date
shall be at least 30 days after the date upon which the notice is delivered,
unless the parties agree to a date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
42
43
11. 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 Executive: Xxxxx X. Xxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
43
44
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
----------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxx X. Xxxxx
----------------------------------------
XXXXX X. XXXXX, Individually
44
45
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXX X. XXXXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
45
46
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
46
47
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
47
48
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
48
49
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
49
50
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
50
51
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
51
52
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
52
53
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
53
54
11. 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 Executive: Xxxx X. Xxxxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
54
55
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
----------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxx X. Xxxxxxx
----------------------------------------
XXXX X. XXXXXXX, Individually
55
56
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXX X. XXXXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
56
57
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
57
58
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
58
59
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
59
60
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
60
61
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
61
62
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
62
63
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
63
64
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
64
65
11. 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 Executive: Xxxxx X. Xxxxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
65
66
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
----------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
------------------------------
XXXXX X. XXXXXXX, Individually
66
67
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXXXX X. XXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and of the mortgage banking subsidiary of the Company's
wholly-owned subsidiary, Citizens Federal Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
67
68
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
68
69
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
69
70
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
CitFed Mortgage Corporation of America, a consolidated subsidiary. As such,
the Executive shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties as the Board or the Board of Directors
of the Bank may prescribe from time to time. The Executive shall also render
services to any Consolidated Subsidiary as requested by the Company or the Bank
from time to time consistent with his executive position. The Executive shall
devote his best efforts and reasonable time and attention to the business and
affairs of the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Executive may serve on corporate or charitable
boards or committees and manage personal investments, so long as such
activities do not interfere materially with the performance of his
responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
70
71
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
71
72
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
72
73
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
73
74
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
74
75
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
75
76
11. 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 Executive: Xxxxxxx X. Xxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
76
77
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
--------------------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxxxx X. Xxxx
------------------------------------------
XXXXXXX X. XXXX, Individually
77
78
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXXXXXX X. XXXXXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
78
79
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
79
80
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
80
81
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
81
82
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
82
83
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
83
84
7(a), 7(b) or 7(c) hereof, or the Executive terminates his
employment for Good Reason, and (ii) the Executive offers to continue to
provide services as contemplated by this Agreement and such offer is declined
("Involuntary Termination"), then, subject to Section 7(e) of this Agreement,
the Company shall, during the lesser period of the Date of Termination through
the remaining term of this Agreement or three years following the Date of
Termination, as liquidated damages pay to the Executive monthly one-twelfth of
the Company Salary at the annual rate in effect at the time the Notice of
Termination is given and one-twelfth of the average annual amount of cash bonus
and cash incentive compensation of the Executive, based on the average amounts
of such compensation earned by the Executive for the three full fiscal years
preceding the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
84
85
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank,
or both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
85
86
notice is delivered, except in the case of Termination for
Cause. In the event that the Executive determines in good faith that he has
experienced an Involuntary Termination of his employment, he shall send a
written notice to the Company stating the circumstances that constitute such
Involuntary Termination and the date upon which his employment shall have
ceased due to such Involuntary Termination. In the event that the Executive
desires to effect a Voluntary Termination, he shall deliver a written notice to
the Company, stating the date upon which employment shall terminate, which date
shall be at least 30 days after the date upon which the notice is delivered,
unless the parties agree to a date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
86
87
11. 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 Executive: Xxxxxxxxx X. Xxxxxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
87
88
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
--------------------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxxxxxx X. Xxxxxxxx
----------------------------------------
XXXXXXXXX X. XXXXXXXX, Individually
88
89
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at Xxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxx, Xxxx 00000 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(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
"Company"), and XXXXXXX X. XXXXXXX, (the "Executive").
WHEREAS, the Executive is currently serving as the Chief Operating Office,
Chief Financial Officer and Executive Vice President of the Company and the
Company's wholly-owned subsidiary, Citizens Federal Bank, F.S.B. (the "Bank");
and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of 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 management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive'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
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
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 herein 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
89
90
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, 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).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
90
91
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive 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
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive'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 Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
91
92
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive 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. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Chief Operating Officer,
Chief Financial Officer and Executive Vice President of the Company and/or the
Bank. As such, the Executive shall render administrative and management
services as are customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties as the Board or the
Board of Directors of the Bank may prescribe from time to time. The Executive
shall also render services to any Consolidated Subsidiary as requested by the
Company or the Bank from time to time consistent with his executive position.
The Executive shall devote his best efforts and reasonable time and attention
to the business and affairs of the Company and the Bank to the extent necessary
to discharge his responsibilities hereunder. The Executive may serve on
corporate or charitable boards or committees and manage personal investments,
so long as such activities do not interfere materially with the performance of
his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
92
93
(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
93
94
7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
94
95
7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
95
96
While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
96
97
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. 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 Company 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 Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company 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
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(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 Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
97
98
11. 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 Executive: Xxxxxxx X. Xxxxxxx
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
Xxx Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
ATTENTION: Corporate 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.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. 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 Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
98
99
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
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: CITFED BANCORP, INC.
/s/ Xxxx X. Xxxx /s/ Xxxxx X. Xxxx
----------------------------- ----------------------------------------
By: XXXXX X. XXXX
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
XXXXXXX X. XXXXXXX, Individually
99
