<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For transition period from __________ to __________
Commission File Number 0 -17609
WEST SUBURBAN BANCORP, INC.
(Exact name of Registrant as specified in its charter)
ILLINOIS 36-3452469
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
711 SOUTH MEYERS ROAD, LOMBARD, ILLINOIS 60148
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (630) 629-4200
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the Issuer's classes
of common stock as of the latest practicable date.
1,000,000 shares of Common Stock, Class A, no par value, were authorized and
347,015 shares were issued and outstanding as of June 30, 1997.
1,000,000 shares of Common Stock, Class B, no par value, were authorized and
85,480 shares were issued and outstanding as of June 30, 1997.
<PAGE>
WEST SUBURBAN BANCORP, INC.
Form 10-Q Quarterly Report
Table of Contents
PART I
Page Number
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 10
PART II
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . 17
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . 17
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 17
Form 10-Q Signature Page . . . . . . . . . . . . . . . . . . . . . . . . 19
THIS REPORT INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. WEST SUBURBAN BANCORP, INC. (THE
"COMPANY") INTENDS SUCH FORWARD-LOOKING STATEMENTS TO BE COVERED BY THE SAFE
HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS CONTAINED IN THE PRIVATE
SECURITIES REFORM ACT OF 1995 AS AMENDED, AND IS INCLUDING THIS STATEMENT FOR
PURPOSES OF INDICATING SUCH INTENT. FORWARD-LOOKING STATEMENTS WHICH ARE
BASED ON CERTAIN ASSUMPTIONS AND DESCRIBE FUTURE PLANS, STRATEGIES AND
EXPECTATIONS OF THE COMPANY, ARE GENERALLY IDENTIFIABLE BY USE OF THE WORDS
"BELIEVE", "EXPECT", "INTEND", "ANTICIPATE", "ESTIMATE", "PROJECT" OR SIMILAR
EXPRESSIONS. THE COMPANY'S ABILITY TO PREDICT RESULTS OR THE ACTUAL EFFECT OF
FUTURE PLANS OR STRATEGIES IS INHERENTLY UNCERTAIN. FACTORS WHICH COULD HAVE
A MATERIAL ADVERSE AFFECT ON THE OPERATIONS AND FUTURE PROSPECTS OF THE
COMPANY AND ITS SUBSIDIARY INCLUDE, BUT ARE NOT LIMITED TO, CHANGES IN
INTEREST RATES, GENERAL ECONOMIC CONDITIONS, LEGISLATIVE/REGULATORY CHANGES,
MONETARY AND FISCAL POLICIES OF THE U.S. GOVERNMENT, INCLUDING POLICIES OF
THE U.S. TREASURY AND THE FEDERAL RESERVE BOARD, THE QUALITY OR COMPOSITION
OF THE LOAN OR INVESTMENT PORTFOLIOS, DEMAND FOR LOAN PRODUCTS, DEPOSIT
FLOWS, COMPETITION, DEMAND FOR FINANCIAL SERVICES IN THE COMPANY'S MARKET
AREA AND ACCOUNTING PRINCIPLES, POLICIES AND GUIDELINES. THESE RISKS AND
UNCERTAINTIES SHOULD BE CONSIDERED IN EVALUATING FORWARD-LOOKING STATEMENTS
AND UNDUE RELIANCE SHOULD NOT BE PLACED ON SUCH STATEMENTS. FURTHER
INFORMATION CONCERNING THE COMPANY AND ITS BUSINESS, INCLUDING ADDITIONAL
FACTORS THAT COULD MATERIALLY AFFECT THE COMPANY'S FINANCIAL RESULTS, IS
INCLUDED IN OTHER FILINGS OF THE COMPANY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(UNAUDITED)
June 30, December 31,
1997 1996
------------ -----------
ASSETS
Cash and due from banks $26,882 $38,520
Interest-bearing deposits in
financial institutions 308 240
Federal funds sold 18,140 29,890
------------ -----------
Total cash and cash equivalents 45,330 68,650
Investment securities:
Available for sale (amortized cost of
$232,609 in 1997; $159,614 in 1996) 231,800 158,578
Held to maturity (fair value of $182,586
in 1997; $170,202 in 1996) 182,872 170,191
Loans, less allowance for loan losses of
$9,974 in 1997; $9,603 in 1996 780,878 784,242
Premises and equipment, net 30,491 30,130
Other real estate 2,570 2,757
Accrued interest and other assets 20,710 21,056
------------ -----------
TOTAL ASSETS $1,294,651 $1,235,604
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $100,874 $102,583
Interest-bearing 1,050,628 996,814
------------ -----------
Total deposits 1,151,502 1,099,397
FHLB advances 1,350
Accrued interest and other liabilities 17,350 16,519
------------ -----------
TOTAL LIABILITIES 1,168,852 1,117,266
------------ -----------
Shareholders' equity:
Common Stock, Class A, no par value;
1,000,000 shares authorized; 347,015
shares issued and outstanding 2,774 2,774
Common Stock, Class B, no par value;
1,000,000 shares authorized;
85,480 shares issued and outstanding 683 683
Surplus 38,066 38,066
Retained earnings 84,763 77,439
Unrealized loss on securities available
for sale, net of taxes (487) (624)
------------ -----------
TOTAL SHAREHOLDERS' EQUITY 125,799 118,338
------------ -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,294,651 $1,235,604
============ ===========
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands, except per share data)
(UNAUDITED)
1997 1996
--------- ---------
INTEREST INCOME
Loans, including fees $34,769 $35,182
--------- ---------
Investment securities:
Taxable 10,025 6,528
Nontaxable 1,071 956
--------- ---------
Total investment securities 11,096 7,484
Deposits in financial institutions 24 38
Federal funds sold 1,140 695
--------- ---------
Total interest income 47,029 43,399
--------- ---------
INTEREST EXPENSE
Deposits 21,424 17,898
Other 296 247
--------- ---------
Total interest expense 21,720 18,145
--------- ---------
Net interest income 25,309 25,254
PROVISION FOR LOAN LOSSES 571 796
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 24,738 24,458
--------- ---------
OTHER OPERATING INCOME
Service fees 1,725 1,784
Net realized gain on sales of
securities available for sale 369
Trust fees 137 128
Net gain on sale of loans
originated for sale 105 71
Loan servicing 417 465
Net gain on sale of other real estate 1,470 20
Other 4,118 2,626
--------- ---------
Total other operating income 7,972 5,463
--------- ---------
OTHER OPERATING EXPENSE
Salaries and employee benefits 8,251 7,194
Occupancy 1,464 1,348
Furniture and equipment 1,406 1,335
FDIC insurance premiums 84 151
Professional fees 444 508
Data processing 405 382
Other real estate 383 981
Other 2,781 2,756
--------- ---------
Total other operating expense 15,218 14,655
--------- ---------
INCOME BEFORE INCOME TAXES 17,492 15,266
Income taxes 6,094 5,408
--------- ---------
NET INCOME $11,398 $9,858
========= =========
NET INCOME PER SHARE $26.35 $22.79
========= =========
CASH DIVIDENDS DECLARED PER SHARE $9.00 $8.00
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
4
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WEST SUBURBAN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands)
(UNAUDITED)
1997 1996
--------- ---------
INTEREST INCOME
Loans, including fees $17,640 $17,266
--------- ---------
Investment securities:
Taxable 5,336 3,275
Nontaxable 533 493
--------- ---------
Total investment securities 5,869 3,768
Deposits in financial institutions 11 18
Federal funds sold 758 326
--------- ---------
Total interest income 24,278 21,378
--------- ---------
INTEREST EXPENSE
Deposits 11,329 8,741
Other 100 157
--------- ---------
Total interest expense 11,429 8,898
--------- ---------
Net interest income 12,849 12,480
PROVISION FOR LOAN LOSSES 276 338
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 12,573 12,142
--------- ---------
OTHER OPERATING INCOME
Service fees 877 921
Net realized gain on sales of securities
available for sale 18
Trust fees 32 23
Net gain on sale of loans originated
for sale 45 43
Loan servicing 213 226
Net (loss) gain on sale of other real
estate (6) 25
Other 1,073 1,931
--------- ---------
Total other operating income 2,234 3,187
--------- ---------
OTHER OPERATING EXPENSE
Salaries and employee benefits 3,715 3,454
Occupancy 747 633
Furniture and equipment 675 641
FDIC insurance premiums 75
Professional fees 190 225
Data processing 220 185
Other real estate 339 393
Other 1,537 1,376
--------- ---------
Total other operating expense 7,423 6,982
--------- ---------
INCOME BEFORE INCOME TAXES 7,384 8,347
Income taxes 2,551 3,073
--------- ---------
NET INCOME $4,833 $5,274
========= =========
NET INCOME PER SHARE $11.17 $12.19
========= =========
CASH DIVIDENDS DECLARED PER SHARE $4.50 $4.00
========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Dollars in thousands)
(UNAUDITED)
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $11,398 $9,858
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,577 1,476
Provision for loan losses 571 796
Provision for deferred income taxes 1,614 1,635
Net premium amortization and discount
accretion of investment securities 308 239
Net realized gain on sales of
investment securities available
for sale (369)
Gain on sale of loans held for sale (105) (71)
Proceeds from sale of loans held
for sale 835 5,465
Origination of loans held for sale (1,633) (5,841)
(Gain) loss on sale of premises
and equipment (5) 28
Gain on sale of other real estate (1,470) (20)
Increase in accrued interest and
other assets (1,178) (5,237)
Increase in accrued interest and
other liabilities 567 3,098
--------- ---------
Total adjustments 1,081 1,199
--------- ---------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 12,479 11,057
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from sales 20,649
Proceeds from maturities 12,682 12,460
Purchases (86,141) (29,675)
Investment securities held to maturity:
Proceeds from maturities 3,588 36,682
Purchases (16,203) (50,131)
Purchase of minority interest in
subsidiaries (224)
Net decrease (increase) in loans 3,414 (19,885)
Purchases of premises and equipment (1,937) (2,515)
Proceeds from sale of premises
and equipment 5 11
Proceeds from sale of other real estate 1,939 936
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES ($82,877) ($31,468)
--------- ---------
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (CONTINUED)
(Dollars in thousands)
(UNAUDITED)
1997 1996
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in
total deposits $52,104 ($19,277)
Increase in federal funds purchased 960
(Decrease) increase in FHLB advances (1,350) 10,745
Cash dividends paid (3,676) (3,352)
--------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 47,078 (10,924)
--------- ---------
Net decrease in cash and cash equivalents (23,320) (31,335)
Cash and cash equivalents at
beginning of period 68,650 88,345
--------- ---------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $45,330 $57,010
========= =========
Supplemental cash flow information:
Cash paid during the period for:
Interest on deposits and
other borrowings $19,746 $19,477
Income taxes $3,673 $4,821
Transfers from loans to other real estate $282 $498
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
WEST SUBURBAN BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
During the first quarter of 1997, West Suburban Bancorp, Inc. (the "Parent")
and its subsidiary ("West Suburban Bank" and together with the Parent, the
"Company") received approvals from the Federal Deposit Insurance Corporation,
the State of Illinois Office of Real Estate and Banks and the Office of
Thrift Supervision to merge its four bank subsidiaries and its thrift into
one state charted bank under the name "West Suburban Bank". On May 17, 1997,
the Company's subsidiaries were merged and since that date, the Company has
conducted its banking activities through its single bank subsidiary. The
merger had no significant impact on the Company's financial condition or
results of operations.
The consolidated financial statements include the accounts of the Company.
Significant intercompany accounts and transactions have been eliminated. The
unaudited interim consolidated financial statements include the accounts of
the Company and are prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements have been
omitted. The interim financial statements and notes should be read in
conjunction with the consolidated financial statements and notes thereto
included in the latest Annual Report on Form 10-K filed by the Company. The
consolidated financial statements include all adjustments (none of which were
other than normal recurring adjustments) necessary for a fair statement of
the results for the interim periods. The results for the interim periods are
not necessarily indicative of the results to be expected for the entire
fiscal year. Certain amounts reported in prior periods have been reclassified
to conform to the 1997 presentation.
NOTE 2 - SECURITIES
The Company does not invest in trading securities. Securities held to
maturity are classified as such only when the Company determines it has both
the ability and positive intent to hold these securities to maturity. All
other securities are classified as available for sale. Held to maturity
securities are carried at amortized cost while available for sale securities
are carried at fair value with net unrealized gains and losses (net of taxes)
reported as a separate component of equity. Gains or losses on disposition
are based on the net proceeds and the adjusted carrying amount of the
securities sold, using the specific identification method.
During the first six months of 1997, the Company's unrealized loss on
securities available for sale decreased $.1 million to $.5 million at June
30, 1997 from $.6 million at December 31, 1996, net of taxes.
NOTE 3 - OUTSTANDING LINES OF CREDIT AVAILABLE - (Dollars in thousands)
June 30, 1997 December 31, 1996
------------- -----------------
Home equity lines $113,280 $108,526
Commercial loans in process 128,286 197,952
Visa credit lines 45,997 43,818
------------- -----------------
Total commitments $287,563 $350,296
============= =================
The Company had $3.0 million and $4.5 million of commitments to originate
residential mortgage loans as of June 30, 1997 and December 31, 1996,
respectively.
8
<PAGE>
NOTE 4 - ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") 125, "Accounting for the Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities", which
provides new accounting and reporting standards for transfers and servicing
of financial assets and extinguishments of liabilities. Those standards are
based on a consistent application of a "financial-components" approach that
focuses on control. Under that approach, after a transfer of financial
assets, an entity recognizes the financial and servicing assets it controls
and the liabilities it has incurred, derecognizes financial assets when
control has been surrendered, and derecognizes liabilities when extinguished.
The adoption of SFAS 125 did not have a material impact on the Company's
financial condition or results of operations.
In December 1996, the Financial Accounting Standards Board ("FASB") issued
SFAS 127, "Deferral of the Effective Date of Certain Provisions of SFAS 125",
which defers the effective date of certain of the provisions of SFAS 125 for
one year.
In March 1997, the FASB issued SFAS 128, "Earnings Per Share", which
establishes new standards for computing and presenting earnings per share and
requires dual presentation of basic and diluted earnings per share. SFAS 128
is effective for financial statements ending after December 15, 1997 and all
prior periods will be restated. The adoption of SFAS 128 will not have an
impact on the Company's earnings per share as the Company has no outstanding
common stock equivalents.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BALANCE SHEET ANALYSIS
ASSET DISTRIBUTION. Total consolidated assets at June 30, 1997 increased
approximately $59.1 million (4.8%) to $1,294.7 million at June 30, 1997 from
$1,235.6 million at December 31, 1996. Total cash and cash equivalents
decreased $23.3 million (34.0%) to $45.3 million at June 30, 1997 from $68.6
million at December 31, 1996. This was due to decreases in cash and due from
banks and federal funds sold of $11.6 million and $11.7 million,
respectively, for the six month period ended June 30, 1997. The Company used
most of these funds together with funds obtained due to growth in deposits to
increase its investment securities portfolio. Aggregate holdings in
investment securities increased $85.9 million (26.1%) to $414.7 million at
June 30, 1997 from $328.8 million at December 31, 1996. The Company's
objectives in managing its securities portfolio are driven by the dynamics of
its entire balance sheet which includes monitoring the maturity structure of
its portfolio, along with general economic conditions including the interest
rate environment. In managing its portfolio, the Company seeks to maintain
liquidity, minimize exposure to interest rate risk and achieve an acceptable
rate of return.
Total loans decreased $3.0 million (.4%) to $790.8 million at June 30, 1997
from $793.8 million at December 31, 1996. Loan demand has remained level as
competition has intensified during the first six months of 1997. The Company
strives to remain competitive in its market by offering competitive rates on
its loan products while not compromising its credit evaluation standards to
attract new business.
ALLOWANCE FOR LOAN LOSSES AND ASSET QUALITY. The allowance for loan losses is
an amount that management believes will be adequate to absorb losses on
existing loans that may become uncollectible. Management evaluates the
adequacy of the allowance based on past loan loss experience, known and
inherent risks in the loan portfolio, adverse situations that may affect the
borrowers' ability to repay, estimated value of any underlying collateral,
and current and prospective economic conditions. The allowance for loan
losses increased $.4 million to $10.0 million at June 30, 1997 from $9.6
million at December 31, 1996. The ratio of the allowance for loan losses to
total loans outstanding increased at June 30, 1997 to 1.26% compared to 1.21%
at December 31, 1996. Nonperforming loans increased $4.5 million (67.9%) to
$11.2 million at June 30, 1997 from $6.7 million at December 31, 1996. This
increase was primarily due to two commercial loans and several residential
real estate loans. Management is monitoring these accounts closely. As of
June 30, 1997 and December 31, 1996, total nonperforming loans to net loans
were 1.4% and .9%, respectively. The allowance for loan losses was
approximately 89% and 144% of the level of nonperforming loans at June 30,
1997 and December 31, 1996, respectively.
The following table presents an analysis of the Company's nonperforming loans
for the periods stated (dollars in thousands):
June 30, 1997 December 31, 1996 Dollar Change
------------- ----------------- -------------
Nonaccrual loans $2,995 $2,283 $712
Accruing loans 90 days past due 8,231 4,405 3,826
------------- ----------------- -------------
Total nonperforming loans $11,226 $6,688 $4,538
============= ================= =============
Nonperforming loans as a
percent of net loans 1.4% .9% ---
Other real estate $2,570 $2,757 ($187)
============= ================= =============
10
<PAGE>
The following table presents an analysis of the Company's provision for loan
losses for the periods stated (dollars in thousands):
1997 1996
----------------- -------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
----------------- -------------------------
Provision-quarter $276 $295 $321 $388 $338
Provision-year to date 571 295 1,505 1,184 796
Net chargeoffs-quarter 169 31 407 189 118
Net chargeoffs-year to date 200 31 802 395 206
Allowance at period end 9,974 9,867 9,603 9,689 9,490
Allowance to period end
total loans 1.26% 1.24% 1.21% 1.22% 1.20%
LIABILITY DISTRIBUTION. Total liabilities increased $51.6 million (4.6%) to
$1,168.9 million at June 30, 1997 from $1,117.3 million at December 31, 1996.
This increase was primarily due to increases in certificates of deposit
balances arising from the Company offering competitive rates of return and
the success of the Company's 35th year anniversary promotion.
Balances in the Company's major categories of deposits are summarized in the
following table (dollars in thousands):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
June 30, 1997 December 31, 1996 Dollar change Percent Change
------------- ----------------- ------------- --------------
Demand and other noninterest-bearing $100,874 $102,583 ($1,709) (1.7)%
NOW accounts 24,930 182,861 (157,931) (86.4)%
Money market savings 503,748 342,872 160,876 46.9 %
Time, $100,000 and over 85,839 86,343 (504) (0.6)%
Time, other 436,111 384,738 51,373 13.4 %
------------- ----------------- ------------- --------------
Total $1,151,502 $1,099,397 $52,105 4.7 %
============= ================= ============= ==============
</TABLE>
The Company attempts to remain well positioned in its market by offering
competitive rates on its savings and certificate of deposit products.
Although the Company promotes its savings products when appropriate,
management does not intend to compromise its net interest margin to attract
deposits.
SHAREHOLDERS' EQUITY. Shareholders' equity increased $7.5 million (6.3%) to
$125.8 million at June 30, 1997 from $118.3 million at December 31, 1996.
This increase was primarily the result of the net retention of 1997 earnings
of $7.3 million.
CAPITAL RESOURCES
The Company's capital ratios as well as those of its subsidiary as of June
30, 1997 are presented below. All such ratios are in excess of the regulatory
capital requirements which call for a minimum total risk-based capital ratio
of 8% for the Company and its subsidiary (at least one-half of the minimum
total risk-based capital must consist of tier 1 capital), a minimum leverage
ratio (3% for the most highly rated banks that do not expect significant
growth; all other institutions are required to maintain a minimum leverage
capital ratio of 4% to 5% depending on their particular circumstances and
risk profiles) for the Company and its subsidiary. Bank holding companies and
their subsidiaries are generally expected to operate at or above the minimum
capital requirements and the ratios shown below are in excess of regulatory
minimums and should allow the Company and its subsidiary to operate without
capital adequacy concerns.
11
<PAGE>
The following table sets forth selected regulatory capital ratios of the
Company and its bank subsidiary at June 30, 1997:
Tier 1 Total
Risk-Based Risk-Based Leverage
Institution Capital Capital Capital
- ----------- ----------- ----------- ----------
West Suburban Bancorp, Inc. 12.43% 13.43% 9.29%
West Suburban Bank 11.40% 12.39% 8.51%
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
provided the federal banking regulators with broad power to take prompt
corrective action to resolve the problems of undercapitalized institutions.
The extent of the regulators' powers depends on whether the institution in
question is "well capitalized", "adequately capitalized", "undercapitalized",
"significantly undercapitalized" or "critically undercapitalized." Depending
upon the capital category to which an institution is assigned, the
regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on
activities; requiring the institution to issue additional capital stock
(including additional voting stock) or to be acquired; restricting
transactions with affiliates; restricting the interest rate the institution
may pay on deposits; ordering a new election of directors of the institution;
requiring that senior executive officers or directors be dismissed;
prohibiting the institution from accepting deposits from correspondent banks;
requiring the institution to divest certain subsidiaries; prohibiting the
payment of principal or interest on subordinated debt; and ultimately,
appointing a receiver for the institution. Management has been advised that
as of June 30, 1997 and December 31, 1996, the Company's subsidiary qualified
as a "well-capitalized" institution.
LIQUIDITY
Effective liquidity management allows a banking institution to accommodate
the changing net funds flow requirements of customers who may deposit or
withdraw funds or modify their credit requirements. The Company manages its
liquidity position through continuous monitoring of profitability trends,
asset quality, interest rate sensitivity and maturity schedules of earning
assets and supporting liabilities.
Generally, the Company uses cash and cash equivalents to meet its liquidity
needs. Additional liquidity is provided by maintaining assets which mature
within a short time-frame or which may be quickly converted to cash without
significant costs. These assets include interest-bearing deposits in
financial institutions, federal funds sold and investment securities
available for sale. As of June 30, 1997 and December 31, 1996, liquid assets
represented 21.4% and 18.4% of total assets, respectively. A more detailed
discussion concerning these assets is presented in the Asset Distribution
section of this report.
RATE SENSITIVITY GAPS
The Company attempts to maintain a conservative position with regard to
interest rate risk by actively managing its asset/liability gap positions and
constantly monitoring the direction and magnitude of gaps and risk. The
Company attempts to moderate the effects of changes in interest rates by
adjusting its asset and liability mix to achieve desired relationships
between rate sensitive assets and rate sensitive liabilities. Rate sensitive
assets and liabilities are those instruments that reprice within a given time
period.
Movements in general market interest rates are a key element in changes in the
net interest margin. The Company's policy is to manage its balance sheet so that
fluctuations in net interest margins are minimized regardless of the level of
interest rates. However, the net interest margin does vary slightly due to
management's response to increasing competition from other financial
institutions.
12
<PAGE>
Listed below are the balances in the major categories of the rate sensitive
assets and liabilities that are subject to repricing as of June 30, 1997
(dollars in thousands):
<TABLE>
<CAPTION>
Over three
Three months to Over one
months twelve year to Over
or less months five years five years Total
--------- ----------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Interest-bearing deposits in financial institutions $308 $308
Federal funds sold 18,140 18,140
Investment securities 20,961 $62,123 $281,853 $49,735 414,672
Loans 296,208 226,875 454 264,320 787,857
--------- ----------- ----------- ------------ ---------
Total interest-earning assets $335,617 $288,998 $282,307 $314,055 $1,220,977
--------- ----------- ----------- ------------ ---------
--------- ----------- ----------- ------------ ---------
Rate sensitive liabilities:
Money market savings $503,748 $503,748
NOW accounts 24,930 24,930
Time deposits:
Less than $100,000 143,372 $221,892 $31,811 $39,036 436,111
$100,000 and over 46,804 30,505 8,530 85,839
--------- ----------- ----------- ------------ ---------
Total interest-bearing liabilities $718,854 $252,397 $31,811 $47,566 $1,050,628
--------- ----------- ----------- ------------ ---------
--------- ----------- ----------- ------------ ---------
Interest sensitivity gap ($383,237) $36,601 $250,496 $266,489
Cumulative interest sensitivity gap ($383,237) ($346,636) ($96,140) $170,349 $170,349
Cumulative interest-earning assets as a
percentage of cumulative
interest-bearing liabilities 46.7% 64.3% 90.4% 116.2%
Cumulative interest sensitivity gap as a
percentage of total assets (29.6)% (26.8)% (7.4)% 13.2%
</TABLE>
The above table does not necessarily indicate the future impact of general
interest rate movements on the Company's net interest income because the
repricing of certain assets and liabilities is discretionary and is subject
to competitive and other pressures. As a result, assets and liabilities
indicated as repricing within the same period may, in fact, reprice at
different times and at different rate levels. Assets and liabilities are
reported in the earliest time frame in which maturity or repricing may occur.
The consolidated interest rate sensitivity position of the Company within the
one year window at June 30, 1997 reflects cumulative net interest-earning
assets compared to cumulative net interest-bearing liabilities of 64.3% and
cumulative net interest-earning assets that reprice or mature within one year
compared to total assets of negative 26.8%.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
NET INCOME. The Company's net income for the six months ended June 30, 1997
and 1996 was approximately $11.4 million and $9.9 million, respectively. This
represents an increase of $1.5 million (15.6%) for the 1997 period when
compared to the same period in 1996. Management believes this was primarily
due to the increase in other operating income resulting from gains recognized
in connection with the disposition of certain other real estate and the
settlement of certain litigation, each of which were one-time transactions.
The Company recorded approximately $3.8 million in income relating to these
transactions for the six month period ended June 30, 1997. The Company
recorded other income of approximately $1.1 million from a refund of the over
funding of a West Suburban Bank of Aurora, F.S.B. ("WSB Aurora")
13
<PAGE>
terminated benefits plan for the six month period ended June 30, 1996. Net
interest income increased $.1 million and the provision for loan loss
decreased $.2 million. Increases to income were partially offset by an
increase to total other operating expense of $.6 million and income tax
expense of $.7 million.
INTEREST INCOME. Total interest income, on a tax equivalent basis, increased
$3.6 million for the six months ended June 30,1997 compared to the same period
in 1996. This increase resulted from an increase of $4.5 million due to growth
in average balances which was offset by a ($.9) million decrease due to lower
interest rates partially due to the Company reducing its rates on its home
equity lines from prime plus one to prime. This reduction in rates was a result
of competitive conditions surrounding this product. The Company's average
interest-earnings assets grew $134.6 million to $1,185.0 million at June 30,
1997 from $1,050.4 million at June 30, 1996. Yields on total interest-earnings
assets decreased primarily due to decreases in average interest rates on the
Company's loan portfolio. Interest on the Company's securities portfolio
increased primarily due to higher yields on U.S. government agencies and
corporations and corporate securities along with higher average outstanding
balances.
INTEREST EXPENSE. Total interest expense increased $3.6 million for the six
months ended June 30,1997 compared to the same period during 1996. Interest on
deposits increased $3.5 million during this period. This increase was the result
of $3.6 million due to higher average balances which was partially offset by a
($.1) million decrease due to lower interest rates. Average interest-bearing
liabilities increased $124.5 million to $1,028.8 million at June 30,1997 from
$904.3 million at June 30,1996 primarily due to certificate of deposit
promotions.
The following table reflects the extent to which changes in the volume of
interest-earning assets and interest-bearing liabilities and changes in interest
rates have affected net interest income on a tax equivalent basis for the period
ended June 30,1997 as compared to the same period in 1996 (dollars in
thousands):
CHANGE IN:
INTEREST INCOME VOLUME RATE TOTAL
------ ------- -------
Interest-bearing deposits in
financial institutions ($6) ($8) ($14)
Federal funds sold 452 (7) 445
Investment securities 3,142 465 3,607
Loans 958 (1,343) (385)
------ ------- -------
Total interest income 4,546 (893) 3,653
------ ------- -------
INTEREST EXPENSE
Interest-bearing deposits 3,598 (72) 3,526
Borrowed funds (15) 64 49
------ ------- -------
Total interest expense 3,583 (8) 3,575
------ ------- -------
Net interest income $963 ($885) $78
====== ======= =======
The following table presents an analysis of the Company's interest-earning
assets and interest-bearing liabilities volumes for the periods stated on a
cumulative basis as of the date indicated (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
------------------------------------ --------------------------------------------
June 30 March 31 Dec. 31 Sept. 30 June 30
------------------------------------ --------------------------------------------
<S> <C> <C> <C> <C> <C>
Average loans $792,921 $791,003 $781,372 $776,621 $771,188
Average interest-earning assets 1,185,024 1,152,764 1,156,452 1,060,434 1,050,373
Average noninterest-bearing deposits 108,209 100,810 103,448 102,655 102,670
Average interest-bearing deposits 1,019,866 988,550 921,925 903,344 894,214
Average deposits 1,128,075 1,089,360 1,025,373 1,005,999 996,884
Average interest-bearing liabilities 1,028,823 1,000,613 932,685 914,467 904,327
</TABLE>
PROVISION FOR LOAN LOSSES. The Company's provision for loan losses decreased
$.2 million (28.3%) for the six months ended June 30, 1997 compared to the
same period in 1996. The provision for loan losses is
14
<PAGE>
based on management's determination that the allowance for loan losses
(after giving effect to the provision) was adequate. A more detailed
discussion concerning the allowance for loan losses is presented in the
Allowance for Loan Losses and Asset Quality section of this report.
OTHER OPERATING INCOME. Total other operating income increased $2.5 million
(45.9%) for the six months ended June 30, 1997 compared to the same period in
1996. This increase was primarily due to the Company settling a claim relating
to an investment that it made during the late 1980's. The Company recorded $2.3
million of income related to this matter. During the first quarter of 1997, the
Company also sold its interest in a property held as other real estate for $1.5
million. As the property was previously written off, this amount represented a
gain recognized as other operating income. These increases to income were
partially offset by decreases in gains on sale of investment securities
available for sale of $.4 million. During the first six months of 1996, the
Company recorded $1.1 million of income from a refund of the over funding of a
WSB Aurora terminated benefits plan.
OTHER OPERATING EXPENSE. Total other operating expense increased $.6 million
(3.8%) for the six months ended June 30, 1997 compared to the same period in
1996. Salary and employee benefits increased $1.1 million due primarily to
increased salaries and severance payouts to two former executives of the
Company. Expenses associated with other real estate decreased $.6 million for
the six months ended June 30, 1997 compared to the same period in 1996. This was
primarily due to the sale for $1.5 million of a property held as other real
estate. Management anticipates reduced other real estate expense as a result of
the sale. Other operating expenses increased $.1 million during the same period.
INCOME TAXES. Income tax expense increased $.7 million (12.7%) for the six
months ended June 30, 1997 to $6.1 million from $5.4 million compared to the
same period in 1996. The increase was principally due to higher taxable income.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
NET INCOME. The Company's net income for the three months ended June 30, 1997
and 1996 was approximately $4.8 million and $5.3 million, respectively, which
represents a decrease of $.5 million (8.4%) for the 1997 period when compared to
the same period in 1996. This was primarily due to the one time recording of
approximately $1.1 million in income from the refund of the over funding of a
WSB Aurora terminated benefits plan in the 1996 period. Net interest income
increased $.4 million and the provision for loan loss decreased $.1 million
during the 1997 period compared to the 1996 period. Income tax expense decreased
$.5 million for the three months ended June 30, 1997 compared to 1996. These
increases to income were partially offset by an increase in total other
operating expense of $.4 million.
INTEREST INCOME. Total interest income increased $2.9 million for the three
months ended June 30, 1997 compared to the same period in 1996 and resulted
primarily from increased volume in the securities portfolio.
INTEREST EXPENSE. Total interest expense increased $2.5 million for the three
months ended June 30, 1997 compared to the same period during 1996 and primarily
resulted from increased certificate of deposit balances.
PROVISION FOR LOAN LOSSES. The Company's provision for loan losses decreased $.1
million (18.3%) for the three months ended June 30, 1997 compared to the same
period in 1996. The provision for loan losses is based on management's
determination that the allowance for loan losses (after giving effect to the
provision) was adequate.
OTHER OPERATING INCOME. Total other income decreased $1.0 million (29.9%) for
the three months ended June 30, 1997 compared to the same period in 1996. This
decrease was primarily due to the recording of
15
<PAGE>
$1.1 million of income from the refund of the over funding of a WSB Aurora
terminated benefits plan in the 1996 period.
OTHER OPERATING EXPENSE. Total other expense increased $.4 million (6.3%) for
the three months ended June 30, 1997 compared to the same period in 1996.
Salary and employee benefits increased $.3 million. Expenses associated with
other real estate expense decreased $.1 million during this period while
other operating expense increased $.2 million.
INCOME TAXES. Income tax expense decreased $.5 million for the three months
ended June 30, 1997 to $2.6 million from $3.1 million compared to the same
period in 1996. The decrease was principally due to lower taxable income.
OTHER CONSIDERATIONS
Earnings of bank holding companies and their subsidiaries are affected by
general economic conditions and also by the fiscal and monetary policies of
federal regulatory agencies, including the Board of Governors of the Federal
Reserve System. Such policies have affected the operating results of all
commercial banks in the past and are expected to do so in the future. The
Company cannot accurately predict the nature or the extent of any effects which
fiscal or monetary policies may have on its subsidiary's business and earnings.
RECENT REGULATORY DEVELOPMENTS
The Committee on Banking and Financial Services of the U.S. House of
Representatives has approved legislation that would allow bank holding
companies to engage in a wider range of nonbanking activities, including
greater authority to engage in securities and insurance activities. The
expanded powers generally would be available to a bank holding company only
if the bank holding company and its bank subsidiaries remain well-capitalized
and well-managed, and if each of the depository institution subsidiaries of
the bank holding company had received at least a "satisfactory" rating under
the Community Reinvestment Act. The proposed legislation would also impose
various restrictions on transactions between the depository institution
subsidiaries of bank holding companies and their nonbank affiliates. These
restrictions are intended to protect the depository institutions from the
risks of the new nonbanking activities permitted to such affiliates.
At this time, the Company is unable to predict whether the proposed legislation
will be enacted and, therefore, is unable to predict the impact such legislation
may have on the operations of the Company and its subsidiary.
Additionally, legislation has been enacted in Illinois that would allow Illinois
banks, effective October 1, 1997, to engage in insurance activities, subject to
various conditions, including requirements for the manner in which insurance
products are marketed to bank customers and requirements that banks selling
insurance provide certain disclosures to customers. Legislation has also been
enacted in Illinois that would prohibit out-of-state banks from acquiring an
Illinois bank unless the Illinois bank has been in existence and continuously
operated for a period of at least five years.
The Company's subsidiary is assessing its opportunities to provide insurance
services to the customers and communities it serves.
16
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company or its
subsidiary are a party other than ordinary routine litigation incidental to
their respective businesses.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A. The Annual Meeting of Shareholders was held on May 14, 1997.
B. The following individuals were elected to serve as directors of the
Company for a term of one year at the Annual Meeting. The votes for
and against such individuals are set forth below:
FOR AGAINST
1. Kevin J. Acker 1,677,768 9,603
2. Duane G. Debs 1,676,031 3,717
3. David S. Bell 1,657,810 24,558
4. Peggy P. LoCicero 1,659,302 13,643
5. Charles P. Howard 1,668,809 7,608
Broker-No Votes: 0
C. Ratification of Deloitte & Touche LLP as the Company's independent
auditors.
FOR AGAINST ABSTAIN
1,672,061 6,461 16,332
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
10.1 Employment Agreement dated May 1, 1997 between the Company and
Mr. Kevin J. Acker.
17
<PAGE>
10.2 Employment Agreement dated May 1, 1997 between the Company and
Mr. Keith W. Acker.
10.3 Employment Agreement dated May 1, 1997 between the Company and
Mr. Duane G. Debs.
10.4 Employment Agreement dated May 1, 1997 between the Company and
Mr. Michael P. Brosnahan.
10.5 Form of Amended Deferred Compensation Agreement between the Company
and Messrs. Kevin J. Acker, Keith W. Acker, Duane G. Debs and
Michael P. Brosnahan.
27 Financial Data Schedule
B. Reports on Form 8-K - The Company did not file a report on Form 8-K during
the three months ended June 30, 1997.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEST SUBURBAN BANCORP, INC.
(Registrant)
Date: August 14, 1997
/s/ Kevin J. Acker
__________________________
KEVIN J. ACKER
CHAIRMAN OF THE BOARD
/s/ Duane G. Debs
__________________________
DUANE G. DEBS
PRESIDENT AND CHIEF FINANCIAL OFFICER
19
<PAGE>
INDEX OF EXHIBITS
Sequential
Page No.
10.1 Employment Agreement dated May 1, 1997 between the
Company and Mr. Kevin J. Acker 21
10.2 Employment Agreement dated May 1, 1997 between the
Company and Mr. Keith W. Acker 32
10.3 Employment Agreement dated May 1, 1997 between the
Company and Mr. Duane G. Debs 43
10.4 Employment Agreement dated May 1, 1997 between the
Company and Mr. Michael P. Brosnahan 54
10.5 Form of Amended Deferred Compensation Agreement between
the Company and Messrs. Kevin J. Acker, Keith W. Acker,
Duane G. Debs and Michael P. Brosnahan 65
27. Financial Data Schedule 74
20
<PAGE>
KEVIN J. ACKER
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into as
of the 1st day of May, 1997 (the "Effective Date"), by and between WEST SUBURBAN
BANCORP, INC., an Illinois corporation (the "Employer"), and KEVIN J. ACKER, an
Illinois resident (the "Executive").
RECITALS
A. The Executive is currently serving as the Senior Vice President of
Marketing of the West Suburban Bank (the "Bank").
B. The Employer owns all of the issued and outstanding capital stock of
the Bank.
C. The Employer desires to continue to employ the Executive as an officer
of the Employer and of the Bank for a specified term and the Executive is
willing to continue such employment upon the terms and conditions hereinafter
set forth.
D. The Employer recognizes that circumstances may arise in which a change
of control of the Employer and/or the Bank through acquisition or otherwise may
occur thereby causing uncertainty of employment without regard to the competence
or past contributions of the Executive which uncertainty may result in the loss
of valuable services of the Executive and the Employer and the Executive wish to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
1. POSITION AND DUTIES. The Employer hereby employs the Executive as the
Senior Vice President of Marketing of the Bank or in such other senior executive
capacity as shall be mutually agreed between the Employer and the Executive.
During the period of the Executive's employment hereunder, the Executive shall
devote his best efforts and full business time, energy, skills and attention to
the business and affairs of the Employer. The Executive's duties and authority
shall consist of and include all duties and authority customarily performed and
held by persons holding equivalent positions with business organizations similar
in nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Directors of
the Employer (the "Board"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff and other assistance, office space and accouterments as shall be
reasonably necessary and appropriate in the light of such assigned duties.
<PAGE>
2. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(a) BASE COMPENSATION. The Executive shall receive an aggregate annual
minimum base salary at the rate of Two Hundred Seventeen Thousand Eight Hundred
Seventy-eight Dollars ($217,878) payable in installments in accordance with the
regular payroll schedule of the Bank. Such base salary shall be subject to
review annually commencing in 1997 and shall be maintained or increased during
the term hereof in accordance with the Employer's established management
compensation policies and plans.
(b) CLUB MEMBERSHIP. The Executive shall be reimbursed for membership
dues and other customary charges at the St. Charles Country Club.
(c) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and supporting documentation, for all
travel, entertainment and other out-of-pocket expenses reasonably and
necessarily incurred by the Executive in the performance of his duties
hereunder and shall be entitled to attend seminars, conferences and meetings
relating to the business of the Employer consistent with the Employer's
established policies in that regard.
(d) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to
senior executives of the Employer, including, but not limited to, pension,
profit-sharing, employee stock ownership plan, supplemental retirement,
incentive compensation, bonus, disability income, split-dollar life
insurance, group life, medical and hospitalization insurance, and similar or
comparable plans, and also to perquisites extended to similarly situated
senior executives, PROVIDED, HOWEVER, that such plans, benefits and
perquisites shall be no less than those made available to all other employees
of the Employer.
(e) WITHHOLDING. The Employer shall be entitled to withhold from amounts
payable to the Executive hereunder, any federal, state or local withholding
or other taxes or charges which it is from time to time required to withhold.
The Employer shall be entitled to rely upon the opinion of its legal counsel
with regard to any question concerning the amount or requirement of any such
withholding.
3. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
heretofore or hereafter during the course of his employment he has produced and
may hereafter produce and have access to material, records, data, trade secrets
and information not generally available to the public (collectively,
"Confidential Information") regarding the Employer and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this
Agreement, the Executive shall hold in confidence and not directly or indirectly
disclose, use, copy or make lists of any such Confidential Information, except
to the extent that such information is or thereafter becomes lawfully available
from public sources, or such disclosure is authorized in writing by the
Employer, required by a law or any competent administrative agency or judicial
authority, or otherwise as reasonably necessary or appropriate in connection
with performance by the
2
<PAGE>
Executive of his duties hereunder. All records, files, documents and other
materials or copies thereof relating to the Employer's business which the
Executive shall prepare or use, shall be and remain the sole property of the
Employer, shall not be removed from the Employer's premises without its
written consent, and shall be promptly returned to the Employer upon
termination of the Executive's employment hereunder. The Executive agrees to
abide by the Employer's reasonable policies, as in effect from time to time,
respecting avoidance of interests conflicting with those of the Employer. In
the event of any violation or threatened violation of these restrictions, the
Employer, in addition to and not in limitation of being relieved of all
further obligations under this Agreement and of any other rights, remedies or
damages available to the Employer under this Agreement or otherwise at law or
in equity, shall be entitled to preliminary and permanent injunctive relief
to prevent or restrain any such violation by the Executive and any and all
persons directly or indirectly acting for or with him, as the case may be.
4. TERM AND TERMINATION.
(a) BASIC TERM. The term of this Agreement shall begin on the Effective
Date and end on December 31, 1999, and shall be automatically extended for one
(1) additional year on each December 31 ("Anniversary Date") unless terminated
by either party effective as of the last day of the then current term by written
notice to that effect delivered to the other party not less than sixty (60) days
prior to an Anniversary Date.
(b) AGREEMENT NON-EXTENSION OR EMPLOYMENT TERMINATION BY EMPLOYER.
(i) In the event of the termination of the Executive's employment
under this Agreement by the Employer prior to the last day of the then
current term for any reason other than a termination in accordance with the
provisions of paragraph (d) of this Section 4, or the non-extension of this
Agreement by the Employer in accordance with the provisions of paragraph (a)
of this Section 4, the Employer shall continue to pay the Executive the base
salary then payable to the Executive and shall continue to provide coverage
for the Executive under all plans and benefits otherwise provided to senior
executives of the Employer, unless unable to continue such coverage by law,
for the remainder of the term of this Agreement, provided, however, that in
the circumstance where this Agreement is not extended, the Executive must
remain employed with the Employer to receive such payments and benefits;
further provided, that the continued payment of these amounts by the Employer
shall not offset or diminish any compensation or benefits accrued as of the
date of termination or non-extension.
(ii) In the event of termination of this Agreement by the
Executive for any reason other than a termination in accordance with the
provisions of paragraph (c) or (g) of this Section 4, the Employer shall pay
the Executive a lump sum amount equal to eighteen (18) times the sum of the
monthly base salary then payable to the Executive plus one twelfth (1/12) of
the base annual deferred compensation to which the Executive is then
entitled, which payment shall be his sole benefit under this Section 4.
Payment to the Executive will be made within thirty (30) days of such
termination.
3
<PAGE>
(iii) If the Employer is not in compliance with its minimum capital
requirements or if the payments required under subparagraph (i) or (ii) above
would cause the Employer's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Employer
is in capital compliance.
(c) CONSTRUCTIVE TERMINATION. If at any time during the term of this
Agreement, except in connection with a termination pursuant to paragraph (d)
of this Section 4, the Executive is Constructively Discharged (as hereinafter
defined) then the Executive shall have the right, by written notice to the
Employer within sixty (60) days of such Constructive Discharge, to terminate
his services hereunder, effective as of thirty (30) days after such notice,
and the Executive shall have no rights or obligations under this Agreement
other than as provided in Sections 3 and 6 hereof. The Executive shall in
such event be entitled to a lump sum payment of compensation and benefits and
continuation of the health, life and disability insurance as if such
termination of his employment was pursuant to subparagraph (b)(i) of this
Section 4.
(a) For purposes of this Agreement, the Executive shall be "Constructively
Discharged" upon the occurrence of any one of the following events:
(i) The Executive is not re-elected or is removed from the positions
with the Employer or any affiliate set forth in Section 1 hereof, other
than as a result of the Executive's election or appointment to positions
of equal or superior scope and responsibility; or
(ii) The Executive shall fail to be vested by the Employer with
the powers and authority of his appointed office; or
(iii) The Employer changes the primary employment location of the
Executive to a place that is more than thirty (30) miles from the primary
employment location as of the Effective Date of this Agreement; or
(iv) The Employer otherwise commits a material breach of its
obligations under this Agreement.
(d) TERMINATION FOR CAUSE. This Agreement and the Executive's employment
hereunder may be terminated for cause as hereinafter defined. "Cause" shall
mean: (i) the Executive's death or his permanent disability, as defined under
the Employer sponsored disability income insurance program, or in the event
there is no such program, the Executive's inability, as a result of physical or
mental incapacity, substantially to perform his duties hereunder for a period of
twelve (12) consecutive months; (ii) a material violation by the Executive of
any applicable material law or regulation respecting the business of the
Employer; (iii) the Executive being found guilty of a felony or an act of
dishonesty in connection with the performance of his duties as an officer of the
Employer, or which disqualifies the Executive from serving as an officer or
director of the Employer; or (iv) the willful or negligent failure of the
Executive to perform his duties hereunder in any material respect. This
Agreement may be terminated immediately for any cause except under (iv) above.
The Executive shall be entitled to at least thirty (30) days' prior written
notice of the Employer's intention to terminate his
4
<PAGE>
employment under (iv) above, specifying the grounds for such termination, a
reasonable opportunity to cure any conduct or act, if curable, alleged as
grounds for such termination, and a reasonable opportunity to present to the
Board his position regarding any dispute relating to the existence of such
cause.
(e) TERMINATION UPON DEATH. In the event payments are due and owing
under this Agreement at the death of the Executive, payment shall be made to
such beneficiary as Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and
satisfaction of all claims and demands on behalf of the Executive. Such
payments shall be in full settlement and satisfaction of all payments
provided for in this Agreement.
(f) PAYMENT UPON TERMINATION FOR DISABILITY. The Employer may terminate
this Agreement and the Executive's employment after the Executive is
determined to be permanently disabled under the Employer sponsored disability
income insurance program or by a physician engaged by the Employer. In the
event of a dispute regarding the Executive's disability, each party shall
choose a physician who together will choose a third physician to make a final
determination. The Executive shall be entitled to the compensation and
benefits provided for under this Agreement for any period during the term of
this Agreement and prior to the establishment of the Executive's disability
during which the Executive is unable to work due to a physical or mental
infirmity. In the event of the termination of this Agreement and the
Executive's employment due to the permanent disability of the Executive, the
Employer shall continue to pay the Executive eighty percent (80%) of the base
salary per month then payable to the Executive, reduced by any amounts
received under the Employer sponsored disability income insurance program,
and shall continue to provide coverage for the Executive under the health and
life insurance programs maintained by the Employer until the earlier of the
date the Executive returns to full-time employment, either with the Employer
or another employer, or Executive's death. Notwithstanding anything
contained in this Agreement to the contrary, until the date specified in a
notice of termination relating to the Executive's disability, the Executive
shall be entitled to return to his positions with the Employer as set forth
in this Agreement in which event no disability of the Executive will be
deemed to have occurred. Notwithstanding any other provision of this
Agreement, in the event of the termination of the Executive's employment
under this Agreement for any reason, the Executive may elect to have any
disability income insurance policy maintained by the Employer on his behalf
transferred to him, and he shall assume all obligations thereunder.
(g) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change in Control (as defined below) and the
termination of the Executive's employment or this Agreement under either
A or B below, the Executive shall be entitled to a lump sum payment equal
to three (3) times his annual base salary then payable, subject to the
limitations set forth below. The Employer shall also continue to provide
coverage for the Executive under the health, life and disability
insurance programs for three (3) years following such termination.
Payments under this
5
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paragraph shall be subject to the limits of subparagraph (g)(ii)
below. The following shall constitute termination under this paragraph:
A. The Executive terminates his employment by a written
notice to that effect delivered to the Board within twenty-four (24)
months after the Change in Control.
B. This Agreement is terminated by the Employer or its
successor either in contemplation of or after the Change in Control.
(ii) It is the intention of the Employer and the Executive that no
portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to
be an "Excess Parachute Payment" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successors. It is agreed that the present value of and payments to or
for the benefit of the Executive in the nature of compensation, receipt
of which is contingent on the Change of Control, and to which Section
280G of the Code applies (in the aggregate "Total Payments") shall not
exceed an amount equal to one dollar less than the maximum amount which
the Employer may pay without loss of deduction under Section 280G(a) of
the Code. Present value for purposes of this Agreement shall be
calculated in accordance with Section 280G(d)(4) of the Code. Within one
hundred and twenty (120) days following the earlier of (A) the giving of
the notice of termination or (B) the giving of notice by the Employer to
the Executive of its belief that there is a payment or benefit due the
Executive which will result in an excess parachute payment as defined in
Section 280G of the Code, the Executive and the Employer, at the
Employer's expense, shall obtain the opinion of such legal counsel and
certified public accountants as the Executive may choose (notwithstanding
the fact that such persons have acted or may also be acting as the legal
counsel or certified public accountants for the Employer), which opinions
need not be unqualified, which sets forth (A) the amount of the Base
Period Income of the Executive, (B) the present value of Total Payments
and (C) the amount and present value of any excess parachute payments.
In the event that such opinions determine that there would be an excess
parachute payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be modified,
reduced or eliminated as specified by the Executive in writing delivered
to the Employer within ninety (90) days of his receipt of such opinions
or, if the Executive fails to so notify the Employer, then as the
Employer shall reasonably determine, so that under the bases of
calculation set forth in such opinions there will be no excess parachute
payment. The provisions of this subparagraph, including the
calculations, notices and opinions provided for herein shall be based
upon the conclusive presumption that (A) the compensation and benefits
provided for in Section 2 hereof and (B) any other compensation earned by
the Executive pursuant to the Employer's compensation programs which
would have been paid in any event, are reasonable compensation for
services rendered, even though the timing of such payment is triggered by
the Change of Control; provided, however, that in the event such legal
counsel so requests in connection with the opinion required by this
subparagraph, the Executive and the Employer shall obtain, at the
Employer's expense,
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and the legal counsel may rely on in providing the opinion, the advice
of a firm of recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by the Executive.
In the event that the provisions of Sections 280G and 4999 of the Code are
repealed without succession, this subparagraph shall be of no further force
or effect.
(iii) For purposes of this paragraph, the term "Change in Control"
shall mean the following:
A. The consummation of the acquisition by any person (as such
term is defined in Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
fifty percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Employer or the Bank; or
B. The individuals who, as of the date hereof, are members of
the Board of the Employer or the Bank cease for any reason to
constitute a majority of the Board, unless the election, or
nomination for election by the stockholders, of any new director was
approved by a vote of a majority of the Board, and such new director
shall, for purposes of this Agreement, be considered as a member of
the Board; or
C. Approval by stockholders of the Employer or the Bank of: (1)
a merger or consolidation if the stockholders immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting
securities of the entity resulting from such merger or consolidation
in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Employer or the
Bank outstanding immediately before such merger or consolidation; or
(2) a complete liquidation or dissolution or an agreement for the
sale or other disposition of all or substantially all of the assets
of the Employer or the Bank.
(a) Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because fifty percent (50%) or more of the combined voting power of
the then outstanding securities of the Employer or the Bank is acquired by: (1)
a trustee or other fiduciary holding securities under one or more employee
benefit plans maintained for employees of the Employer or the Bank; or (2) any
corporation which, immediately prior to such acquisition, is owned directly or
indirectly by the stockholders in the same proportion as their ownership of
stock of the Employer or the Bank immediately prior to such acquisition.
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(h) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by
a notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or
8(g) (12 U.S.C. Section 1818(g)) of the Federal Deposit Insurance Act, as
amended, the Employer's obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Employer
shall (A) pay the Executive all of the compensation withheld while the
contract obligations were suspended and (B) reinstate any of the
obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12 U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section
1818(g)) of the Federal Deposit Insurance Act, as amended, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall not be affected.
(iii) If the Employer is in default as defined in Section 3(x) (12
U.S.C. Section 1813(x)(1)) of the Federal Deposit Insurance Act, as
amended, all obligations of the Employer under this contract shall
terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the
contract is necessary for the continued operation of the institution by
the Federal Deposit Insurance Corporation (the "FDIC"), at the time the
FDIC enters into an agreement to provide assistance to or on behalf of
the Employer under the authority contained in Section 13(c) (12 U.S.C.
Section 1823(c)) of the Federal Deposit Insurance Act, as amended, or
when the Employer is determined by the FDIC 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.
(v) Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with
Section 18(k) (12 U.S.C. Section 1828(k)) of the Federal Deposit
Insurance Act as amended, and any regulations promulgated thereunder.
(i) TERMINATION UPON RETIREMENT. In the event of the termination of this
Agreement due to the retirement of the Executive at or after the attainment of
age sixty-two (62), the Employer shall continue to provide coverage for the
Executive under the health and life insurance programs maintained by the
Employer until his death.
5. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall
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any of such payments be subject to seizure for the payment of any debt,
judgment, alimony, separate maintenance or be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise of the Executive.
6. INDEMNIFICATION.
(a) INSURANCE. The Employer shall provide the Executive (including his
heirs, personal representatives, executors and administrators) for the term of
this Agreement with coverage under a standard directors' and officers' liability
insurance policy at its expense.
(b) INDEMNIFICATION UNDER STATE LAW. In addition to the insurance coverage
provided for in paragraph (a) of this Section 6, the Employer shall hold
harmless and indemnify the Executive (and his heirs, executors and
administrators) to the fullest extent permitted under applicable law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been an officer of the Employer (whether or not he
continues to be an officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
(c) ADVANCEMENT OF EXPENSES. In the event the Executive becomes a party,
or is threatened to be made a party, to any action, suit or proceeding for
which the Employer has agreed to provide insurance coverage or
indemnification under this Section 6, the Employer shall, to the full extent
permitted under applicable law, advance all expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement
(collectively "Expenses") incurred by the Executive in connection with the
investigation, defense, settlement, or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by the Employer of a
written undertaking from the Executive: (i) to reimburse the Employer for
all Expenses actually paid by the Employer to or on behalf of the Executive
in the event it shall be ultimately determined that the Executive is not
entitled to indemnification by the Employer for such Expenses; and (ii) to
assign to the Employer all rights of the Executive to indemnification, under
any policy of directors' and officers' liability insurance or otherwise, to
the extent of the amount of Expenses actually paid by the Employer to or on
behalf of the Executive.
7. GENERAL PROVISIONS.
(a) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, the Employer and his and its respective
personal representatives, successors and assigns, and any successor or assign of
the Employer shall be deemed the "Employer" hereunder. The Employer shall
require any successor to all or substantially all of the business and/or assets
of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
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(b) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, along with the
Deferred Compensation and Split-Dollar Insurance Agreement for the benefit of
the Executive, constitutes the entire agreement between the parties
respecting the subject matter hereof, and supersedes all prior negotiations,
undertakings, agreements and arrangements with respect thereto, whether
written or oral. Except as otherwise explicitly provided herein, this
Agreement may not be amended or modified except by written agreement signed
by the Executive and the Employer.
(c) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should
be declared invalid or unenforceable by a court of competent jurisdiction,
the validity and enforceability of the remaining provisions shall not be
affected thereby. This Agreement shall be construed and the legal relations
of the parties hereto shall be determined in accordance with the laws of the
State of Illinois without reference to the law regarding conflicts of law.
(d) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement or the Executive's employment by the Employer
shall be settled exclusively by arbitration, conducted by a single arbitrator
sitting in a location selected by the Executive within fifty (50) miles of
the main office of the Employer, in accordance with the rules of the American
Arbitration Association (the "AAA") then in effect. The arbitrator shall be
selected by the parties from a list of arbitrators provided by the AAA,
provided that no arbitrator shall be related to or affiliated with either of
the parties. No later than ten (10) days after the list of proposed
arbitrators is received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location or
telephonically. At that meeting, the party who sought arbitration shall
eliminate one (1) proposed arbitrator and then the other party shall
eliminate one (1) proposed arbitrator. The parties shall continue to
eliminate names from the list of proposed arbitrators in this manner until a
single proposed arbitrator remains. This remaining arbitrator shall
arbitrate the dispute. Each party shall submit, in writing, the specific
requested action or decision it wishes to take, or make, with respect to the
matter in dispute, and the arbitrator shall be obligated to choose one (1)
party's specific requested action or decision, without being permitted to
effectuate any compromise position. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
the Executive shall be entitled to seek specific performance of his right to
be paid through the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
(e) LEGAL FEES. All reasonable legal fees paid or incurred by the
Executive pursuant to any dispute or question of interpretation relating to
this Agreement shall be paid or reimbursed by the Employer if the Executive
is successful on the merits pursuant to a legal judgment, arbitration or
settlement.
(f) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at the same time or any prior
or subsequent time.
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(g) NOTICES. Notices pursuant to this Agreement shall be in writing and
shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of
the Employer, attention: Chairman; or, if to the Executive, to the address
set forth below the Executive's signature on this Agreement, or to such other
address as the party to be notified shall have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WEST SUBURBAN BANCORP, INC. KEVIN J. ACKER
By: /s/ Duane G. Debs /s/ Kevin J. Acker
------------------------------------ --------------------------------
Name:
----------------------------------- --------------------------------
President
--------------------------------
(Address)
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KEITH W. ACKER
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into as
of the 1st day of May, 1997 (the "Effective Date"), by and between WEST SUBURBAN
BANCORP, INC., an Illinois corporation (the "Employer"), and KEITH W. ACKER, an
Illinois resident (the "Executive").
RECITALS
A. The Executive is currently serving as the Vice President and Chief
Operating Officer of the Employer and President of the West Suburban Bank (the
"Bank").
B. The Employer owns all of the issued and outstanding capital stock of
the Bank.
C. The Employer desires to continue to employ the Executive as an officer
of the Employer and of the Bank for a specified term and the Executive is
willing to continue such employment upon the terms and conditions hereinafter
set forth.
D. The Employer recognizes that circumstances may arise in which a change
of control of the Employer and/or the Bank through acquisition or otherwise may
occur thereby causing uncertainty of employment without regard to the competence
or past contributions of the Executive which uncertainty may result in the loss
of valuable services of the Executive and the Employer and the Executive wish to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
1. POSITION AND DUTIES. The Employer hereby employs the Executive as the
Vice President and Chief Operating Officer of the Employer and as the President
of the Bank or in such other senior executive capacity as shall be mutually
agreed between the Employer and the Executive. During the period of the
Executive's employment hereunder, the Executive shall devote his best efforts
and full business time, energy, skills and attention to the business and affairs
of the Employer. The Executive's duties and authority shall consist of and
include all duties and authority customarily performed and held by persons
holding equivalent positions with business organizations similar in nature and
size to the Employer, as such duties and authority are reasonably defined,
modified and delegated from time to time by the Board of Directors of the
Employer (the "Board"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff and other assistance, office space and accouterments as shall be
reasonably necessary and appropriate in the light of such assigned duties.
<PAGE>
2. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(a) BASE COMPENSATION. The Executive shall receive an aggregate
annual minimum base salary at the rate of Two Hundred Seventeen Thousand
Eight Hundred Seventy-eight Dollars ($217,878) payable in installments in
accordance with the regular payroll schedule of the Bank. Such base salary
shall be subject to review annually commencing in 1997 and shall be
maintained or increased during the term hereof in accordance with the
Employer's established management compensation policies and plans.
(b) CLUB MEMBERSHIP. The Executive shall be reimbursed for
membership dues and other customary charges at the Medina Country Club.
(c) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed,
upon submission of appropriate vouchers and supporting documentation, for all
travel, entertainment and other out-of-pocket expenses reasonably and
necessarily incurred by the Executive in the performance of his duties
hereunder and shall be entitled to attend seminars, conferences and meetings
relating to the business of the Employer consistent with the Employer's
established policies in that regard.
(d) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to
senior executives of the Employer, including, but not limited to, pension,
profit-sharing, employee stock ownership plan, supplemental retirement,
incentive compensation, bonus, disability income, split-dollar life
insurance, group life, medical and hospitalization insurance, and similar or
comparable plans, and also to perquisites extended to similarly situated
senior executives, PROVIDED, HOWEVER, that such plans, benefits and
perquisites shall be no less than those made available to all other employees
of the Employer.
(e) WITHHOLDING. The Employer shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes or charges which it is from time to time required
to withhold. The Employer shall be entitled to rely upon the opinion of its
legal counsel with regard to any question concerning the amount or
requirement of any such withholding.
3. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
heretofore or hereafter during the course of his employment he has produced and
may hereafter produce and have access to material, records, data, trade secrets
and information not generally available to the public (collectively,
"Confidential Information") regarding the Employer and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this
Agreement, the Executive shall hold in confidence and not directly or indirectly
disclose, use, copy or make lists of any such Confidential Information, except
to the extent that such information is or thereafter becomes lawfully available
from public sources, or such disclosure is authorized in writing by the
Employer, required by a law or any competent administrative agency or judicial
authority, or otherwise as reasonably necessary or appropriate in connection
with performance by the
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Executive of his duties hereunder. All records, files, documents and other
materials or copies thereof relating to the Employer's business which the
Executive shall prepare or use, shall be and remain the sole property of the
Employer, shall not be removed from the Employer's premises without its
written consent, and shall be promptly returned to the Employer upon
termination of the Executive's employment hereunder. The Executive agrees to
abide by the Employer's reasonable policies, as in effect from time to time,
respecting avoidance of interests conflicting with those of the Employer. In
the event of any violation or threatened violation of these restrictions, the
Employer, in addition to and not in limitation of being relieved of all
further obligations under this Agreement and of any other rights, remedies or
damages available to the Employer under this Agreement or otherwise at law or
in equity, shall be entitled to preliminary and permanent injunctive relief
to prevent or restrain any such violation by the Executive and any and all
persons directly or indirectly acting for or with him, as the case may be.
4. TERM AND TERMINATION.
(a) BASIC TERM. The term of this Agreement shall begin on the
Effective Date and end on December 31, 1999, and shall be automatically
extended for one (1) additional year on each December 31 ("Anniversary Date")
unless terminated by either party effective as of the last day of the then
current term by written notice to that effect delivered to the other party
not less than sixty (60) days prior to an Anniversary Date.
(b) AGREEMENT NON-EXTENSION OR EMPLOYMENT TERMINATION BY EMPLOYER.
(i) In the event of the termination of the Executive's employment
under this Agreement by the Employer prior to the last day of the then
current term for any eason other than a termination in accordance with
the provisions of paragraph (d) of this Section 4, or the non-extension
of this Agreement by the Employer in accordance with the provisions of
paragraph (a) of this Section 4, the Employer shall continue to pay the
Executive the base salary then payable to the Executive and shall
continue to provide coverage for the Executive under all plans and
benefits otherwise provided to senior executives of the Employer, unless
unable to continue such coverage by law, for the remainder of the term of
this Agreement, provided, however, that in the circumstance where this
Agreement is not extended, the Executive must remain employed with the
Employer to receive such payments and benefits; further provided, that
the continued payment of these amounts by the Employer shall not offset
or diminish any compensation or benefits accrued as of the date of
termination or non-extension.
(ii) In the event of termination of this Agreement by the
Executive for any reason other than a termination in accordance with the
provisions of paragraph (c) or (g) of this Section 4, the Employer shall
pay the Executive a lump sum amount equal to eighteen (18) times the sum
of the monthly base salary then payable to the Executive plus one twelfth
(1/12) of the base annual deferred compensation to which the Executive is
then entitled, which payment shall be his sole benefit under this Section
4. Payment to the Executive will be made within thirty (30) days of such
termination.
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(iii) If the Employer is not in compliance with its minimum
capital requirements or if the payments required under subparagraph (i)
or (ii) above would cause the Employer's capital to be reduced below its
minimum capital requirements, such payments shall be deferred until such
time as the Employer is in capital compliance.
(c) CONSTRUCTIVE TERMINATION. If at any time during the term of this
Agreement, except in connection with a termination pursuant to paragraph (d) of
this Section 4, the Executive is Constructively Discharged (as hereinafter
defined) then the Executive shall have the right, by written notice to the
Employer within sixty (60) days of such Constructive Discharge, to terminate his
services hereunder, effective as of thirty (30) days after such notice, and the
Executive shall have no rights or obligations under this Agreement other than as
provided in Sections 3 and 6 hereof. The Executive shall in such event be
entitled to a lump sum payment of compensation and benefits and continuation of
the health, life and disability insurance as if such termination of his
employment was pursuant to subparagraph (b)(i) of this Section 4.
(a) For purposes of this Agreement, the Executive shall be "Constructively
Discharged" upon the occurrence of any one of the following events:
(i) The Executive is not re-elected or is removed from the
positions with the Employer or any affiliate set forth in Section 1
hereof, other than as a result of the Executive's election or appointment
to positions of equal or superior scope and responsibility; or
(ii) The Executive shall fail to be vested by the Employer with
the powers and authority of his appointed office; or
(iii) The Employer changes the primary employment location of the
Executive to a place that is more than thirty (30) miles from the primary
employment location as of the Effective Date of this Agreement; or
(iv) The Employer otherwise commits a material breach of its
obligations under this Agreement.
(d) TERMINATION FOR CAUSE. This Agreement and the Executive's employment
hereunder may be terminated for cause as hereinafter defined. "Cause" shall
mean: (i) the Executive's death or his permanent disability, as defined under
the Employer sponsored disability income insurance program, or in the event
there is no such program, the Executive's inability, as a result of physical or
mental incapacity, substantially to perform his duties hereunder for a period of
twelve (12) consecutive months; (ii) a material violation by the Executive of
any applicable material law or regulation respecting the business of the
Employer; (iii) the Executive being found guilty of a felony or an act of
dishonesty in connection with the performance of his duties as an officer of the
Employer, or which disqualifies the Executive from serving as an officer or
director of the Employer; or (iv) the willful or negligent failure of the
Executive to perform his duties hereunder in any material respect. This
Agreement may be terminated immediately for any cause except under (iv) above.
The Executive shall be entitled to at least thirty (30) days' prior written
notice of the Employer's intention to terminate his
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employment under (iv) above, specifying the grounds for such termination, a
reasonable opportunity to cure any conduct or act, if curable, alleged as
grounds for such termination, and a reasonable opportunity to present to
the Board his position regarding any dispute relating to the existence
of such cause.
(e) TERMINATION UPON DEATH. In the event payments are due and owing
under this Agreement at the death of the Executive, payment shall be made to
such beneficiary as Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on behalf of the Executive. Such payments shall be
in full settlement and satisfaction of all payments provided for in this
Agreement.
(f) PAYMENT UPON TERMINATION FOR DISABILITY. The Employer may terminate
this Agreement and the Executive's employment after the Executive is determined
to be permanently disabled under the Employer sponsored disability income
insurance program or by a physician engaged by the Employer. In the event
of a dispute regarding the Executive's disability, each party shall choose
a physician who together will choose a third physician to make a final
determination. The Executive shall be entitled to the compensation and
benefits provided for under this Agreement for any period during the term of
this Agreement and prior to the establishment of the Executive's disability
during which the Executive is unable to work due to a physical or mental
infirmity. In the event of the termination of this Agreement and the
Executive's employment due to the permanent disability of the Executive, the
Employer shall continue to pay the Executive eighty percent (80%) of the base
salary per month then payable to the Executive, reduced by any amounts received
under the Employer sponsored disability income insurance program, and shall
continue to provide coverage for the Executive under the health and life
insurance programs maintained by the Employer until the earlier of the date the
Executive returns to full-time employment, either with the Employer or another
employer, or Executive's death. Notwithstanding anything contained in this
Agreement to the contrary, until the date specified in a notice of termination
relating to the Executive's disability, the Executive shall be entitled to
return to his positions with the Employer as set forth in this Agreement in
which event no disability of the Executive will be deemed to have occurred.
Notwithstanding any other provision of this Agreement, in the event of the
termination of the Executive's employment under this Agreement for any reason,
the Executive may elect to have any disability income insurance policy
maintained by the Employer on his behalf transferred to him, and he shall assume
all obligations thereunder.
(g) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change in Control (as defined below) and the
termination of the Executive's employment or this Agreement under either
A or B below, the Executive shall be entitled to a lump sum payment equal
to three (3) times his annual base salary then payable, subject to the
limitations set forth below. The Employer shall also continue to provide
coverage for the Executive under the health, life and disability
insurance programs for three (3) years following such termination.
Payments under this
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paragraph shall be subject to the limits of subparagraph (g)(ii) below.
The following shall constitute termination under this paragraph:
A. The Executive terminates his employment by a written notice
to that effect delivered to the Board within twenty-four (24) months
after the Change in Control.
B. This Agreement is terminated by the Employer or its successor
either in contemplation of or after the Change in Control.
(ii) It is the intention of the Employer and the Executive that no
portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to
be an "Excess Parachute Payment" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successors. It is agreed that the present value of and payments to or
for the benefit of the Executive in the nature of compensation, receipt
of which is contingent on the Change of Control, and to which Section
280G of the Code applies (in the aggregate "Total Payments") shall not
exceed an amount equal to one dollar less than the maximum amount which
the Employer may pay without loss of deduction under Section 280G(a) of
the Code. Present value for purposes of this Agreement shall be
calculated in accordance with Section 280G(d)(4) of the Code. Within one
hundred and twenty (120) days following the earlier of (A) the giving of
the notice of termination or (B) the giving of notice by the Employer to
the Executive of its belief that there is a payment or benefit due the
Executive which will result in an excess parachute payment as defined in
Section 280G of the Code, the Executive and the Employer, at the
Employer's expense, shall obtain the opinion of such legal counsel and
certified public accountants as the Executive may choose (notwithstanding
the fact that such persons have acted or may also be acting as the legal
counsel or certified public accountants for the Employer), which opinions
need not be unqualified, which sets forth (A) the amount of the Base
Period Income of the Executive, (B) the present value of Total Payments
and (C) the amount and present value of any excess parachute payments.
In the event that such opinions determine that there would be an excess
parachute payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be modified,
reduced or eliminated as specified by the Executive in writing delivered
to the Employer within ninety (90) days of his receipt of such opinions
or, if the Executive fails to so notify the Employer, then as the
Employer shall reasonably determine, so that under the bases of
calculation set forth in such opinions there will be no excess parachute
payment. The provisions of this subparagraph, including the
calculations, notices and opinions provided for herein shall be based
upon the conclusive presumption that (A) the compensation and benefits
provided for in Section 2 hereof and (B) any other compensation earned by
the Executive pursuant to the Employer's compensation programs which
would have been paid in any event, are reasonable compensation for
services rendered, even though the timing of such payment is triggered by
the Change of Control; provided, however, that in the event such legal
counsel so requests in connection with the opinion required by this
subparagraph, the Executive and the Employer shall obtain, at the
Employer's expense,
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and the legal counsel may rely on in providing the
opinion, the advice of a firm of recognized executive compensation
consultants as to the reasonableness of any item of compensation to be
received by the Executive. In the event that the provisions of Sections
280G and 4999 of the Code are repealed without succession, this
subparagraph shall be of no further force or effect.
(iii) For purposes of this paragraph, the term "Change in
Control" shall mean the following:
A. The consummation of the acquisition by any person (as such
term is defined in Section 13(d) or 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
fifty percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Employer or the Bank; or
B. The individuals who, as of the date hereof, are members of the
Board of the Employer or the Bank cease for any reason to constitute
a majority of the Board, unless the election, or nomination for
election by the stockholders, of any new director was approved by a
vote of a majority of the Board, and such new director shall, for
purposes of this Agreement, be considered as a member of the Board; or
C. Approval by stockholders of the Employer or the Bank of: (1)
a merger or consolidation if the stockholders immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting
securities of the entity resulting from such merger or consolidation
in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Employer or the
Bank outstanding immediately before such merger or consolidation; or
(2) a complete liquidation or dissolution or an agreement for the
sale or other disposition of all or substantially all of the assets
of the Employer or the Bank.
(a) Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because fifty percent (50%) or more of the combined
voting power of the then outstanding securities of the Employer or the Bank
is acquired by: (1) a trustee or other fiduciary holding securities under
one or more employee benefit plans maintained for employees of the Employer
or the Bank; or (2) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the stockholders in the same
proportion as their ownership of stock of the Employer or the Bank
immediately prior to such acquisition.
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(h) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by
a notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or
8(g) (12 U.S.C. Section 1818(g)) of the Federal Deposit Insurance Act, as
amended, the Employer's obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Employer
shall (A) pay the Executive all of the compensation withheld while the
contract obligations were suspended and (B) reinstate any of the
obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12 U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section
1818(g)) of the Federal Deposit Insurance Act, as amended, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall not be affected.
(iii) If the Employer is in default as defined in Section 3(x) (12
U.S.C. Section 1813(x)(1)) of the Federal Deposit Insurance Act, as
amended, all obligations of the Employer under this contract shall
terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the
contract is necessary for the continued operation of the institution by
the Federal Deposit Insurance Corporation (the "FDIC"), at the time the
FDIC enters into an agreement to provide assistance to or on behalf of
the Employer under the authority contained in Section 13(c) (12 U.S.C.
Section 1823(c)) of the Federal Deposit Insurance Act, as amended, or
when the Employer is determined by the FDIC 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.
(v) Any payments made to the Executive pursuant to this Agreement,
or otherwise, are subject to and conditioned upon their compliance with
Section 18(k) (12 U.S.C. Section 1828(k)) of the Federal Deposit
Insurance Act as amended, and any regulations promulgated thereunder.
(i) TERMINATION UPON RETIREMENT. In the event of the termination of this
Agreement due to the retirement of the Executive at or after the attainment of
age sixty-two (62), the Employer shall continue to provide coverage for the
Executive under the health and life insurance programs maintained by the
Employer until his death.
5. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall
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any of such payments be subject to seizure for the payment of any debt,
judgment, alimony, separate maintenance or be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise of the Executive.
6. INDEMNIFICATION.
(a) INSURANCE. The Employer shall provide the Executive (including his
heirs, personal representatives, executors and administrators) for the term of
this Agreement with coverage under a standard directors' and officers' liability
insurance policy at its expense.
(b) INDEMNIFICATION UNDER STATE LAW. In addition to the insurance coverage
provided for in paragraph (a) of this Section 6, the Employer shall hold
harmless and indemnify the Executive (and his heirs, executors and
administrators) to the fullest extent permitted under applicable law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been an officer of the Employer (whether or not he
continues to be an officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
(c) ADVANCEMENT OF EXPENSES. In the event the Executive becomes a party,
or is threatened to be made a party, to any action, suit or proceeding for
which the Employer has agreed to provide insurance coverage or
indemnification under this Section 6, the Employer shall, to the full extent
permitted under applicable law, advance all expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement
(collectively "Expenses") incurred by the Executive in connection with the
investigation, defense, settlement, or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by the Employer of a
written undertaking from the Executive: (i) to reimburse the Employer for
all Expenses actually paid by the Employer to or on behalf of the Executive
in the event it shall be ultimately determined that the Executive is not
entitled to indemnification by the Employer for such Expenses; and (ii) to
assign to the Employer all rights of the Executive to indemnification, under
any policy of directors' and officers' liability insurance or otherwise, to
the extent of the amount of Expenses actually paid by the Employer to or on
behalf of the Executive.
7. GENERAL PROVISIONS.
(a) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Executive, the Employer and his and its
respective personal representatives, successors and assigns, and any
successor or assign of the Employer shall be deemed the "Employer" hereunder.
The Employer shall require any successor to all or substantially all of the
business and/or assets of the Employer, whether directly or indirectly, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Employer would be required to perform if no such succession had
taken place.
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(b) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, along with the
Deferred Compensation and Split-Dollar Insurance Agreement for the benefit of
the Executive, constitutes the entire agreement between the parties
respecting the subject matter hereof, and supersedes all prior negotiations,
undertakings, agreements and arrangements with respect thereto, whether
written or oral. Except as otherwise explicitly provided herein, this
Agreement may not be amended or modified except by written agreement signed
by the Executive and the Employer.
(c) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should
be declared invalid or unenforceable by a court of competent jurisdiction,
the validity and enforceability of the remaining provisions shall not be
affected thereby. This Agreement shall be construed and the legal relations
of the parties hereto shall be determined in accordance with the laws of the
State of Illinois without reference to the law regarding conflicts of law.
(d) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement or the Executive's employment by the Employer
shall be settled exclusively by arbitration, conducted by a single arbitrator
sitting in a location selected by the Executive within fifty (50) miles of
the main office of the Employer, in accordance with the rules of the American
Arbitration Association (the "AAA") then in effect. The arbitrator shall be
selected by the parties from a list of arbitrators provided by the AAA,
provided that no arbitrator shall be related to or affiliated with either of
the parties. No later than ten (10) days after the list of proposed
arbitrators is received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location or
telephonically. At that meeting, the party who sought arbitration shall
eliminate one (1) proposed arbitrator and then the other party shall
eliminate one (1) proposed arbitrator. The parties shall continue to
eliminate names from the list of proposed arbitrators in this manner until a
single proposed arbitrator remains. This remaining arbitrator shall
arbitrate the dispute. Each party shall submit, in writing, the specific
requested action or decision it wishes to take, or make, with respect to the
matter in dispute, and the arbitrator shall be obligated to choose one (1)
party's specific requested action or decision, without being permitted to
effectuate any compromise position. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
the Executive shall be entitled to seek specific performance of his right to
be paid through the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
(e) LEGAL FEES. All reasonable legal fees paid or incurred by the
Executive pursuant to any dispute or question of interpretation relating to
this Agreement shall be paid or reimbursed by the Employer if the Executive
is successful on the merits pursuant to a legal judgment, arbitration or
settlement.
(f) WAIVER. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at the same time or any prior
or subsequent time.
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(g) NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of
the Employer, attention: Chairman; or, if to the Executive, to the address
set forth below the Executive's signature on this Agreement, or to such other
address as the party to be notified shall have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WEST SUBURBAN BANCORP, INC. KEITH W. ACKER
By: /s/ Kevin J. Acker /s/ Keith W. Acker
--------------------------------------- -------------------------------
Name:
--------------------------------------- -------------------------------
Chairman of the Board of Directors
-------------------------------
(Address)
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DUANE G. DEBS
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into as
of the 1st day of May, 1997 (the "Effective Date"), by and between WEST SUBURBAN
BANCORP, INC., an Illinois corporation (the "Employer"), and DUANE G. DEBS, an
Illinois resident (the "Executive").
RECITALS
A. The Executive is currently serving as the President and Chief
Financial Officer of the Employer and Senior Vice President and Comptroller of
the West Suburban Bank (the "Bank").
B. The Employer owns all of the issued and outstanding capital stock of
the Bank.
C. The Employer desires to continue to employ the Executive as an officer
of the Employer and of the Bank for a specified term and the Executive is
willing to continue such employment upon the terms and conditions hereinafter
set forth.
D. The Employer recognizes that circumstances may arise in which a change
of control of the Employer and/or the Bank through acquisition or otherwise may
occur thereby causing uncertainty of employment without regard to the competence
or past contributions of the Executive which uncertainty may result in the loss
of valuable services of the Executive and the Employer and the Executive wish to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
1. POSITION AND DUTIES. The Employer hereby employs the Executive as the
President and Chief Financial Officer of the Employer and as the Senior Vice
President and Comptroller of the Bank or in such other senior executive capacity
as shall be mutually agreed between the Employer and the Executive. During the
period of the Executive's employment hereunder, the Executive shall devote his
best efforts and full business time, energy, skills and attention to the
business and affairs of the Employer. The Executive's duties and authority
shall consist of and include all duties and authority customarily performed and
held by persons holding equivalent positions with business organizations similar
in nature and size to the Employer, as such duties and authority are reasonably
defined, modified and delegated from time to time by the Board of Directors of
the Employer (the "Board"). The Executive shall have the powers necessary to
perform the duties assigned to him and shall be provided such supporting
services, staff and other assistance, office space and accouterments as shall be
reasonably necessary and appropriate in the light of such assigned duties.
<PAGE>
2. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(a) BASE COMPENSATION. The Executive shall receive an aggregate
annual minimum base salary at the rate of One Hundred Thirty-five Thousand
Dollars ($135,000) payable in installments in accordance with the regular
payroll schedule of the Bank. Such base salary shall be subject to review
annually commencing in 1997 and shall be maintained or increased during the term
hereof in accordance with the Employer's established management compensation
policies and plans.
(b) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed,
upon submission of appropriate vouchers and supporting documentation, for all
travel, entertainment and other out-of-pocket expenses reasonably and
necessarily incurred by the Executive in the performance of his duties hereunder
and shall be entitled to attend seminars, conferences and meetings relating to
the business of the Employer consistent with the Employer's established policies
in that regard.
(c) OTHER BENEFITS. The Executive shall be entitled to all
benefits specifically established for him and, when and to the extent he is
eligible therefor, to participate in all plans and benefits generally
accorded to senior executives of the Employer, including, but not limited to,
pension, profit-sharing, employee stock ownership plan, supplemental
retirement, incentive compensation, bonus, disability income, split-dollar
life insurance, group life, medical and hospitalization insurance, and
similar or comparable plans, and also to perquisites extended to similarly
situated senior executives, PROVIDED, HOWEVER, that such plans, benefits and
perquisites shall be no less than those made available to all other employees
of the Employer.
(d) WITHHOLDING. The Employer shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes or charges which it is from time to time required to
withhold. The Employer shall be entitled to rely upon the opinion of its legal
counsel with regard to any question concerning the amount or requirement of any
such withholding.
3. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
heretofore or hereafter during the course of his employment he has produced and
may hereafter produce and have access to material, records, data, trade secrets
and information not generally available to the public (collectively,
"Confidential Information") regarding the Employer and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this
Agreement, the Executive shall hold in confidence and not directly or indirectly
disclose, use, copy or make lists of any such Confidential Information, except
to the extent that such information is or thereafter becomes lawfully available
from public sources, or such disclosure is authorized in writing by the
Employer, required by a law or any competent administrative agency or judicial
authority, or otherwise as reasonably necessary or appropriate in connection
with performance by the Executive of his duties hereunder. All records, files,
documents and other materials or copies thereof relating to the Employer's
business which the Executive shall prepare or use, shall be and
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remain the sole property of the Employer, shall not be removed from the
Employer's premises without its written consent, and shall be promptly
returned to the Employer upon termination of the Executive's employment
hereunder. The Executive agrees to abide by the Employer's reasonable
policies, as in effect from time to time, respecting avoidance of interests
conflicting with those of the Employer. In the event of any violation or
threatened violation of these restrictions, the Employer, in addition to and
not in limitation of being relieved of all further obligations under this
Agreement and of any other rights, remedies or damages available to the
Employer under this Agreement or otherwise at law or in equity, shall be
entitled to preliminary and permanent injunctive relief to prevent or
restrain any such violation by the Executive and any and all persons directly
or indirectly acting for or with him, as the case may be.
4. TERM AND TERMINATION.
(a) BASIC TERM. The term of this Agreement shall begin on the
Effective Date and end on December 31, 1999, and shall be automatically extended
for one (1) additional year on each December 31 ("Anniversary Date") unless
terminated by either party effective as of the last day of the then current term
by written notice to that effect delivered to the other party not less than
sixty (60) days prior to an Anniversary Date.
(b) AGREEMENT NON-EXTENSION OR EMPLOYMENT TERMINATION BY EMPLOYER.
(i) In the event of the termination of the Executive's
employment under this Agreement by the Employer prior to the last day of
the then current term for any reason other than a termination in accordance
with the provisions of paragraph (d) of this Section 4, or the
non-extension of this Agreement by the Employer in accordance with the
provisions of paragraph (a) of this Section 4, the Employer shall continue
to pay the Executive the base salary then payable to the Executive and
shall continue to provide coverage for the Executive under all plans and
benefits otherwise provided to senior executives of the Employer, unless
unable to continue such coverage by law, for the remainder of the term of
this Agreement, provided, however, that in the circumstance where this
Agreement is not extended, the Executive must remain employed with the
Employer to receive such payments and benefits; further provided, that the
continued payment of these amounts by the Employer shall not offset or
diminish any compensation or benefits accrued as of the date of termination
or non-extension.
(ii) In the event this Agreement is not extended in accordance
with the provisions of paragraph (a) of this Section 4, the Executive may
elect to terminate his employment, and upon such election, the Employer
shall pay the Executive a lump sum amount equal to nine (9) times the
monthly base salary then payable to the Executive, which payment shall be
his sole benefit under this Section 4. The election by the Executive must
be delivered in writing to the Employer within sixty (60) days of the later
of his receipt of notice of the non-extension of this Agreement or the next
following Anniversary Date. Payment to the Executive will be made within
thirty (30) days of such termination.
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(iii) If the Employer is not in compliance with its minimum
capital requirements or if the payments required under subparagraph (i) or
(ii) above would cause the Employer's capital to be reduced below its
minimum capital requirements, such payments shall be deferred until such
time as the Employer is in capital compliance.
(c) CONSTRUCTIVE TERMINATION. If at any time during the term of this
Agreement, except in connection with a termination pursuant to paragraph (d) of
this Section 4, the Executive is Constructively Discharged (as hereinafter
defined) then the Executive shall have the right, by written notice to the
Employer within sixty (60) days of such Constructive Discharge, to terminate his
services hereunder, effective as of thirty (30) days after such notice, and the
Executive shall have no rights or obligations under this Agreement other than as
provided in Sections 3 and 6 hereof. The Executive shall in such event be
entitled to a lump sum payment of compensation and benefits and continuation of
the health, life and disability insurance as if such termination of his
employment was pursuant to subparagraph (b)(i) of this Section 4.
For purposes of this Agreement, the Executive shall be "Constructively
Discharged" upon the occurrence of any one of the following events:
(i) The Executive is not re-elected or is removed from the
positions with the Employer or any affiliate set forth in Section 1 hereof,
other than as a result of the Executive's election or appointment to
positions of equal or superior scope and responsibility; or
(ii) The Executive shall fail to be vested by the Employer with
the powers and authority of his appointed office; or
(iii) The Employer changes the primary employment location of
the Executive to a place that is more than thirty (30) miles from the
primary employment location as of the Effective Date of this Agreement; or
(iv) The Employer otherwise commits a material breach of its
obligations under this Agreement.
(d) TERMINATION FOR CAUSE. This Agreement and the Executive's
employment hereunder may be terminated for cause as hereinafter defined.
"Cause" shall mean: (i) the Executive's death or his permanent disability, as
defined under the Employer sponsored disability income insurance program, or in
the event there is no such program, the Executive's inability, as a result of
physical or mental incapacity, substantially to perform his duties hereunder for
a period of twelve (12) consecutive months; (ii) a material violation by the
Executive of any applicable material law or regulation respecting the business
of the Employer; (iii) the Executive being found guilty of a felony or an act of
dishonesty in connection with the performance of his duties as an officer of the
Employer, or which disqualifies the Executive from serving as an officer or
director of the Employer; or (iv) the willful or negligent failure of the
Executive to perform his duties hereunder in any material respect. This
Agreement may be terminated immediately for any cause except under (iv) above.
The Executive shall be entitled to at least thirty (30) days' prior written
notice of the Employer's intention to terminate his
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employment under (iv) above, specifying the grounds for such termination, a
reasonable opportunity to cure any conduct or act, if curable, alleged as
grounds for such termination, and a reasonable opportunity to present to the
Board his position regarding any dispute relating to the existence of such
cause.
(e) TERMINATION UPON DEATH. In the event payments are due and owing
under this Agreement at the death of the Executive, payment shall be made to
such beneficiary as Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and satisfaction
of all claims and demands on behalf of the Executive. Such payments shall be in
full settlement and satisfaction of all payments provided for in this Agreement.
(f) PAYMENT UPON TERMINATION FOR DISABILITY. The Employer may
terminate this Agreement and the Executive's employment after the Executive is
determined to be permanently disabled under the Employer sponsored disability
income insurance program or by a physician engaged by the Employer. In the
event of a dispute regarding the Executive's disability, each party shall choose
a physician who together will choose a third physician to make a final
determination. The Executive shall be entitled to the compensation and benefits
provided for under this Agreement for any period during the term of this
Agreement and prior to the establishment of the Executive's disability during
which the Executive is unable to work due to a physical or mental infirmity. In
the event of the termination of this Agreement and the Executive's employment
due to the permanent disability of the Executive, the Employer shall continue to
pay the Executive eighty percent (80%) of the base salary per month then payable
to the Executive, reduced by any amounts received under the Employer sponsored
disability income insurance program, and shall continue to provide coverage for
the Executive under the health and life insurance programs maintained by the
Employer until the earlier of the date the Executive returns to full-time
employment, either with the Employer or another employer, or Executive's death.
Notwithstanding anything contained in this Agreement to the contrary, until the
date specified in a notice of termination relating to the Executive's
disability, the Executive shall be entitled to return to his positions with the
Employer as set forth in this Agreement in which event no disability of the
Executive will be deemed to have occurred. Notwithstanding any other provision
of this Agreement, in the event of the termination of the Executive's employment
under this Agreement for any reason, the Executive may elect to have any
disability income insurance policy maintained by the Employer on his behalf
transferred to him, and he shall assume all obligations thereunder.
(g) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change in Control (as defined below) and
the termination of the Executive's employment or this Agreement under
either A or B below, the Executive shall be entitled to a lump sum payment
equal to three (3) times his annual base salary then payable, subject to
the limitations set forth below. The Employer shall also continue to
provide coverage for the Executive under the health, life and disability
insurance programs for three (3) years following such termination.
Payments under this
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paragraph shall be subject to the limits of subparagraph (g)(ii) below.
The following shall constitute termination under this paragraph:
A. The Executive terminates his employment by a written
notice to that effect delivered to the Board within twenty-four
(24) months after the Change in Control.
B. This Agreement is terminated by the Employer or its
successor either in contemplation of or after the Change in
Control.
(ii) It is the intention of the Employer and the Executive that
no portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to be
an "Excess Parachute Payment" as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), or its successors. It is
agreed that the present value of and payments to or for the benefit of the
Executive in the nature of compensation, receipt of which is contingent on
the Change of Control, and to which Section 280G of the Code applies (in
the aggregate "Total Payments") shall not exceed an amount equal to one
dollar less than the maximum amount which the Employer may pay without loss
of deduction under Section 280G(a) of the Code. Present value for purposes
of this Agreement shall be calculated in accordance with Section 280G(d)(4)
of the Code. Within one hundred and twenty (120) days following the
earlier of (A) the giving of the notice of termination or (B) the giving of
notice by the Employer to the Executive of its belief that there is a
payment or benefit due the Executive which will result in an excess
parachute payment as defined in Section 280G of the Code, the Executive and
the Employer, at the Employer's expense, shall obtain the opinion of such
legal counsel and certified public accountants as the Executive may choose
(notwithstanding the fact that such persons have acted or may also be
acting as the legal counsel or certified public accountants for the
Employer), which opinions need not be unqualified, which sets forth (A) the
amount of the Base Period Income of the Executive, (B) the present value of
Total Payments and (C) the amount and present value of any excess parachute
payments. In the event that such opinions determine that there would be an
excess parachute payment, the payment hereunder or any other payment
determined by such counsel to be includable in Total Payments shall be
modified, reduced or eliminated as specified by the Executive in writing
deliverd to the Employer within ninety (90) days of his receipt of such
opinions or, if the Executive fails to so notify the Employer, then as the
Employer shall reasonably determine, so that under the bases of calculation
set forth in such opinions there will be no excess parachute payment. The
provisions of this subparagraph, including the calculations, notices and
opinions provided for herein shall be based upon the conclusive presumption
that (A) the compensation and benefits provided for in Section 2 hereof and
(B) any other compensation earned by the Executive pursuant to the
Employer's compensation programs which would have been paid in any event,
are reasonable compensation for services rendered, even though the timing
of such payment is triggered by the Change of Control; provided, however,
that in the event such legal counsel so requests in connection with the
opinion required by this subparagraph, the Executive and the Employer shall
obtain, at the Employer's expense,
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and the legal counsel may rely on in providing the opinion, the advice of
a firm of recognized executive compensation consultants as to the
reasonableness of any item of compensation to be received by the
Executive. In the event that the provisions of Sections 280G and 4999 of
the Code are repealed without succession, this subparagraph shall be of
no further force or effect.
(iii) For purposes of this paragraph, the term "Change in
Control" shall mean the following:
A. The consummation of the acquisition by any person (as
such term is defined in Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
1934 Act) of fifty percent (50%) or more of the combined voting
power of the then outstanding voting securities of the Employer
or the Bank; or
B. The individuals who, as of the date hereof, are members
of the Board of the Employer or the Bank cease for any reason to
constitute a majority of the Board, unless the election, or
nomination for election by the stockholders, of any new director
was approved by a vote of a majority of the Board, and such new
director shall, for purposes of this Agreement, be considered as
a member of the Board; or
C. Approval by stockholders of the Employer or the Bank
of: (1) a merger or consolidation if the stockholders
immediately before such merger or consolidation do not, as a
result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the voting securities of the Employer or the Bank outstanding
immediately before such merger or consolidation; or (2) a
complete liquidation or dissolution or an agreement for the sale
or other disposition of all or substantially all of the assets of
the Employer or the Bank.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because fifty percent (50%) or more of the combined voting power
of the then outstanding securities of the Employer or the Bank is acquired
by: (1) a trustee or other fiduciary holding securities under one or more
employee benefit plans maintained for employees of the Employer or the Bank;
or (2) any corporation which, immediately prior to such acquisition, is owned
directly or indirectly by the stockholders in the same proportion as their
ownership of stock of the Employer or the Bank immediately prior to such
acquisition.
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(h) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by a
notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or 8(g)
(12 U.S.C. Section 1818(g)) of the Federal Deposit Insurance Act, as
amended, the Employer's obligations under this contract shall be suspended
as of the date of service, unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Employer shall (A) pay the
Executive all of the compensation withheld while their contract obligations
were suspended and (B) reinstate any of the obligations which were
suspended.
(ii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Employer's affairs by an order
issued under Section 8(e) (12 U.S.C. Section 1818(e)) or 8(g) (12 U.S.C.
Section 1818(g)) of the Federal Deposit Insurance Act, as amended, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall not be affected.
(iii) If the Employer is in default as defined in Section
3(x) (12 U.S.C. Section 1813(x)(1)) of the Federal Deposit Insurance Act,
as amended, all obligations of the Employer under this contract shall
terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the
contract is necessary for the continued operation of the institution by the
Federal Deposit Insurance Corporation (the "FDIC"), at the time the FDIC
enters into an agreement to provide assistance to or on behalf of the
Employer under the authority contained in Section 13(c) (12 U.S.C. Section
1823(c)) of the Federal Deposit Insurance Act, as amended, or when the
Employer is determined by the FDIC 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.
(v) Any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) (12 U.S.C. Section 1828(k)) of the Federal
Deposit Insurance Act as amended, and any regulations promulgated
thereunder.
(i) TERMINATION UPON RETIREMENT. In the event of the termination of
this Agreement due to the retirement of the Executive at or after the attainment
of age sixty-two (62), the Employer shall continue to provide coverage for the
Executive under the health and life insurance programs maintained by the
Employer until his death.
5. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall
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any of such payments be subject to seizure for the payment of any debt,
judgment, alimony, separate maintenance or be transferable by operation
of law in the event of bankruptcy, insolvency or otherwise of the Executive.
6. INDEMNIFICATION.
(a) INSURANCE. The Employer shall provide the Executive (including
his heirs, personal representatives, executors and administrators) for the term
of this Agreement with coverage under a standard directors' and officers'
liability insurance policy at its expense.
(b) INDEMNIFICATION UNDER STATE LAW. In addition to the insurance
coverage provided for in paragraph (a) of this Section 6, the Employer shall
hold harmless and indemnify the Executive (and his heirs, executors and
administrators) to the fullest extent permitted under applicable law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been an officer of the Employer (whether or not he
continues to be an officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
(c) ADVANCEMENT OF EXPENSES. In the event the Executive becomes a
party, or is threatened to be made a party, to any action, suit or proceeding
for which the Employer has agreed to provide insurance coverage or
indemnification under this Section 6, the Employer shall, to the full extent
permitted under applicable law, advance all expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement (collectively
"Expenses") incurred by the Executive in connection with the investigation,
defense, settlement, or appeal of any threatened, pending or completed action,
suit or proceeding, subject to receipt by the Employer of a written undertaking
from the Executive: (i) to reimburse the Employer for all Expenses actually
paid by the Employer to or on behalf of the Executive in the event it shall be
ultimately determined that the Executive is not entitled to indemnification by
the Employer for such Expenses; and (ii) to assign to the Employer all rights of
the Executive to indemnification, under any policy of directors' and officers'
liability insurance or otherwise, to the extent of the amount of Expenses
actually paid by the Employer to or on behalf of the Executive.
7. GENERAL PROVISIONS.
(a) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, the Employer and his and its respective
personal representatives, successors and assigns, and any successor or assign of
the Employer shall be deemed the "Employer" hereunder. The Employer shall
require any successor to all or substantially all of the business and/or assets
of the Employer, whether directly or indirectly, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and
substance satisfactory to the Executive, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent as the Employer
would be required to perform if no such succession had taken place.
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(b) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, along with the
Deferred Compensation and Split-Dollar Insurance Agreement for the benefit of
the Executive, constitutes the entire agreement between the parties respecting
the subject matter hereof, and supersedes all prior negotiations, undertakings,
agreements and arrangements with respect thereto, whether written or oral.
Except as otherwise explicitly provided herein, this Agreement may not be
amended or modified except by written agreement signed by the Executive and the
Employer.
(c) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should be
declared invalid or unenforceable by a court of competent jurisdiction, the
validity and enforceability of the remaining provisions shall not be affected
thereby. This Agreement shall be construed and the legal relations of the
parties hereto shall be determined in accordance with the laws of the State of
Illinois without reference to the law regarding conflicts of law.
(d) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement or the Executive's employment by the Employer
shall be settled exclusively by arbitration, conducted by a single arbitrator
sitting in a location selected by the Executive within fifty (50) miles of
the main office of the Employer, in accordance with the rules of the American
Arbitration Association (the "AAA") then in effect. The arbitrator shall be
selected by the parties from a list of arbitrators provided by the AAA,
provided that no arbitrator shall be related to or affiliated with either of
the parties. No later than ten (10) days after the list of proposed
arbitrators is received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location or
telephonically. At that meeting, the party who sought arbitration shall
eliminate one (1) proposed arbitrator and then the other party shall
eliminate one (1) proposed arbitrator. The parties shall continue to
eliminate names from the list of proposed arbitrators in this manner until a
single proposed arbitrator remains. This remaining arbitrator shall
arbitrate the dispute. Each party shall submit, in writing, the specific
requested action or decision it wishes to take, or make, with respect to the
matter in dispute, and the arbitrator shall be obligated to choose one (1)
party's specific requested action or decision, without being permitted to
effectuate any compromise position. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
the Executive shall be entitled to seek specific performance of his right to
be paid through the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
(e) LEGAL FEES. All reasonable legal fees paid or incurred by the
Executive pursuant to any dispute or question of interpretation relating to this
Agreement shall be paid or reimbursed by the Employer if the Executive is
successful on the merits pursuant to a legal judgment, arbitration or
settlement.
(f) WAIVER. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
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(g) NOTICES. Notices pursuant to this Agreement shall be in writing
and shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of the
Employer, attention: Chairman; or, if to the Executive, to the address set
forth below the Executive's signature on this Agreement, or to such other
address as the party to be notified shall have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WEST SUBURBAN BANCORP, INC. DUANE G. DEBS
By: /s/ Kevin J. Acker /s/ Duane G. Debs
-------------------------------------- -------------------------------
Name:
-------------------------------------- -------------------------------
Chairman of the Board of Directors
-------------------------------
(Address)
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MICHAEL P. BROSNAHAN
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), is made and entered into as
of the 1st day of May, 1997 (the "Effective Date"), by and between WEST SUBURBAN
BANCORP, INC., an Illinois corporation (the "Employer"), and MICHAEL P.
BROSNAHAN, an Illinois resident (the "Executive").
RECITALS
A. The Executive is currently serving as a Vice President of the Employer
and the Senior Vice President of Lending of the West Suburban Bank (the "Bank").
B. The Employer owns all of the issued and outstanding capital stock of
the Bank.
C. The Employer desires to continue to employ the Executive as an officer
of the Employer and of the Bank for a specified term and the Executive is
willing to continue such employment upon the terms and conditions hereinafter
set forth.
D. The Employer recognizes that circumstances may arise in which a change
of control of the Employer and/or the Bank through acquisition or otherwise may
occur thereby causing uncertainty of employment without regard to the competence
or past contributions of the Executive which uncertainty may result in the loss
of valuable services of the Executive and the Employer and the Executive wish to
provide reasonable security to the Executive against changes in the employment
relationship in the event of any such change of control.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between the
parties hereto as follows:
AGREEMENTS
1. POSITION AND DUTIES. The Employer hereby employs the Executive as a
Vice President of the Employer and the Senior Vice President of Lending of the
Bank or in such other senior executive capacity as shall be mutually agreed
between the Employer and the Executive. During the period of the Executive's
employment hereunder, the Executive shall devote his best efforts and full
business time, energy, skills and attention to the business and affairs of the
Employer. The Executive's duties and authority shall consist of and include all
duties and authority customarily performed and held by persons holding
equivalent positions with business organizations similar in nature and size to
the Employer, as such duties and authority are reasonably defined, modified and
delegated from time to time by the Board of Directors of the Employer (the
"Board"). The Executive shall have the powers necessary to perform the duties
assigned to him and shall be provided such supporting services, staff and other
assistance, office space and accouterments as shall be reasonably necessary and
appropriate in the light of such assigned duties.
<PAGE>
2. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation,
expense reimbursement and other benefits:
(a) BASE COMPENSATION. The Executive shall receive an aggregate annual
minimum base salary at the rate of One Hundred Eighty-five Thousand Dollars
($185,000) payable in installments in accordance with the regular payroll
schedule of the Bank. Such base salary shall be subject to review annually
commencing in 1997 and shall be maintained or increased during the term hereof
in accordance with the Employer's established management compensation policies
and plans.
(b) CLUB MEMBERSHIP. The Executive shall be reimbursed for membership
dues and other customary charges at the Naperville Country Club.
(c) REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and supporting documentation, for all travel,
entertainment and other out-of-pocket expenses reasonably and necessarily
incurred by the Executive in the performance of his duties hereunder and shall
be entitled to attend seminars, conferences and meetings relating to the
business of the Employer consistent with the Employer's established policies in
that regard.
(d) OTHER BENEFITS. The Executive shall be entitled to all benefits
specifically established for him and, when and to the extent he is eligible
therefor, to participate in all plans and benefits generally accorded to
senior executives of the Employer, including, but not limited to, pension,
profit-sharing, employee stock ownership plan, supplemental retirement,
incentive compensation, bonus, disability income, split-dollar life
insurance, group life, medical and hospitalization insurance, and similar or
comparable plans, and also to perquisites extended to similarly situated
senior executives, PROVIDED, HOWEVER, that such plans, benefits and
perquisites shall be no less than those made available to all other employees
of the Employer.
(e) WITHHOLDING. The Employer shall be entitled to withhold from amounts
payable to the Executive hereunder, any federal, state or local withholding or
other taxes or charges which it is from time to time required to withhold. The
Employer shall be entitled to rely upon the opinion of its legal counsel with
regard to any question concerning the amount or requirement of any such
withholding.
3. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
heretofore or hereafter during the course of his employment he has produced and
may hereafter produce and have access to material, records, data, trade secrets
and information not generally available to the public (collectively,
"Confidential Information") regarding the Employer and its subsidiaries and
affiliates. Accordingly, during and subsequent to termination of this
Agreement, the Executive shall hold in confidence and not directly or indirectly
disclose, use, copy or make lists of any such Confidential Information, except
to the extent that such information is or thereafter becomes lawfully available
from public sources, or such disclosure is authorized in writing by the
Employer, required by a law or any competent administrative agency or judicial
authority, or otherwise as reasonably necessary or appropriate in connection
with performance by the
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Executive of his duties hereunder. All records, files, documents and other
materials or copies thereof relating to the Employer's business which the
Executive shall prepare or use, shall be and remain the sole property of the
Employer, shall not be removed from the Employer's premises without its
written consent, and shall be promptly returned to the Employer upon
termination of the Executive's employment hereunder. The Executive agrees to
abide by the Employer's reasonable policies, as in effect from time to time,
respecting avoidance of interests conflicting with those of the Employer. In
the event of any violation or threatened violation of these restrictions, the
Employer, in addition to and not in limitation of being relieved of all
further obligations under this Agreement and of any other rights, remedies or
damages available to the Employer under this Agreement or otherwise at law or
in equity, shall be entitled to preliminary and permanent injunctive relief
to prevent or restrain any such violation by the Executive and any and all
persons directly or indirectly acting for or with him, as the case may be.
4. TERM AND TERMINATION.
(a) BASIC TERM. The term of this Agreement shall begin on the Effective
Date and end on December 31, 1999, and shall be automatically extended for one
(1) additional year on each December 31 ("Anniversary Date") unless terminated
by either party effective as of the last day of the then current term by written
notice to that effect delivered to the other party not less than sixty (60) days
prior to an Anniversary Date.
(b) AGREEMENT NON-EXTENSION OR EMPLOYMENT TERMINATION BY EMPLOYER.
(i) In the event of the termination of the Executive's employment
under this Agreement by the Employer prior to the last day of the then
current term for any reason other than a termination in accordance with
the provisions of paragraph (d) of this Section 4, or the non-extension
of this Agreement by the Employer in accordance with the provisions of
paragraph (a) of this Section 4, the Employer shall continue to pay the
Executive the base salary then payable to the Executive and shall
continue to provide coverage for the Executive under all plans and
benefits otherwise provided to senior executives of the Employer, unless
unable to continue such coverage by law, for the remainder of the term of
this Agreement, provided, however, that in the circumstance where this
Agreement is not extended, the Executive must remain employed with the
Employer to receive such payments and benefits; further provided, that
the continued payment of these amounts by the Employer shall not offset
or diminish any compensation or benefits accrued as of the date of
termination or non-extension.
(ii) In the event this Agreement is not extended in accordance with
the provisions of paragraph (a) of this Section 4, the Executive may
elect to terminate his employment, and upon such election, the Employer
shall pay the Executive a lump sum amount equal to nine (9) times the
monthly base salary then payable to the Executive, which payment shall be
his sole benefit under this Section 4. The election by the Executive
must be delivered in writing to the Employer within sixty (60) days of
the later of his receipt of notice of the non-extension of this Agreement
or the next following
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Anniversary Date. Payment to the Executive will be made within thirty
(30) days of such termination.
(iii) If the Employer is not in compliance with its minimum capital
requirements or if the payments required under subparagraph (i) or (ii)
above would cause the Employer's capital to be reduced below its minimum
capital requirements, such payments shall be deferred until such time as
the Employer is in capital compliance.
(c) CONSTRUCTIVE TERMINATION. If at any time during the term of this
Agreement, except in connection with a termination pursuant to paragraph (d) of
this Section 4, the Executive is Constructively Discharged (as hereinafter
defined) then the Executive shall have the right, by written notice to the
Employer within sixty (60) days of such Constructive Discharge, to terminate his
services hereunder, effective as of thirty (30) days after such notice, and the
Executive shall have no rights or obligations under this Agreement other than as
provided in Sections 3 and 6 hereof. The Executive shall in such event be
entitled to a lump sum payment of compensation and benefits and continuation of
the health, life and disability insurance as if such termination of his
employment was pursuant to subparagraph (b)(i) of this Section 4.
(a) For purposes of this Agreement, the Executive shall be "Constructively
Discharged" upon the occurrence of any one of the following events:
(i) The Executive is not re-elected or is removed from the positions
with the Employer or any affiliate set forth in Section 1 hereof, other
than as a result of the Executive's election or appointment to positions
of equal or superior scope and responsibility; or
(ii) The Executive shall fail to be vested by the Employer with the
powers and authority of his appointed office; or
(iii) The Employer changes the primary employment location of the
Executive to a place that is more than thirty (30) miles from the primary
employment location as of the Effective Date of this Agreement; or
(iv) The Employer otherwise commits a material breach of its
obligations under this Agreement.
(d) TERMINATION FOR CAUSE. This Agreement and the Executive's employment
hereunder may be terminated for cause as hereinafter defined. "Cause" shall
mean: (i) the Executive's death or his permanent disability, as defined under
the Employer sponsored disability income insurance program, or in the event
there is no such program, the Executive's inability, as a result of physical or
mental incapacity, substantially to perform his duties hereunder for a period of
twelve (12) consecutive months; (ii) a material violation by the Executive of
any applicable material law or regulation respecting the business of the
Employer; (iii) the Executive being found guilty of a felony or an act of
dishonesty in connection with the performance of his duties as an officer of the
Employer, or which disqualifies the Executive from serving as an officer or
director of the Employer; or (iv) the willful or negligent failure of the
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Executive to perform his duties hereunder in any material respect. This
Agreement may be terminated immediately for any cause except under (iv) above.
The Executive shall be entitled to at least thirty (30) days' prior written
notice of the Employer's intention to terminate his employment under (iv) above,
specifying the grounds for such termination, a reasonable opportunity to cure
any conduct or act, if curable, alleged as grounds for such termination, and a
reasonable opportunity to present to the Board his position regarding any
dispute relating to the existence of such cause.
(e) TERMINATION UPON DEATH. In the event payments are due and owing
under this Agreement at the death of the Executive, payment shall be made to
such beneficiary as Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and
satisfaction of all claims and demands on behalf of the Executive. Such
payments shall be in full settlement and satisfaction of all payments
provided for in this Agreement.
(f) PAYMENT UPON TERMINATION FOR DISABILITY. The Employer may terminate
this Agreement and the Executive's employment after the Executive is
determined to be permanently disabled under the Employer sponsored disability
income insurance program or by a physician engaged by the Employer. In the
event of a dispute regarding the Executive's disability, each party shall
choose a physician who together will choose a third physician to make a final
determination. The Executive shall be entitled to the compensation and
benefits provided for under this Agreement for any period during the term of
this Agreement and prior to the establishment of the Executive's disability
during which the Executive is unable to work due to a physical or mental
infirmity. In the event of the termination of this Agreement and the
Executive's employment due to the permanent disability of the Executive, the
Employer shall continue to pay the Executive eighty percent (80%) of the base
salary per month then payable to the Executive, reduced by any amounts
received under the Employer sponsored disability income insurance program,
and shall continue to provide coverage for the Executive under the health and
life insurance programs maintained by the Employer until the earlier of the
date the Executive returns to full-time employment, either with the Employer
or another employer, or Executive's death. Notwithstanding anything
contained in this Agreement to the contrary, until the date specified in a
notice of termination relating to the Executive's disability, the Executive
shall be entitled to return to his positions with the Employer as set forth
in this Agreement in which event no disability of the Executive will be
deemed to have occurred. Notwithstanding any other provision of this
Agreement, in the event of the termination of the Executive's employment
under this Agreement for any reason, the Executive may elect to have any
disability income insurance policy maintained by the Employer on his behalf
transferred to him, and he shall assume all obligations thereunder.
(g) TERMINATION UPON CHANGE OF CONTROL.
(i) In the event of a Change in Control (as defined below) and the
termination of the Executive's employment or this Agreement under either
A or B below, the Executive shall be entitled to a lump sum payment equal
to three (3) times his annual base salary then payable, subject to the
limitations set forth below. The Employer shall
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<PAGE>
also continue to provide coverage for the Executive under the health,
life and disability insurance programs for three (3) years following such
termination. Payments under this paragraph shall be subject to the
limits of subparagraph (g)(ii) below. The following shall constitute
termination under this paragraph:
A. The Executive terminates his employment by a written notice to
that effect delivered to the Board within twenty-four (24) months
after the Change in Control.
B. This Agreement is terminated by the Employer or its successor
either in contemplation of or after the Change in Control.
(ii) It is the intention of the Employer and the Executive that no
portion of any payment under this Agreement, or payments to or for the
benefit of the Executive under any other agreement or plan, be deemed to
be an "Excess Parachute Payment" as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), or its
successors. It is agreed that the present value of and payments to or
for the benefit of the Executive in the nature of compensation, receipt
of which is contingent on the Change of Control, and to which Section
280G of the Code applies (in the aggregate "Total Payments") shall not
exceed an amount equal to one dollar less than the maximum amount which
the Employer may pay without loss of deduction under Section 280G(a) of
the Code. Present value for purposes of this Agreement shall be
calculated in accordance with Section 280G(d)(4) of the Code. Within one
hundred and twenty (120) days following the earlier of (A) the giving of
the notice of termination or (B) the giving of notice by the Employer to
the Executive of its belief that there is a payment or benefit due the
Executive which will result in an excess parachute payment as defined in
Section 280G of the Code, the Executive and the Employer, at the
Employer's expense, shall obtain the opinion of such legal counsel and
certified public accountants as the Executive may choose (notwithstanding
the fact that such persons have acted or may also be acting as the legal
counsel or certified public accountants for the Employer), which opinions
need not be unqualified, which sets forth (A) the amount of the Base
Period Income of the Executive, (B) the present value of Total Payments
and (C) the amount and present value of any excess parachute payments.
In the event that such opinions determine that there would be an excess
parachute payment, the payment hereunder or any other payment determined
by such counsel to be includable in Total Payments shall be modified,
reduced or eliminated as specified by the Executive in writing delivered
to the Employer within ninety (90) days of his receipt of such opinions
or, if the Executive fails to so notify the Employer, then as the
Employer shall reasonably determine, so that under the bases of
calculation set forth in such opinions there will be no excess parachute
payment. The provisions of this subparagraph, including the
calculations, notices and opinions provided for herein shall be based
upon the conclusive presumption that (A) the compensation and benefits
provided for in Section 2 hereof and (B) any other compensation earned by
the Executive pursuant to the Employer's compensation programs which
would have been paid in any event, are reasonable compensation for
services rendered, even though the timing of such payment is triggered by
the Change of Control; provided, however, that in
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the event such legal counsel so requests in connection with the opinion
required by this subparagraph, the Executive and the Employer shall obtain,
at the Employer's expense, and the legal counsel may rely on in providing
the opinion, the advice of a firm of recognized executive compensation
consultants as to the reasonableness of any item of compensation to be
received by the Executive. In the event that the provisions of Sections
280G and 4999 of the Code are repealed without succession, this
subparagraph shall be of no further force or effect.
(iii) For purposes of this paragraph, the term "Change in Control"
shall mean the following:
A. The consummation of the acquisition by any person (as such term
is defined in Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "1934 Act")) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty
percent (50%) or more of the combined voting power of the then
outstanding voting securities of the Employer or the Bank; or
B. The individuals who, as of the date hereof, are members of the
Board of the Employer or the Bank cease for any reason to constitute
a majority of the Board, unless the election, or nomination for
election by the stockholders, of any new director was approved by a
vote of a majority of the Board, and such new director shall, for
purposes of this Agreement, be considered as a member of the Board; or
C. Approval by stockholders of the Employer or the Bank of: (1)
a merger or consolidation if the stockholders immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than fifty percent
(50%) of the combined voting power of the then outstanding voting
securities of the entity resulting from such merger or consolidation
in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Employer or the
Bank outstanding immediately before such merger or consolidation; or
(2) a complete liquidation or dissolution or an agreement for the
sale or other disposition of all or substantially all of the assets
of the Employer or the Bank.
(a) Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because fifty percent (50%) or more of the combined voting power of
the then outstanding securities of the Employer or the Bank is acquired by: (1)
a trustee or other fiduciary holding securities under one or more employee
benefit plans maintained for employees of the Employer or the Bank; or (2) any
corporation which, immediately prior to such acquisition, is owned directly or
indirectly by the stockholders in the same proportion as their ownership of
stock of the Employer or the Bank immediately prior to such acquisition.
7
<PAGE>
(h) REGULATORY SUSPENSION AND TERMINATION.
(i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employer's affairs by
a notice served under Section 8(e)(3) (12 U.S.C. Section 1818(e)(3)) or
8(g) (12 U.S.C. Section 1818(g)) of the Federal Deposit Insurance Act, as
amended, the Employer's obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Employer
shall (A) pay the Executive all of the compensation withheld while their
contract obligations were suspended and (B) reinstate any of the
obligations which were suspended.
(ii) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Employer's affairs by an order issued
under Section 8(e) (12 U.S.C. Section 1818(e)) or 8(g) (12 U.S.C. Section
1818(g)) of the Federal Deposit Insurance Act, as amended, all
obligations of the Employer under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall not be affected.
(iii) If the Employer is in default as defined in Section 3(x) (12
U.S.C. Section 1813(x)(1)) of the Federal Deposit Insurance Act, as
amended, all obligations of the Employer under this contract shall
terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(iv) All obligations of the Employer under this contract shall be
terminated, except to the extent determined that continuation of the
contract is necessary for the continued operation of the institution by
the Federal Deposit Insurance Corporation (the "FDIC"), at the time the
FDIC enters into an agreement to provide assistance to or on behalf of
the Employer under the authority contained in Section 13(c) (12 U.S.C.
Section 1823(c)) of the Federal Deposit Insurance Act, as amended, or
when the Employer is determined by the FDIC 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.
(v) Any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with
Section 18(k) (12 U.S.C. Section 1828(k)) of the Federal Deposit
Insurance Act as amended, and any regulations promulgated thereunder.
(i) TERMINATION UPON RETIREMENT. In the event of the termination of this
Agreement due to the retirement of the Executive at or after the attainment of
age sixty-two (62), the Employer shall continue to provide coverage for the
Executive under the health and life insurance programs maintained by the
Employer until his death.
5. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of the Employer, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall
8
<PAGE>
any of such payments be subject to seizure for the payment of any debt,
judgment, alimony, separate maintenance or be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise of the Executive.
6. INDEMNIFICATION.
(a) INSURANCE. The Employer shall provide the Executive (including his
heirs, personal representatives, executors and administrators) for the term of
this Agreement with coverage under a standard directors' and officers' liability
insurance policy at its expense.
(b) INDEMNIFICATION UNDER STATE LAW. In addition to the insurance
coverage provided for in paragraph (a) of this Section 6, the Employer shall
hold harmless and indemnify the Executive (and his heirs, executors and
administrators) to the fullest extent permitted under applicable law against
all expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been an officer of the Employer (whether or not he
continues to be an officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited
to, judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
(c) ADVANCEMENT OF EXPENSES. In the event the Executive becomes a party,
or is threatened to be made a party, to any action, suit or proceeding for
which the Employer has agreed to provide insurance coverage or
indemnification under this Section 6, the Employer shall, to the full extent
permitted under applicable law, advance all expenses (including reasonable
attorneys' fees), judgments, fines and amounts paid in settlement
(collectively "Expenses") incurred by the Executive in connection with the
investigation, defense, settlement, or appeal of any threatened, pending or
completed action, suit or proceeding, subject to receipt by the Employer of a
written undertaking from the Executive: (i) to reimburse the Employer for
all Expenses actually paid by the Employer to or on behalf of the Executive
in the event it shall be ultimately determined that the Executive is not
entitled to indemnification by the Employer for such Expenses; and (ii) to
assign to the Employer all rights of the Executive to indemnification, under
any policy of directors' and officers' liability insurance or otherwise, to
the extent of the amount of Expenses actually paid by the Employer to or on
behalf of the Executive.
7. GENERAL PROVISIONS.
(a) SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Executive, the Employer and his and its
respective personal representatives, successors and assigns, and any
successor or assign of the Employer shall be deemed the "Employer" hereunder.
The Employer shall require any successor to all or substantially all of the
business and/or assets of the Employer, whether directly or indirectly, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as the Employer would be required to perform if no such succession had
taken place.
9
<PAGE>
(b) ENTIRE AGREEMENT; MODIFICATIONS. This Agreement, along with the
Deferred Compensation and Split-Dollar Insurance Agreement for the benefit of
the Executive, constitutes the entire agreement between the parties
respecting the subject matter hereof, and supersedes all prior negotiations,
undertakings, agreements and arrangements with respect thereto, whether
written or oral. Except as otherwise explicitly provided herein, this
Agreement may not be amended or modified except by written agreement signed
by the Executive and the Employer.
(c) ENFORCEMENT AND GOVERNING LAW. The provisions of this Agreement
shall be regarded as divisible and separate; if any of said provisions should
be declared invalid or unenforceable by a court of competent jurisdiction,
the validity and enforceability of the remaining provisions shall not be
affected thereby. This Agreement shall be construed and the legal relations
of the parties hereto shall be determined in accordance with the laws of the
State of Illinois without reference to the law regarding conflicts of law.
(d) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement or the Executive's employment by the Employer
shall be settled exclusively by arbitration, conducted by a single arbitrator
sitting in a location selected by the Executive within fifty (50) miles of
the main office of the Employer, in accordance with the rules of the American
Arbitration Association (the "AAA") then in effect. The arbitrator shall be
selected by the parties from a list of arbitrators provided by the AAA,
provided that no arbitrator shall be related to or affiliated with either of
the parties. No later than ten (10) days after the list of proposed
arbitrators is received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location or
telephonically. At that meeting, the party who sought arbitration shall
eliminate one (1) proposed arbitrator and then the other party shall
eliminate one (1) proposed arbitrator. The parties shall continue to
eliminate names from the list of proposed arbitrators in this manner until a
single proposed arbitrator remains. This remaining arbitrator shall
arbitrate the dispute. Each party shall submit, in writing, the specific
requested action or decision it wishes to take, or make, with respect to the
matter in dispute, and the arbitrator shall be obligated to choose one (1)
party's specific requested action or decision, without being permitted to
effectuate any compromise position. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
the Executive shall be entitled to seek specific performance of his right to
be paid through the date of termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
(e) LEGAL FEES. All reasonable legal fees paid or incurred by the
Executive pursuant to any dispute or question of interpretation relating to
this Agreement shall be paid or reimbursed by the Employer if the Executive
is successful on the merits pursuant to a legal judgment, arbitration or
settlement.
(f) WAIVER. No waiver by either party at any time of any breach by the
other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at the same time or any prior
or subsequent time.
10
<PAGE>
(g) NOTICES. Notices pursuant to this Agreement shall be in writing and
shall be deemed given when received; and, if mailed, shall be mailed by
United States registered or certified mail, return receipt requested, postage
prepaid; and if to the Employer, addressed to the principal headquarters of
the Employer, attention: Chairman; or, if to the Executive, to the address
set forth below the Executive's signature on this Agreement, or to such other
address as the party to be notified shall have given to the other.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WEST SUBURBAN BANCORP, INC. MICHAEL P. BROSNAHAN
By: /s/ Kevin J. Acker /s/ Michael P. Brosnahan
--------------------------------------- --------------------------------
Name:
--------------------------------------- --------------------------------
Chairman of the Board of Directors
--------------------------------
(Address)
11
<PAGE>
DEFERRED COMPENSATION AND
SPLIT-DOLLAR INSURANCE AGREEMENT
Effective the 13th day of November, 1990, West Suburban Bank, a banking
organization organized and existing under the laws of the State of Illinois,
hereinafter referred to as "Corporation" and __________________, a Key
Employee and Executive of the Corporation, hereinafter referred to as
"Executive," entered into a Deferred Compensation Agreement. By the terms
thereof, the Corporation and the Executive reserved the right to modify or
amend that agreement. By execution hereof, the Corporation and Executive
hereby amend and restate that agreement in its entirety.
The Executive has been in the employ of the Corporation for several years,
and has now and for years past faithfully served the Corporation. It is the
consensus of the Board of Directors of the Corporation that Executive's
services have been of exceptional merit, in excess of the compensation paid
and an invaluable contribution to the profits and position of the Corporation
in its field of activity.
It is the mutual desire of the Corporation and the Executive that Executive
remain in the employ of the Corporation, and to establish a program to
provide supplemental employment benefits and pre-retirement death benefits
for the Executive. Accordingly, it is the desire of the Corporation and the
Executive to enter into this Agreement under which the Corporation will agree
to make certain payments to Executive upon his employment termination and,
alternatively, to his beneficiaries in the event of his death while employed
by the Corporation.
Therefore, in consideration of Executive's services performed in the past and
those to be performed in the future, and based upon the mutual promises and
covenants herein contained, the Corporation and Executive agree as follows:
I. ARTICLE ONE - DEFINITIONS
A. EFFECTIVE DATE. The effective date of this Agreement shall be May 1,
1997.
B. EMPLOYMENT AGREEMENT. The Employment Agreement entered into between
Executive and the Corporation dated May 1, 1997, as amended.
II. ARTICLE TWO - EMPLOYMENT
a) Employment shall be in accordance with the terms of the Employment
Agreement.
III. ARTICLE THREE - DEFERRED COMPENSATION
A. The Corporation shall set aside and accrue to the benefit of
Executive the sum of the following no later than December 31 of each
year subject to the terms set forth in this Agreement:
1. A base of Twenty-five Thousand Dollars ($25,000) per year; and
1
<PAGE>
2. Such additional annual deferred compensation as determined by the
Board of Directors.
3. In the event Executive becomes entitled to receive benefits
under Article Five of this Agreement, he shall be entitled to a
pro-rata portion of his base benefit based upon his completed
calendar months of employment for the year of employment
termination and any additional annual deferred compensation
determined by the Board of Directors.
B. The sum of the above annual set aside, plus each prior year's set
aside, shall be referred to as Executive's Deferred Compensation
Account ("EDC Account"). The EDC Account shall bear annual interest
equal to the one year treasury note constant maturity interest rate
published by the Federal Home Loan Bank in effect on January 1 of
each year (constant one year U.S. Treasury Index per FRB H15).
C. The Corporation may purchase life insurance to fund all or part of
the above EDC Account and Executive shall execute all reasonable
insurance applications to facilitate such purchase provided,
however, Executive shall have no right, title or interest in such
insurance or in the EDC Account, unless otherwise provided by the
Corporation.
IV. ARTICLE FOUR - SPLIT-DOLLAR-LIFE INSURANCE
A. If the Executive is insurable, the Corporation shall purchase life
insurance on the life of Executive with a minimum death benefit of
$_____________ to fund its obligations under this Agreement in the
event of the death of Executive before termination of employment.
B. All premiums due on such insurance shall be paid by the Corporation.
However, Executive shall be responsible for the income taxes
incurred each year on the value of the "economic benefit" of the
life insurance protection for federal income tax purposes.
C. All dividends attributable to such life insurance will be applied to
reduce premiums.
D. The Corporation shall have all ownership rights under such life
insurance, except Executive shall have the right to designate the
beneficiary thereunder.
E. The amount receivable by the Corporation upon termination of such
life insurance shall be:
1. Upon termination of this Agreement or the death of Executive,
the Corporation's share shall be an amount equal to the greater
of the aggregate premiums paid by the Corporation or the cash
value.
2
<PAGE>
2. Upon surrender of such life insurance, the Corporation's share
shall be an amount equal to the cash value.
3. For purposes of this Agreement, "aggregate premiums" shall mean
all premiums paid by the Corporation. Such premiums shall be
reduced by any indebtedness and any accrued unpaid interest
incurred by the Corporation on the life insurance and by the
amount of any policy dividends used to reduce or offset such
premiums. "Cash value" shall mean the guaranteed cash value of
the life insurance plus the cash value of any dividend additions
as of the date to which premiums have been paid plus any
dividend credits outstanding, and reduced by any indebtedness
and any accrued unpaid interest incurred by the Corporation on
the life insurance.
F. Upon Executive's death, the Corporation and Executive's beneficiary
shall execute such forms and furnish such other documents or
information as are required to receive payment under the life
insurance.
V. ARTICLE FIVE - BENEFITS
a) The following benefits provided by the Corporation to Executive shall
be available under this Agreement:
A. Executive shall be entitled to receive the accrued balance in his
EDC Account upon any termination of his employment other than upon
death. Such amount shall be paid in the number of annual
installments elected by Executive. The Board of Directors of the
Corporation may at any time accelerate the payment of any
outstanding balance.
B. Upon any termination of employment other than upon death, Executive
may elect to acquire any life insurance maintained by the
Corporation under Article Four. In the event of such an election,
any amount receivable under Section A above shall be reduced by the
cash value of such insurance, as defined under Article Four.
C. In the event of Executive's death before termination of employment,
the beneficiary named by Executive shall receive the death benefit
payable under any life insurance purchased by the Corporation, less
an amount equal to the greater of the aggregate premiums paid by the
Corporation for or the cash value of such insurance, each as defined
under Article Four, such benefit payment to be in full satisfaction
of any amounts due under this Agreement. Notwithstanding the
preceding sentence, in the event the death benefit receivable by the
beneficiary is less than the accrued balance in the EDC Account of
Executive, the beneficiary shall receive an additional amount equal
to the difference between the EDC Account balance and the death
benefit receivable.
3
<PAGE>
VI. ARTICLE SIX - RESTRICTIONS UPON DEFERRED COMPENSATION FUNDING
The Corporation shall have no obligation to set aside, earmark or
entrust any fund or money with which to pay its deferred
compensation obligations under this Agreement. Executive, his
beneficiaries or any successor in interest to him shall be and
remain simply a general creditor of the Corporation in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
The Corporation reserves the absolute right in its sole discretion
to either fund the deferred compensation obligations undertaken by
this Agreement or to refrain from funding the same and to determine
the extent, nature and method of such funding.
Should Corporation elect to fund its deferred compensation obligation
under this Agreement, in whole or in part, through the purchase of
life insurance, mutual funds, disability policies or annuities, the
Corporation reserves the absolute right, in its sole discretion, to
terminate such funding at any time, in whole or in part. At no time
shall Executive be deemed to have any lien or right, title or
interest in or to any specific funding investment or to any assets
of the Corporation.
If Corporation elects to invest in a life insurance, disability, or
annuity policy upon the life of Executive, then Executive shall
assist the Corporation by freely submitting to a physical exam and
supplying such additional information necessary to obtain such
insurance or annuities.
VII. ARTICLE SEVEN - MISCELLANEOUS
A. ALIENABILITY AND ASSIGNMENT PROHIBITION. Neither Executive, his
surviving spouse nor any other beneficiary under this Agreement
shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber, in
advance, any of the benefits payable hereunder nor shall any of said
benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance owed by the Executive or
his beneficiary nor be transferable by operation of law in the event
of bankruptcy, insolvency or otherwise. In the event Executive or
any beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Corporation's
liabilities shall forthwith cease and terminate.
B. BINDING OBLIGATION OF CORPORATION AND ANY SUCCESSOR IN INTEREST.
Corporation expressly agrees that it shall not merge or consolidate
into or with another corporation or sell substantially all of its
assets to another corporation, firm or person until such
corporation, firm or person expressly agrees, in writing, to assume
and discharge the duties and obligations of the Corporation under
this Agreement. This Agreement shall be binding upon the parties
hereto, their successors, beneficiaries, heirs and personal
representatives.
4
<PAGE>
C. REVOCATION. It is agreed by and between the parties hereto that,
during the lifetime of the Executive, this Agreement may be amended
or revoked at any time or times, in whole or in part, by the mutual
written assent of the Executive and the Corporation.
D. TERMINATION. It is agreed by and between the parties hereto that
the annual set aside under this Agreement may be terminated by the
Corporation at the end of the then current term of the Employment
Agreement in the event of the non-extension or termination thereof.
E. GENDER. Whenever in this Agreement words are used in the masculine
or neuter gender, they shall be read and construed as in the
masculine, feminine or neuter gender whenever they should so apply.
F. EFFECT ON OTHER CORPORATION BENEFIT PLANS. Nothing contained in
this Agreement shall affect the right of the Executive to
participate in or be covered by any qualified or non-qualified
pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of
Corporation's existing or future compensation structure.
G. HEADINGS. Headings and subheadings in this Agreement are inserted
for reference and convenience only and shall not be deemed a part of
this Agreement.
H. APPLICABLE LAW. The validity and interpretation of this Agreement
shall be governed by the laws of the State of Illinois.
VIII. ARTICLE EIGHT - ERISA PROVISIONS
A. NAMED FIDUCIARY AND PLAN ADMINISTRATOR. The "Named Fiduciary and
Plan Administrator" of this Agreement shall be Duane G. Debs until
his resignation or removal by the Board of Directors of the
Corporation. As Named Fiduciary and Plan Administrator, Duane G.
Debs shall be responsible for the management, control and
administration of this Agreement as established herein. He may
delegate to others certain aspects of the management and operation
responsibilities of the plan including the employment of advisors
and the delegation of ministerial duties to qualified individuals.
B. CLAIMS PROCEDURE. In the event that benefits under this Plan
Agreement are not paid to the Executive (or to his beneficiary in
the case of Executive's death) and such claimants feel they are
entitled to receive such benefits, then a written claim must be made
to the Named Fiduciary and Administrator named above within sixty
(60) days from the date payments are refused. The Plan Fiduciary
and Administrator and the corporation shall review the written claim
and, if the claim is denied in whole or in part, they shall provide,
in writing and within ninety (90) days of receipt of such claim,
their specific reasons for such denial
5
<PAGE>
and reference to the provisions of this Agreement upon which the
denial is based and any additional material or information necessary
to perfect the claim. Such written notice shall further indicate
the additional steps to be taken by claimants if a further review of
the claim denial is desired. A claim shall be deemed denied if the
Plan Fiduciary and Administrator fails to take any action within the
aforesaid ninety (90) day period.
If claimants desire a second review, they shall notify the Plan
Fiduciary and Administrator in writing within sixty (60) days of the
first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and
comments they may feel appropriate. In its sole discretion, the Plan
Fiduciary and Administrator shall then review the second claim and
provide a written decision within sixty (60) days of receipt of such
claim. This decision shall likewise state the specific reasons for
the decision and shall include reference to specific provisions of
the Plan Agreement upon which the decision is based.
C. ARBITRATION. If claimants continue to dispute any benefit denial
after the second review, the claimants may submit the dispute to
arbitration. Such arbitration shall be conducted by a single
arbitrator sitting in a location selected by Executive within fifty
(50) miles of the main office of Corporation, in accordance with the
rules of the American Arbitration Association (the "AAA") then in
effect. The arbitrator shall be selected by the parties from a list
of arbitrators provided by the AAA, provided that no arbitrator
shall be related to or affiliated with either of the parties. No
later than ten (10) days after the list of proposed arbitrators is
received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location or
telephonically. At that meeting, the party who sought arbitration
shall eliminate one (1) proposed arbitrator and then the other party
shall eliminate one (1) proposed arbitrator. The parties shall
continue to eliminate names from the list of proposed arbitrators in
this manner until a single proposed arbitrator remains. This
remaining arbitrator shall arbitrate the dispute. Each party shall
submit, in writing, the specific requested action or decision it
wishes to take, or make, with respect to the matter in dispute, and
the arbitrator shall be obligated to choose one (1) party's specific
requested action or decision, without being permitted to effectuate
any compromise position. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific
performance of his right to be paid through the date of termination
during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the ______ day of May, 1997
and that, upon execution, each has received a confirming copy.
____________________________________ ___________________________________
(WITNESS) ___________________________________
WEST SUBURBAN BANK
____________________________________ By:_______________________________
(WITNESS) Its:______________________________
7
<PAGE>
DEFERRED COMPENSATION AND
SPLIT-DOLLAR INSURANCE AGREEMENT
DEFERRAL ELECTION
TO: The Board of Directors of West Suburban Bank
In accordance with the provisions of the Deferred Compensation and Split-Dollar
Insurance Agreement, I hereby elect to have the amounts deferred under the
Agreement paid to me in _____ (INSERT A NUMBER ONE (1) THROUGH TEN (10)) annual
installments. I understand that I cannot modify the manner of payment election
made by me any later than twelve (12) months before my anticipated date of
employment termination.
________________________________________ ___________________________
Date
WEST SUBURBAN BANK
By:_______________________________________ _____________________________
Its:______________________________________ Date
<PAGE>
DEFERRED COMPENSATION AND
SPLIT-DOLLAR INSURANCE AGREEMENT
DESIGNATION OF BENEFICIARIES
TO: The Board of Directors of West Suburban Bank
In accordance with the provisions of the Deferred Compensation and Split-Dollar
Insurance Agreement, I hereby revoke any prior designations and designate the
following beneficiary* to receive the benefits under the Agreement upon my
death:
Name: _______________________________________________________________
Address: _______________________________________________________________
_______________________________________________________________
________________________________________ _______________________________
Date
* If more than one beneficiary is to be designated, separately list the
beneficiaries and specify the percentage of each distribution to be received by
each beneficiary.
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<PAGE>
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 26,882
<INT-BEARING-DEPOSITS> 1,050,628
<FED-FUNDS-SOLD> 18,140
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 231,800
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<INVESTMENTS-MARKET> 182,586
<LOANS> 790,852
<ALLOWANCE> 9,974
<TOTAL-ASSETS> 1,294,651
<DEPOSITS> 1,151,502
<SHORT-TERM> 0
<LIABILITIES-OTHER> 17,350
<LONG-TERM> 0
0
0
<COMMON> 3,457
<OTHER-SE> 122,342
<TOTAL-LIABILITIES-AND-EQUITY> 1,294,651
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<INTEREST-TOTAL> 47,029
<INTEREST-DEPOSIT> 21,424
<INTEREST-EXPENSE> 21,720
<INTEREST-INCOME-NET> 25,309
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<EXPENSE-OTHER> 15,218
<INCOME-PRETAX> 17,492
<INCOME-PRE-EXTRAORDINARY> 17,492
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,398
<EPS-PRIMARY> 26.35
<EPS-DILUTED> 26.35
<YIELD-ACTUAL> 7.9
<LOANS-NON> 2,995
<LOANS-PAST> 8,231
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<ALLOWANCE-OPEN> 9,603
<CHARGE-OFFS> 334
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