EXHIBIT 10.20
Change in Control Executive Severance
Agreement with Xxxxxx X. Xxxxxxxxxx dated
June 1, 2001
CHANGE OF CONTROL EXECUTIVE SEVERANCE AGREEMENT
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THIS CHANGE OF CONTROL EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is
entered into as of the 1st day of June 2001, by and between COMMERCIAL FEDERAL
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CORPORATION, a Nebraska corporation (the "Corporation"), and its wholly-owned
subsidiary, COMMERCIAL FEDERAL BANK, a FEDERAL SAVINGS BANK (the "Bank"),
referred to collectively as the "Employer," and XXXXXX X. XXXXXXXXXX (the
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"Executive").
R E C I T A L S:
A. The Executive is a key member of the management of the Employer. It is
in the best interests of the Corporation, its shareholders, and the Bank to
provide an inducement to the Executive to remain in the service of the Employer
in the event of any proposed or anticipated Change of Control of the Employer as
defined herein, as well as to facilitate an orderly transition in the event of a
Change of Control.
B. The Employer wishes to provide economic security for the Executive in
the event of a Change of Control.
C. The following provisions have been approved by the Boards of Directors
of the Corporation and the Bank (the "Boards"), and apply in the event of a
Change of Control:
1. Duration. This Agreement will remain in force until such time as the
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Employer terminates this Agreement, or the Executive terminates his or her
employment, or the Employer terminates the employment of the Executive prior to
a Change of Control. The Employer may amend or terminate this Agreement at any
time prior to a Change of Control Event, as defined herein. However, if this
Agreement is terminated in anticipation of a Change of Control Event, such
termination shall be a "Constructive Involuntary Termination" as defined herein.
2. Change of Control. A Change of Control shall be deemed to have occurred
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in each of the following events, referred to herein as a "Change of Control
Event":
a. At any time a majority of the directors of the Corporation or the
Bank are not the persons for whom election proxies have been solicited by
the Boards, or persons then serving as directors appointed by the Boards,
except where such appointments are necessitated by the removal of
directors.
b. At any time forty nine percent (49%) or more of the outstanding
stock of the Corporation or the Bank is acquired or beneficially owned (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, or any successor thereto) by any person or entity (excluding the
Corporation, the Bank, or the Executive) or any combination of persons or
entities acting in concert.
c. At any time the shareholders of the Corporation or the Bank approve
an agreement to merge or consolidate the Corporation or the Bank with or
into another corporation, or to sell or otherwise dispose of all, or
substantially all of the assets of the Corporation or the Bank.
3. Constructive Involuntary Termination. A Constructive Involuntary
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Termination is deemed to have occurred if, in anticipation of a Change of
Control Event, or after such an event has occurred, any of the following occurs:
a. This Agreement or the Executive's employment is terminated by
Employer in anticipation of a Change of Control, or by the successor
corporation after a Change of Control.
b. The Executive's compensation level is reduced, the Executive is
given diminished responsibilities, or the Executive is given a lower job
title.
c. The level of the Executive's participation in incentive
compensation is reduced or eliminated.
d. The Executive's benefit coverage or perquisites are reduced or
eliminated, except to the extent such reduction or elimination applies to
all other employees.
e. The Executive's office location is changed to a location greater
than fifty (50) miles from the location of the Executive's office at the
time of the Change of Control Event.
4. Termination for Cause. The benefits provided herein shall not be due in
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the event the Executive's employment is terminated for cause. With respect to
the Corporation, the term "cause" shall mean, and be limited to any act of
personal dishonesty, willful misconduct, or willful violation of law, which act
results in substantial loss to the Employer or its reputation. With respect to
the Bank, termination for cause shall mean termination because of the
Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.
5. Voluntary Termination. The benefits provided herein shall not be due in
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the event of a voluntary termination. A voluntary termination will have occurred
if the Executive resigns from the successor corporation after a Change of
Control under conditions other than as specified in Section 3.
6. Regulatory Provisions Applicable Only to the Bank.
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a. If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C.(S)(S) 1818(e)(3) and (g)(1)), the Bank's obligations under this
Agreement shall be suspended as of the date of service unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Bank may in its discretion (i) pay the Executive all or part of the
compensation withheld while its contract obligations were suspended; and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.
b. If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C.(S)(S) 1818(e)(4) or (g)(1)), all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
c. If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations of the Bank under this
Agreement shall terminate as of the date of default, but this paragraph
shall not affect any vested rights of the contracting parties.
d. All obligations of the Bank under this Agreement shall be
terminated, except to the extent determined that continuation of this
Agreement is necessary for the continued operation of the Bank:
i. At the time the Federal Deposit Insurance Corporation ("FDIC")
or the Resolution Trust Corporation ("RTC") enters into an agreement
to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the Federal Deposit Insurance Act; or
ii. At the time the FDIC or the RTC approves a supervisory merger
to resolve problems related to operation of the Bank or when the Bank
is determined by the Director to be in an unsafe or unsound condition.
Any rights of the parties that have already vested, however, shall not
be affected by such action.
7. Severance Award. If, in anticipation of a Change of Control, or after a
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Change of Control Event has occurred, the Executive's employment is terminated
without cause, or a Constructive Involuntary Termination occurs, the following
provisions apply:
a. The Executive will continue to receive, in equal monthly payments,
the base salary and all commissions and bonuses (including short- and
long-term incentive programs and stock options granted pursuant to the
Corporation's executive incentive plan) in effect at the time of the
involuntary termination for a period of 35.88 months from the date of
termination. For purposes of this paragraph, commissions and bonuses shall
be determined by computing the average monthly commission and/or bonus
earned by the Executive for the twenty four (24) months immediately
preceding the month in which such termination of employment occurs. The
amount so determined shall be paid to the Executive each month together
with such base salary, during such 35.88 month period. It is not the intent
of the parties to this Agreement that payment hereunder will constitute a
"parachute payment" as defined in Section 280G of the Internal Revenue Code
of 1986 (the "Code"). Any payments made by the Bank to the Executive
pursuant to this Agreement, or otherwise, are subject to and conditioned
upon their compliance with 12 U.S.C. (S)(S) 1828 (K) any regulation
promulgated thereunder. All benefits and payments shall be reduced, if
necessary, to the largest aggregate amount that will result in no portion
thereof being subject to federal excise tax or being nondeductible to the
Employer for federal income tax purposes. The Executive will determine
which payments or benefits are to be reduced, if necessary to conform to
this provision.
b. During the period of months for which the Executive receives
compensation under the preceding paragraph, the Executive will also
continue to participate in any health, disability, and life insurance plan
to the same extent as if the Executive were an employee of the Employer or
any successor corporation. In the event that the Executive's participation
in any of these plans is prohibited, the Employer or successor corporation,
at its sole expense, shall provide the Executive with benefits
substantially similar to those which the Executive is entitled to receive
under any such plan. The Executive shall remain responsible for that
portion of the costs of such plans for which the Executive was responsible
prior to termination.
c. The Executive will also continue to participate until the end of
such period in any perquisite program (auto, country club, dining club,
physical, tax planning, etc.) of the Employer or any successor corporation,
to the same extent as if the Executive were an employee of the successor
corporation. In the event the providing of any such program is not
possible, the Employer shall arrange, at its sole cost, to provide an
equivalent benefit. The Employer may elect to substitute a cash payment
equivalent to the projected value of any perquisite over the transition
period.
d. In the event the Executive obtains employment during the period
salary, commissions, and bonuses are payable under Section 7(a), any
amounts received by the Executive as a result of such employment shall be
offset against and shall serve to reduce the amount payable by the
Employer. In addition, any benefits the Executive receives which are
similar to those described in Paragraphs 7(b) and (c) shall relieve the
Employer from any obligation to provide such benefits to the Executive. The
Executive shall provide to the Employer all federal and state tax returns
filed for any period in which any amounts are paid pursuant to this
Agreement, within fifteen (15) days after such returns are filed, and shall
provide such other information the Employer may reasonably require to
assure compliance with this paragraph.
8. Legal Fees and Expenses. To the extent not prohibited by law, the
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Employer shall also pay to the Executive one-half (1/2) of all legal fees and
expenses reasonably incurred by the Executive as a result of an involuntary
termination, including, but not limited to, fees and expenses incurred in
seeking to enforce any right or benefit provided by this Agreement.
9. Successors and Assigns. This Agreement shall be binding upon and inure
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to the benefit of the successors of the Corporation and the Bank.
The Executive shall have no right to assign, pledge, or otherwise dispose
of or transfer any interest in this Agreement, whether directly or indirectly,
or in whole or in part.
10. Joint and Several Liability. It is the intent of the parties hereto
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that the liability of the Corporation and the Bank hereunder be joint and
several. If either such party shall be prohibited for any reason from fulfilling
the terms hereof, the other such party shall nevertheless be and remain fully
liable.
11. Severability. In the event that any portion of this Agreement is held
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to be invalid or unenforceable for any reason, it is hereby agreed that
invalidity or unenforceability shall not affect the other portions of this
Agreement and that the remaining covenants, terms, and conditions shall remain
in full force and effect and any court of competent jurisdiction may so modify
the objectionable provisions as to make it valid and enforceable.
12. Governing Law. This Agreement shall be construed in accordance with the
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laws of the State of Nebraska, and supersedes any existing Change of Control
agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMMERCIAL FEDERAL CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx, Chairman & CEO
COMMERCIAL FEDERAL BANK, A
FEDERAL SAVINGS BANK
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx, Chairman & CEO
