<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ----- to -----
Commission file number 0-19611
CITFED BANCORP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 31-1332674
(State of other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
ONE CITIZENS FEDERAL CENTRE, DAYTON, OHIO 45402
(Address of principal executive offices) (Zip code)
</TABLE>
(937) 223-4234
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
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 report), 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.
Outstanding at
Class of Common Stock November 8, 1996
--------------------- ----------------
$.01 par value 5,722,928
<PAGE> 2
CITFED BANCORP, INC.
FORM 10-Q
INDEX
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<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Statements of Financial
Condition as of September 30, 1996
and March 31, 1996 1
Consolidated Statements of Operations
for the Three and Six Months ended
September 30, 1996 and 1995 2
Consolidated Statement of Stockholders'
Equity for the Six Months ended
September 30, 1996 3
Consolidated Statements of Cash Flows
for the Six Months ended
September 30, 1996 and 1995 4
Notes to Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
Exhibit Index 22
</TABLE>
<PAGE> 3
CITFED BANCORP, INC. AND SUBSIDIARIES
FORM 10Q
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, 1996 AND MARCH 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Part 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS SEPTEMBER 30, MARCH 31,
1996 1996
------------ ---------
(unaudited)
ASSETS
------
<S> <C> <C>
CASH AND DEMAND DEPOSITS $ 26,682 $ 23,047
Interest-bearing time deposits and cash equivalents 17,567 29,677
---------- ----------
TOTAL CASH AND EQUIVALENTS 44,249 52,724
Investment securities held to maturity 223,221 188,743
Mortgage-backed securities available for sale 732,567 655,679
Loans (less allowance for loan losses of $17,811 and $16,330
at September 30, 1996 and March 31, 1996, respectively) 1,546,361 1,445,844
Loans held for sale 31,112 75,656
Accrued interest receivable:
Investment securities 3,732 2,479
Loans 9,118 8,929
Mortgage-backed securities 4,056 3,578
Real estate held for sale, net 6,739 5,862
Federal Home Loan Bank stock, at cost 37,362 31,908
Office properties and equipment, net 19,258 20,039
Cost in excess of fair value of net assets acquired 21,769 23,219
Other assets 68,073 83,226
---------- ----------
TOTAL $2,747,617 $2,597,886
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits $1,561,842 $1,649,265
Advances from Federal Home Loan Bank 724,106 602,504
Other borrowings 256,020 145,557
Other liabilities 30,620 26,451
---------- ----------
TOTAL LIABILITIES 2,572,588 2,423,777
STOCKHOLDERS' EQUITY:
Serial Preferred Stock, ($.01 par value),
Authorized 5,000,000 shares; none outstanding
Common Stock ($.01 par value),
Authorized 20,000,000 shares; 5,721,194 outstanding 57 57
Additional paid-in capital 55,190 54,718
Retained earnings-substantially restricted 126,041 123,743
Unearned ESOP shares (632) (632)
Net unrealized loss on securities available for sale (5,306) (3,402)
Unearned compensation - restricted stock awards (321) (375)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 175,029 174,109
---------- ----------
TOTAL $2,747,617 $2,597,886
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 1
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CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended September 30, 1996 and 1995
(DOLLARS IN THOUSANDS, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
-------------------- ------------------
1996 1995 1996 1995
--------- --------- -------- --------
INTEREST INCOME: (unaudited)
<S> <C> <C> <C> <C>
Loans $30,632 $29,043 $60,167 $56,756
Mortgage-backed securities 12,510 8,442 23,176 17,048
Investments 3,756 2,645 7,166 5,617
Other 661 881 1,269 1,376
------- ------- ------- -------
Total interest income 47,559 41,011 91,778 80,797
------- ------- ------- -------
INTEREST EXPENSE:
Deposits 17,738 18,326 35,775 36,174
Borrowings 12,958 8,606 23,320 17,111
------- ------- ------- -------
Total interest expense 30,696 26,932 59,095 53,285
------- ------- ------- -------
NET INTEREST INCOME 16,863 14,079 32,683 27,512
Provision for loan losses 1,050 300 1,500 600
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 15,813 13,779 31,183 26,912
------- ------- ------- -------
NON-INTEREST INCOME (LOSS):
Servicing fees and charges:
Consumer banking 3,300 2,359 6,136 4,490
Trust 865 635 1,766 1,235
Mortgage loan origination & servicing, net 2,664 1,790 5,076 3,589
Gain (loss) on sale of earning assets:
Mortgage servicing rights 0 2,060 0 3,662
Investments 0 63 0 63
Loans and mortgage-backed securities 0 26 0 50
Land held for development (30) (19) (110) (36)
Gain (loss) on sale:
Office properties and equipment (4) 1 32 1
Provision for losses on real estate held for sale (9) (9) (18) (19)
Other 584 157 1,091 367
------- ------- ------- -------
Total non-interest income 7,370 7,063 13,973 13,402
------- ------- ------- -------
NON-INTEREST EXPENSES:
Salaries and benefits 6,800 5,946 13,251 11,947
Occupancy and equipment 3,278 3,219 6,487 6,449
Amortization of cost in excess of fair value of
net assets acquired 725 723 1,450 1,475
SAIF recapitalization charge 10,293 0 10,293 0
FDIC premiums and OTS assessments 1,025 1,038 2,030 1,953
Marketing and advertising 551 486 1,023 929
Franchise Tax 396 435 793 866
Other 2,662 3,057 5,130 5,484
------- ------- ------- -------
Total non-interest expenses 25,730 14,904 40,457 29,103
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES (2,547) 5,938 4,699 11,211
Income tax provision (benefit) (661) 2,169 1,549 3,759
------- ------- ------- -------
NET INCOME (LOSS) $(1,886) $ 3,769 $ 3,150 $ 7,452
======= ======= ======= =======
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARES $ (0.32) $ .64 $ .53 $ 1.27
======== ======= ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For The Six Months Ended September 30, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
ADDITIONAL NET UNREALIZED OTHER
OUTSTANDING COMMON PAID-IN RETAINED (LOSS) GAIN ON SECURITIES EQUITY
(unaudited) SHARES STOCK CAPITAL EARNINGS AVAILABLE FOR SALE ADJUSTMENTS
----------- -------- ---------- -------- ------------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1996 5,685,567 $57 $54,718 $123,743 $(3,402) $(1,007)
Net Income 3,150
Dividends Paid (852)
Change in net unrealized
(Loss) Gain on securities
Available for sale (1,904)
Stock options exercised 37,149 454
Shares retired (2,022)
ESOP compensation 72
Restricted Stock awards:
Compensation 500 18 (18)
--------- --- ------- -------- ------- -------
BALANCE, SEPT. 30, 1996 5,721,194 $57 $55,190 $126,041 $(5,306) $ (953)
========= === ======= ======== ======= =======
<CAPTION>
TOTAL
STOCKHOLDERS'
(unaudited) EQUITY
-----------------
<S> <C>
BALANCE, MARCH 31, 1996 $174,109
Net Income 3,150
Dividends Paid (852)
Change in net unrealized
(Loss) Gain on securities
Available for sale (1,904)
Stock options exercised 454
Shares retired
ESOP compensation 72
Restricted Stock awards:
Compensation 0
--------
BALANCE, SEPT. 30, 1996 $175,029
========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended September 30, 1996 and 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
----------------------
(Unaudited) 1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 3,151 $ 7,452
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,439 1,895
Amortization of intangibles 1,320 5,874
Amortization of deferred loan fees (352) (655)
(Increase) decrease in loans held for sale 42,880 (18,837)
FHLB stock dividends (561) (962)
(Gain) loss on sale of earning assets 1,742 (429)
Provision for loan and REO losses 1,518 619
ESOP and RRP 62 107
Increase in accrued interest receivable (1,920) (1,832)
(Increase) decrease in other assets 18,257 (1,778)
Increase (decrease) in other liabilities, net 5,195 (2,296)
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 72,731 (10,842)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities:
Purchased (55,730) (38,207)
Matured/principal collected 21,247 32,008
Mortgage-backed securities held to maturity:
Principal collected 16,177
Mortgage-backed securities available for sale:
Purchased (139,018) (9,701)
Sold 1,939
Principal collected 59,247 13,822
Loans held for investment:
Originated (260,253) (202,247)
Principal collected 156,605 102,756
Gain on sale of mortgage servicing rights 3,662
Purchased and originated mortgage servicing rights (3,060) (4,012)
Purchases/Redemptions of FHLB stock (4,892) 2,184
Proceeds from real estate sold 1,105 859
Real estate acquired for development and sale (95) (242)
Office properties and equipment, net (605) (1,051)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES $(225,449) (82,053)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits, net (87,423) 24,662
FHLB advances:
Borrowings 749,200 755,500
Payments (627,598) (711,703)
Other borrowings 112,726 96,744
Payments (2,263) (96,933)
Common stock issuances 454 152
Cash dividends paid (853) (709)
--------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 144,243 67,713
--------- ---------
NET DECREASE IN CASH AND EQUIVALENTS (8,475) (25,182)
Cash and equivalents, beginning of year 52,724 72,660
--------- ---------
CASH AND EQUIVALENTS, END OF YEAR $ 44,249 $ 47,478
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 58,059 $ 50,706
========= =========
Income taxes paid (received) $ 3,950 ($626)
========= =========
SUPPLEMENTAL OF NON-CASH INVESTING ACTIVITIES:
Transfer of loans to foreclosed real estate $ 2,016 $ 1,806
========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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CITFED BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Six Months Ended September 30, 1996 and 1995
(Unaudited)
1. BASIS OF PRESENTATION
The foregoing consolidated financial statements as of September 30, 1996
and 1995, and for the three and six months ended September 30, 1996 and 1995
are unaudited. However, in the opinion of management, all adjustments (which
consist of normal recurring accruals) necessary for a fair presentation of the
consolidated financial statements have been included. Results for any interim
period are not necessarily indicative of results to be expected for the year.
The interim consolidated financial statements include the accounts of CitFed
Bancorp, Inc. (the "Corporation"), its subsidiary, Citizens Federal Bank,
F.S.B. (the "Bank" or "Citizens Federal") and the Bank's subsidiaries.
2. COMMITMENTS AND CONTINGENCIES
At September 30, 1996, the Bank had outstanding commitments to originate
and purchase loans aggregating approximately $56.6 million. The commitments
extend over varying periods of time with the majority being disbursed within
thirty days. Loan commitments with interest rates established with the
borrower amounted to $45.1 million; the remainder are at floating rates. The
Bank had outstanding mandatory and optional forward commitments to sell loans
and mortgage-backed securities of $54.5 million at September 30, 1996.
The Corporation and its subsidiaries are defendants in certain lawsuits
arising in the ordinary course of business. Management, after review with its
legal counsel, is of the opinion that the resolution of these legal matters
will not have a material adverse effect on the Corporation's financial position
or results of operations.
3. SUBSIDIARY OPERATIONS
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<S> <C>
CitFed Bancorp has four subsidiaries:
Citizens Federal Bank, F.S.B. CitFed Mortgage Corporation of America
(federal savings bank) (mortgage banking)
C. F. Property Management Company Dayton Financial Services Corporation
(which does business as CitFed Investment (residential land development)
Group) (mutual fund and insurance sales)
</TABLE>
<TABLE>
<CAPTION>
Earnings (losses): THREE MONTHS ENDED SIX MONTHS ENDED
(In thousands) SEPT. 30, SEPT. 30
------------ ----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Citizens Federal Bank $(2,222) $3,352 $2,485 $ 6,430
CitFed Mortgage 752 1,343 1,488 2,344
CitFed Investment Group 78 (11) 175 6
Dayton Financial (45) (44) (103) (61)
CitFed Bancorp (including consolidating entries) (450) (871) (895) (1,267)
------- ------ ------ -------
NET INCOME (LOSS) $(1,887) $3,769 $3,150 $ 7,452
======= ====== ====== =======
</TABLE>
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4. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share for the three and six
months ended September 30, 1996 and 1995 are divided by the weighted average
number of common shares and common share equivalents outstanding during the
period. Average common and common stock equivalents outstanding for the three
month period ended September 30, 1996 and 1995 were 5,921,949 and 5,876,633,
respectively. Average common and common stock equivalents outstanding for the
six month period ended September 30, 1996 and 1995 were 5,911,255 and
5,875,864, respectively. Stock options are considered common share
equivalents.
5. DIVIDEND
The Board of Directors declared on October 18, 1996, a 50% stock dividend,
which will have the effect of a 3-for-2 stock split payable November 29, 1996,
to stockholders of record on November 15, 1996. The Corporation also declared
on October 18, 1996, a post-split quarterly dividend of $0.08 per share payable
December 2, 1996 to stockholders of record on November 15, 1996. The total
amount of the dividend will be approximately $686,750.
6. ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
Effective April 1, 1996, the Corporation adopted the provisions of
Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights" ("SFAS 122"). SFAS 122 requires that a mortgage banking
enterprise recognize, as separate assets, rights to service mortgage loans for
others that have been acquired through either the purchase or origination of a
loan. A mortgage banking enterprise that sells or securitizes those loans with
servicing rights retained should allocate the total cost of the mortgage loans
sold or securitized to the mortgage servicing rights ("MSR's") and the loans
based on their relative fair values. Additionally, SFAS 122 requires that
MSR's be periodically assessed for impairment and reported on the Consolidated
Statement of Financial Condition at the lower of cost or fair value. As a
result of adopting SFAS 122, the Corporation capitalized $2.7 million of MSR's
from its retail lending operations.
The fair value of capitalized MSR's is calculated, on a disaggregated
basis, by discounting estimated expected future cash flows using a discount
rate commensurate with the risk involved. In using this valuation method, the
Bank used assumptions that market participants would use in estimating future
net servicing income which included estimates of the cost of servicing per
loan, the discount rate, float value, inflation rate, ancillary income per
loan, prepayment speeds and default rates. The Bank conducts its periodic
impairment analyses using a disaggregated method, based on the underlying
loans' interest rates and loan type. There was no valuation allowance recorded
at September 30, 1996.
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<PAGE> 9
7. ACCOUNTING FOR STOCK-BASED COMPENSATION
On April 1, 1996, the Corporation adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). SFAS 123 establishes optional financial accounting standards and
additional disclosure requirements for stock-based employee compensation plans.
The Corporation is retaining its current accounting method for its stock-based
employee compensation plans, and as such, its adoption of SFAS 123 has had no
material impact on the Corporation's financial condition or results of its
operations.
8. ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF
On April 1, 1996, the Corporation adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of" ("SFAS 121"). SFAS 121
requires that long-lived assets and certain identifiable intangibles, and
goodwill related to those assets to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Adoption of this statement
did not have a material impact on the financial condition or results of
operations of the Corporation.
9. RECLASSIFICATIONS
Certain amounts for prior periods have been reclassified for comparative
purposes to conform with the current year's presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Corporation is a Delaware corporation organized on January 25, 1991 for
the purpose of acquiring all of the outstanding capital stock of Citizens
Federal which was issued on January 29, 1992. Citizens Federal is a
federally-chartered stock savings bank headquartered in Dayton, Ohio. The Bank
has 33 offices in a seven county area that comprises the greater Dayton area. In
addition, through the Bank's wholly owned subsidiary, CitFed Mortgage
Corporation of America (the "CitFed Mortgage"), it operates thirteen mortgage
loan origination offices in Dayton, Columbus and Cincinnati, Ohio; Indiana,
Kentucky, Virginia and North Carolina.
FORWARD-LOOKING STATEMENT
When used in this Quarterly Report on Form 10-Q, the words or phrases
"will likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks
and uncertainties - including, changes in economic conditions in the Company's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Company's market area and competition,
that could cause actual results to differ materially from historical earnings
and those
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presently anticipated or projected. The Company wishes to caution readers not
to place undue reliance on any such forward-looking statements, which speak
only as of the date made. The Company wishes to advise readers that the
factors listed above could affect the Company's financial performance and could
cause the Company's actual results for future periods to differ materially from
any opinions or statements expressed with respect to future periods in any
current statements.
The Company does not undertake -- and specifically disclaims any
obligation -- to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
RESULTS OF OPERATIONS
Citizens Federal's results of operations depend primarily upon the level
of net interest income, which is the difference between the interest income
earned on its interest-earning assets such as loans and investments, and the
costs of the Bank's interest-bearing liabilities, primarily deposits and
borrowings. Results of operations are also dependent upon the level of the
Bank's non-interest income, including fee income and service charges, and
affected by the level of its non-interest expenses, including its general and
administrative expenses. Net interest income depends upon the volume of
interest-earning assets and interest-bearing liabilities and the interest rate
earned or paid on them, respectively.
Net Income: For the three months ended September 30, 1996, the
Corporation incurred a net loss of $1.9 million compared to net income of $3.8
million for the three months ended September 30, 1995. The current quarter's
loss was attributable to a one-time charge of $7.2 million (net of tax) for the
recapitalization of the Savings Association Insurance Fund ("SAIF") resulting
from legislation enacted on September 30, 1996. (See "Regulatory
Developments") Net income without the SAIF recapitalization for the three
month period ended September 30, 1996 would have been $5.3 million as compared
to $3.8 million for the three month period ended September 30, 1995, resulting
in an increase of $1.5 million, or 41.1%.
Net income for the six months ended September 30, 1996 was $3.2 million
compared to $7.5 million for the same period a year ago. Without the SAIF
recapitalization charge, net income for the six months ended September 30, 1996
would have been $10.4 million, or a 39.0% increase over the same period in
fiscal 1996.
Interest Income: Total interest income increased $6.5 million, or 16.0%
from $41.0 million for the second quarter of fiscal 1996 to $47.6 million for
the second quarter of fiscal 1997. Of this increase, $9.7 million resulted
from an increase of $397.3 million in the average balance of interest-earning
assets, primarily loans receivable and mortgage-backed securities. The
offsetting $3.2 million decrease resulted from a 14 basis point decrease in the
weighted average yield on interest-earning assets.
Total interest income increased $11.0 million, or 13.6% from $80.8 million
for the six months ended September 30, 1995, to $91.8 million for the six
months ended September 30, 1996. Of this increase, $13.3 million resulted from
a $334.7 million increase in the average balance of interest-earning assets.
The offsetting $2.3 million decrease resulted from a 12 basis point decrease in
the average yield on interest-earning assets.
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<PAGE> 11
Management decided, throughout fiscal 1996 and 1997, to grow the Bank's
assets by increasing its permanent portfolio of consumer and one- to
four-family loans held for investment. As a result, the average balance of
loans increased $108.8 million from September 1995 to September 1996. In
addition, purchases during this same period have resulted in an increase in the
average balance of mortgage-backed securities and investment securities of
$238.2 million and $52.4 million, respectively.
Interest Expense: Total interest expense increased $3.8 million, or
14.0% from $26.9 million for the second quarter of fiscal 1996 to $30.7 million
for the second quarter of fiscal 1997. Of this increase, $10.3 million was the
result of an increase of $365.2 million in the average balance of
interest-bearing liabilities. The offsetting $6.5 million decrease related to
a 13 basis point decrease in the cost of funds.
Total interest expense increased $5.8 million, or 10.9% from $53.3 million
for the six months ended September 30, 1995, to $59.1 million for the six
months ended September 30, 1996. Of this increase $12.5 million was the result
of a $310.6 million increase in the average balance of interest-bearing
liabilities. The offsetting $6.7 million related to a 16 basis point decrease
in the cost of funds.
The Bank's average deposits decreased $14.2 million for the second quarter
of fiscal 1997 as compared to the second quarter of fiscal 1996 primarily due
to a $23.3 million decrease in demand and money market deposits partially
offset by a $6.7 million increase in retail certificates of deposit. In
addition, FHLB advances and securities sold under agreements to repurchase
increased $271.3 million and $108.3 million, respectively. These increases
were necessary to fund the asset growth planned by management and to fund the
reduction in deposits.
Rate/Volume Analysis. The following table presents the dollar amount of
changes in interest income and interest expense for major components of
interest-earning assets and interest-bearing liabilities. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (i) changes in rate (i.e., changes in rate
multiplied by old volume) and (ii) changes in volume (i.e., changes in volume
multiplied by old rate). For purposes of this table, changes attributable to
both rate and volume which cannot be segregated have been allocated
proportionately to the change due to rate and the change due to volume.
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<TABLE>
<CAPTION>
RATE/VOLUME ANALYSIS
(In Thousands) 3 Months Ended Sept. 30,
|---------------- 1996 vs 1995 ---------------------|
Total
Increase(Decrease) Due to Increase
Volume Rate (Decrease)
------ ---- ---------
<S> <C> <C> <C>
Interest-Earning Assets:
Loans receivable $ 4,899 $(3,310) $1,589
Mortgage-backed securities 4,017 51 4,068
Investment securities 849 262 1,111
Other (29) (191) (220)
------- ------- ------
Total interest-earning assets $ 9,736 $(3,188) $6,548
======= ======= ------
Interest-Bearing Liabilities:
Deposits:
NOW Accounts 136 (329) (193)
Savings Deposits (7) (231) (238)
Money Market Deposits (111) 24 (87)
Certificates of Deposits 480 (550) (70)
FHLB advances 6,497 (3,304) 3,193
Securities sold under agreement
to repurchase 3,290 (2,174) 1,116
Other Borrowings (14) 57 43
------- ------- ------
Total interest-bearing liabilities $10,271 $(6,507) 3,764
======= ======= ------
Net interest income $2,784
======
<CAPTION>
RATE/VOLUME ANALYSIS
(In Thousands) 6 Months Ended Sept. 30,
|---------------- 1996 vs 1995 ---------------------|
Total
Increase(Decrease) Due to Increase
Volume Rate (Decrease)
------ ---- ----------
<S> <C> <C> <C>
Interest-Earning Assets:
Loans receivable $ 5,344 $(1,933) $ 3,411
Mortgage-backed securities 6,581 (453) 6,128
Investment securities 1,405 144 1,549
Other (51) (56) (107)
------- ------- -------
Total interest-earning assets $13,279 $(2,298) $10,981
======= ======= -------
Interest-Bearing Liabilities:
Deposits:
NOW Accounts 120 (286) (166)
Savings Deposits (28) (336) (364)
Money Market Deposits (228) (14) (242)
Certificates of Deposits 1,044 (671) 373
FHLB advances 8,718 (3,774) 4,944
Securities sold under agreement
to repurchase 2,925 (1,633) 1,292
Other Borrowings (4) (23) (27)
------- ------- -------
Total interest-bearing liabilities $12,547 $(6,737) 5,810
======= ======= -------
Net interest income $ 5,171
=======
</TABLE>
Net Interest Margin. The following table presents, for the periods
indicated, the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, and the resultant rates and
the net interest margin. No tax equivalent adjustments have been made. All
average balances are daily average balances.
The ratio of average interest-earning assets to average interest-bearing
liabilities increased to 102.2% for the six months ended September 30, 1996, as
compared to 101.4% for the same period last year. Although the weighted
average interest rate declined for both interest-earning assets and
interest-bearing liabilities, the decline was greater for interest-bearing
liabilities resulting in an increased interest spread.
Page 10
<PAGE> 13
<TABLE>
<CAPTION>
Three months ended September 30,
1996 1995
---------------------------------- -------------------------------
Average Interest Yield/ Average Interest Yield/
Outstanding Earned/ Weighted Outstanding Earned/ Weighted
Balance Paid Rate Balance Paid Rate
----------- -------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Interest-Earning Assets:
Loans receivable (1) $1,540,967 $ 30,632 7.95% $1,432,189 $29,043 8.11%
Mortgage-backed securities 741,206 12,510 6.75 502,977 8,442 6.71
Investment securities 227,262 3,756 6.61 174,836 2,645 6.05
Other 59,412 661 4.45 61,503 881 5.73
---------- -------- ------ ---------- ------- ------
Total interest-earning assets $2,568,847 $ 47,559 7.41% $2,171,505 $41,011 7.55%
========== -------- ------ ========== ------- ------
Interest-Bearing Liabilities:
Deposits:
NOW account $175,660 $ 858 1.95% $ 172,198 $ 1,051 2.44%
Demand deposits 112,529 0 0.00 125,199 0 0.00
Savings deposits 211,369 1,308 2.48 212,367 1,546 2.91
Money Market deposits 131,543 1,111 3.38 142,214 1,198 3.37
Certificates of deposit 955,160 14,461 6.06 948,485 14,531 6.13
FHLB advances 711,268 9,738 5.48 439,986 6,545 5.95
Securities sold under agreements
to repurchase 175,613 2,363 5.38 67,351 1,247 7.41
Other borrowings 41,167 857 8.33 41,274 814 7.89
---------- -------- ------ ---------- ------- ------
Total interest-bearing liabilities $2,514,309 30,696 4.88% $2,149,074 26,932 5.01%
========== -------- ------ ========== ------- ------
Net interest income; interest
rate spread $ 16,863 2.53% $14,079 2.54%
======== ====== ======= ======
Net interest margin (2) 2.63% 2.59%
===== =====
Average interest-earning assets to
average interest-bearing liabilities 102.17% 101.04%
====== ======
<CAPTION>
Six months ended September 30,
1996 1995
-------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Loans receivable (1) $1,521,698 $60,167 7.91% $1,416,781 $56,756 8.01%
Mortgage-backed securities 700,107 23,176 6.62 510,775 17,048 6.68
Investment securities 218,032 7,166 6.57 175,237 5,617 6.41
Other 57,754 1,269 4.39 60,049 1,376 4.58
---------- ------- ----- ----------- ------- -----
Total interest-earning assets $2,497,591 $91,778 7.35% $2,162,842 $80,797 7.47%
========== ------- ------ =========== ------- ------
Interest-Bearing Liabilities:
Deposits:
NOW account $ 177,341 $ 1,854 2.09% $ 173,405 $ 2,020 2.33%
Demand deposits 121,577 0 0.00 122,350 0 0.00
Savings deposits 212,095 2,621 2.47 214,131 2,985 2.79
Money Market deposits 131,671 2,202 3.34 145,291 2,444 3.36
Certificates of deposit 963,171 29,098 6.04 942,124 28,725 6.10
FHLB advances 658,304 17,945 5.45 426,823 13,001 6.09
Securities sold under agreements
to repurchase 138,013 3,652 5.29 67,351 2,360 7.01
Other borrowings 41,188 1,723 8.37 41,282 1,750 8.48
---------- ------- ------ ---------- ------- ------
Total interest-bearing liabilities $2,443,360 59,095 4.84% $2,132,757 53,285 5.00%
========== ------- ------ ========== ------- ------
Net interest income; interest
rate spread $32,683 2.51% $27,512 2.47%
======= ===== ======= =====
Net interest margin (2) 2.62% 2.54%
====== ======
Average interest-earning assets to
average interest-bearing liabilities 102.22% 101.41%
====== ======
</TABLE>
(1) Average balances for loans receivable include average balances for
non-accrual loans.
(2) Net interest margin is net interest income divided by average
interest-earning assets.
Page 11
<PAGE> 14
Provision for Loan Losses. The Bank's provision for loan losses was $1.5
million for the six months ended September 30, 1996, compared to a provision of
$600,000 for the six months ended September 30, 1995. Both provisions reflect
the Bank's continuing evaluation of its loan portfolio, the growth of the
portfolio, and the effect thereon from general economic conditions.
Management's estimate of the adequacy of its general allowances for loan
losses is based upon an analysis of the Bank's loan portfolio including such
factors as prior loan loss experiences, economic conditions affecting the real
estate market, regulatory considerations and other matters.
The following table sets forth an analysis of the Bank's allowance for
loan losses at the dates indicated.
<TABLE>
<CAPTION>
Six Months Ended
September 30,
1996 1995
--------- ---------
<S> <C> <C>
(Dollars in thousands)
Balance at beginning of period $16,330 $15,782
------- -------
Charge-offs:
One-to four-family real estate (125) (44)
Other real estate (6) (975)
Consumer (167) (22)
Commercial business (20) 0
------- -------
Total charge-offs (318) (1,041)
------- -------
Recoveries:
One-to four-family real estate 38 47
Other real estate 201 83
Consumer 40 28
Commercial business 20 53
------- -------
Total recoveries 299 211
------- -------
Net recoveries (charge-offs) (19) (830)
Transfer from REO (for adoption of FAS #114) 0 110
Provisions 1,500 600
------- -------
Balance at end of period $17,811 $15,662
======= =======
Ratio of net recoveries (charge-offs) during the period
to average loans outstanding during the period (0.00%) (0.06%)
======= =======
Ratio of allowance to non-performing loans
at end of period. 90.09% 159.69%
======= =======
</TABLE>
Management believes that the relationship of the allowance to total loans
and to non-performing loans is adequate based on all information currently
available. See "Asset Quality."
Page 12
<PAGE> 15
The ratio of the allowance to non-performing loans decreased to 90.09% at
September 30, 1996, compared to 159.69% for the same period one year ago
primarily because of the increase in non-performing loans from $9.8 million to
$19.8 million. This increase was the result of the Bank placing its 1%
participation in a first mortgage loan on two office buildings in New York City
amounting to $9.3 million on non-accrual status during the December 1995
quarter. This was the result of the debtors filing for Chapter 11 bankruptcy
protection. The Bank has a $2.5 million reserve recorded on this loan at
September 30, 1996, and no additional reserves were considered necessary based
on management's analysis of this loan.
Non-Interest Income: Non-interest income for the three months ended
September 30, 1996, totaled $7.4 million as compared to $7.1 million for the
same period a year ago, an increase of $307,000, or 4.3%. Non-interest income
for the six months ended September 30, 1996, totaled $14.0 million as compared
to $13.4 million for the same period a year ago, an increase of $571,000, or
4.3%.
Consumer banking fees and charges increased 39.9% to $3.3 million for the
three months ended September 30, 1996, up from $2.4 million for the same period
last year. This increase continued to reflect the benefits of increases in the
number of checking accounts and fees associated with these accounts and
increased fees associated with consumer and commercial loan activities.
Consumer banking fees and charges increased 36.7% to $6.1 million for the six
months ended September 30, 1996, up from $4.5 million for the same period last
year.
Trust and investment services fee income for the second quarter of fiscal
1997 increased 36.2% to $865,000 compared to $635,000 for the second quarter of
fiscal 1996. Administered trust assets were $412.2 million at September 30,
1996, compared with $396.5 million at September 30, 1995. CitFed Investment
Group initiated a new program during the first quarter of fiscal 1996 to
facilitate the sale of mutual funds and insurance products through the Bank's
retail branches. Commission revenue from CitFed Investment Group was $312,000
for the second quarter of fiscal 1997, compared to $163,000 for the second
quarter of fiscal 1996. Trust and investment service fee income for the six
months ended September 30, 1996, increased 43.0% to $1.8 million from $1.2
million for the same period a year ago.
Income from mortgage banking operations increased by 48.8% in the second
quarter of fiscal 1997 to $2.7 million, up from $1.8 million for the same
period a year ago. This increase was due primarily to $1.1 million of income
recognized from the adoption of SFAS 122 during the period. See Note 6 of the
Notes to Consolidated Financial Statements under Item 1 of this Part I.
Without the effects of SFAS 122, mortgage banking fee income would have
declined by $231,000. This decline was primarily due to secondary marketing
losses which were $570,000 higher in the second quarter of fiscal 1997 compared
to the same period a year ago. Income from mortgage banking operations
increased by 41.4% for the six months ended September 30, 1996, to $5.1
million, as compared to $3.6 million for the same period last year.
Page 13
<PAGE> 16
CitFed Mortgage maintains the flexibility to either sell servicing rights
for current income and cash flow or retain servicing for future income. The
decision to sell or retain servicing is based on current market conditions, as
well as, CitFed Mortgage's financial objectives. To help offset lower
origination revenues in the second quarter of fiscal 1996, CitFed Mortgage sold
$167.7 million of mortgage loan servicing rights generating a gain of $2.1
million. During the second quarter of fiscal 1997 there were no servicing
rights sold. Mortgage loan closings totaled $164.3 million for the three
months ended September 30, 1996, compared to $184.1 million for the three
months ended September 30, 1995, a decrease of 10.7%.
Non-Interest Expenses: Non-interest expenses for the three months ended
September 30, 1996 were $25.7 million, which includes the one-time SAIF
recapitalization charge of $10.3 million. Without the SAIF recapitalization
charge, non-interest expenses were $15.4 million for the three months ended
September 30, 1996, compared to $14.9 million for the same period a year ago,
an increase of $533,000, or 3.6%. See "Regulatory Development" herein.
Non-interest expenses for the six months ended September 30, 1996 were
$30.2 million without the SAIF recapitalization charge, compared to $29.1
million for the six months ended September 30, 1995, an increase of $1.1
million, or 3.6%.
Salaries and benefits increased $854,000 over the prior year's second
quarter from normal wage increases during the quarter and the opening of
Williamsburg, Virginia and Indianapolis, Indiana mortgage origination offices.
Salaries and benefits increased by $1.3 million to $13.3 million for the six
months ended September 30, 1996, as compared to $11.9 million for the same
period a year ago, a 10.9% increase.
Income Tax Provision: The Bank had a net income tax benefit for the
three months ended September 30, 1996, of 26.0% because of the one-time SAIF
assessment incurred. Without the SAIF assessment, the effective tax rate was
31.3% for the second quarter of fiscal 1997 compared to 36.5% for the second
quarter of fiscal 1996.
For the six months ended September 30, 1996, the effective tax rate
decreased to 33.0%, compared to 33.5% for the six months ended September 30,
1995.
Page 14
<PAGE> 17
ASSET QUALITY
Non-Performing Assets. The table below sets forth the amounts and
categories of non-performing assets in the Bank's loan portfolio as of the
dates indicated below.
<TABLE>
<CAPTION>
Sept. 30, March 31,
1996 1996
---------- ----------
<S> <C> <C>
(Dollars in thousands)
Non-Performing Assets
Non-accruing loans:
One- to four-family $ 6,562 $ 4,595
Multi-family and commercial real estate 12,967 12,760
Consumer 44 38
Commercial business 197 303
------- -------
Total 19,770 17,696
------- -------
Foreclosed assets:
One- to four-family 2,524 823
Multi-family and commercial real estate 2,709 3,449
------- -------
Total 5,233 4,272
------- -------
Total non-performing assets $25,003 $21,968
======= =======
Non-performing loans to total loans 1.26% 1.21%
==== ====
Non-performing assets to total assets 0.91% 0.85%
==== ====
</TABLE>
The $3.0 million increase in non-performing assets from March 31, 1996 to
September 30, 1996, was the result of several factors. Non-accruing one-to
four-family mortgage loans increased $2.0 million during the period. Sixty
loans totaling $5.4 million were placed on non-accrual status, eight loans
totaling $915,000 were transferred to foreclosed assets, twenty loans totaling
$1.2 million were returned to accruing status and fourteen loans totaling $1.2
million were paid off.
Non-accruing multi-family and commercial real estate loans increased
$207,000 for the period. Five loans for $1.1 million were added to
non-accrual status and four loans totaling $858,000 were paid in full.
Foreclosed assets increased $961,000 for the period. Fourteen residential
properties totaling $2.0 million (net of $21,000 in loss reserves) were added,
and four properties totaling $302,000 were sold. Seven commercial properties
totaling $667,000 were sold. The reserve for foreclosed assets increased by
$73,000 from net recoveries of $55,000 and a provision of $18,000.
Page 15
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY--The Corporation conducts its business through its subsidiary,
Citizens Federal and Citizens Federal's subsidiaries. The main source of funds
for the Corporation are dividends from the Bank. The Bank meets the OTS
regulatory capital requirements that would allow the Bank to declare and pay
capital distributions to the Corporation. The Corporation is not subject to
any OTS regulatory restrictions on the payment of dividends to its
stockholders. The Board of Directors of the Corporation declared on October
18, 1996, a three-for-two stock split in the form of a stock dividend and a
cash dividend on its common stock of eight cents ($0.08) per share. The stock
dividend will be paid on November 29, 1996 to stockholders of record on
November 15, 1996. The cash dividend will be based upon the post-split shares
and will be paid on December 2, 1996 to stockholders of record on November 15,
1996.
The Bank's principal sources of funds include deposits, advances from the FHLB,
reverse repurchase agreements, repayments on loans and mortgage-backed
securities, maturities of investment securities, proceeds from the sale of
loans, mortgage-backed and investment securities available for sale, funds
provided by operations and capital invested by the Corporation. Investment
maturities and scheduled amortization of loans and mortgage-backed securities
are generally a predictable source of funds. Deposit flows and mortgage
prepayments are influenced by the general level of interest rates, economic
conditions, competition and the restructuring of the thrift industry.
Management also considers the Corporation's interest sensitivity "gap" when
considering alternative sources of funds. At September 30, 1996, the
Corporation's one-year gap was a negative 12.58%.
The Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. This requirement, which may vary at the discretion
of the OTS depending upon economic conditions and deposit flows, is based upon
a percentage of deposits and short-term borrowings. The required ratio is
currently 5.0%. While the Bank's liquidity ratio varies from time to time, it
has generally maintained liquid assets substantially in excess of the minimum
requirement. The Bank's liquid asset ratio was 15.36% at September 30, 1996.
Liquidity management is both a daily and long-term responsibility of
management. The Bank adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) the projected amount
of loans to be originated by the mortgage banking subsidiary and held for
re-sale, (iii) expected deposit flows, (iv) yields available on
interest-earning deposits, and (v) the objective of its asset/liability
management program. Excess liquidity is invested generally in interest-earning
overnight deposits and other short-term government and agency obligations. If
Citizens Federal requires funds beyond its ability to generate them internally,
the Bank has additional borrowing capacity with the FHLB and collateral
eligible for reverse repurchase agreements.
The Bank anticipates that it will have sufficient funds available to meet
current loan commitments. At September 30, 1996, the Bank had commitments to
purchase from CitFed Mortgage loans totaling $33.0 million. CitFed Mortgage
had commitments to fund loans of $56.6 million and to sell loans of $54.5
million.
Page 16
<PAGE> 19
CAPITAL--Savings institutions insured by the Federal Deposit Insurance
Corporation are required to meet three regulatory capital requirements. If a
requirement is not met, regulatory authorities may take legal or administrative
actions, including restrictions on growth or operations or, in extreme cases,
seizure. Institutions not in compliance may apply for an exemption from the
requirements and submit a recapitalization plan. The following table
demonstrates the Bank's compliance with each of these requirements as of
September 30, 1996:
<TABLE>
<CAPTION>
Fully Phased-in
Requirement (1)
------------------
<S> <C> <C>
(Dollars in thousands) Amount %(2)
------------------
Tangible Capital:
Bank's $163,452 6.00%
Requirement 40,865 1.50
-------- ----
Excess $122,587 4.50%
======== ====
Core Capital
Bank's $163,452 6.00%
Requirement 81,730 3.00
-------- ----
Excess $ 81,722 3.00%
======== ====
Risk-Based Capital:
Bank's $179,004 13.91%
Requirement 102,937 8.00
-------- -----
Excess $ 76,067 5.91%
======== =====
</TABLE>
(1) Entire investment in non-qualifying subsidiary is excluded for
calculations.
(2) Tangible and core capital levels are shown as a percentage of total
adjusted assets, risk-based capital levels are a percentage of
risk-weighted assets.
A reconciliation of the Corporation's GAAP Capital is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) Sept. 30, 1996
--------------
<S> <C>
Bank's stockholder's equity $181,201
Less additional capital contributed to
Bank by the Corporation (22,000)
Plus Corporation's stockholders'
equity not available for regulatory capital 15,828
--------
Stockholders' equity of the Corporation $175,029
========
</TABLE>
Minimum capital requirements, as required by the Federal Deposit Insurance
Corporation Improvement Act of 1991, to determine whether an institution is
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, or critically undercapitalized became effective December 19,
1992. Well capitalized institutions are defined as having core capital of at
least 5.0%, core capital to risk-weighted assets of at least 6% and risk-based
capital of at least 10.0%. The Bank's ratios at September 30, 1996 were 6.00%,
12.68% and 13.91%, respectively. As a result, the Bank meets the capital
requirements of a well capitalized institution.
Page 17
<PAGE> 20
REGULATORY DEVELOPMENTS
On September 30, 1996, federal legislation was enacted that requires the
SAIF to be recapitalized with a one-time assessment on virtually all
SAIF-insured institutions, such as the Bank, equal to 65.7 basis points on
SAIF-insured deposits maintained by those institutions as of March 31, 1995.
This SAIF assessment, which is to be paid to the FDIC by November 27, 1996, is
approximately $10.3 million and has been accrued by the Company at September
30, 1996.
As a result of the SAIF recapitalization, the FDIC has proposed to amend
its regulation concerning the insurance premiums payable by SAIF-insured
institutions. Effective October 1, 1996 through December 31, 1996, the FDIC
has proposed that the SAIF insurance premium for all SAIF-insured institutions
that are required to pay the Financing Corporation (FICO) obligation, such as
the Bank, be reduced to a range of 18 to 27 basis points from 23 to 31 basis
points per $100 of domestic deposits. The Bank currently qualifies for the
minimum SAIF insurance premium of 23 basis points. The FDIC has also proposed
to further reduce the SAIF insurance premium to a range of 0 to 27 basis points
per $100 of domestic deposits, effective January 1, 1997. Management cannot
predict whether or in what form the FDIC's final regulation may be promulgated.
Page 18
<PAGE> 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In August 1995, the Corporation filed suit against the United States
Government for reneging on contracts with the Bank regarding the
treatment of supervisory goodwill as capital. Although, the U. S.
Supreme Court recently decided for the plaintiff in three pending
supervisory goodwill cases involving other entities it is uncertain as
to how this will affect the Corporation's claim.
Item 4. Submission of Matters to a Vote of Security Holders
a) The Annual Meeting of stockholders was held on July 26, 1996 and
adjourned to and reconvened on September 20, 1996.
b) The matters approved by stockholders at the annual meeting on July 26,
1996, and the number of votes cast for, against or withheld (as well as
the number of abstentions and broker non-votes) as to each matter are
set forth below:
<TABLE>
<CAPTION>
Election of the following Directors
for a three-year term: For Withheld
--------- --------
<S> <C> <C>
Cheryl A. Craigie 4,963,510 355,810
Allen M. Hill 5,112,338 206,982
Gilbert P. Williamson 5,108,817 210,503
</TABLE>
The approval and ratification of the amendment to CitFed's 1991 Stock
Option and Incentive Plan to increase by 280,000 the number of shares reserved
for issuance thereunder.
<TABLE>
<S> <C>
For 4,096,127
Against 1,136,901
Abstain 71,363
Broker Non-votes 14,929
</TABLE>
c) The matter approved by stockholders at the adjourned and reconvened
annual meeting held on September 20, 1996 and the number of votes cast
for, against or withheld (as well as abstentions and broker non-votes)
as to each matter are set forth below:
The approval and ratification of the amendment of Article Fourth of
CitFed's Certificate of Incorporation to increase the total number of
shares of common stock which the Corporation shall have authority to
issue to twenty million shares.
<TABLE>
<S> <C>
For 3,624,782
Against 1,482,060
Abstain 57,801
Broker Non-votes 154,677
</TABLE>
Page 19
<PAGE> 22
Item 5. Other Information
In connection with the Corporation's acquisition of PSB Holdings,
Corporation ("PSB") during fiscal 1996, the Corporation filed
a request with the Internal Revenue Service ("IRS") for a
determination letter with respect to the tax qualified status of
PSB's employee stock ownership plan ("ESOP") upon termination. In
August, 1996, the Corporation received a determination letter from
the IRS indicating that the PSB ESOP could be terminated, with
shares distributed, without adversely affecting its qualifications
for federal income tax purposes. As a result, the ESOP intends to
pay off its obligation to the Corporation and distribute all
remaining shares of stock to qualifying employees. The fair value of
the shares released for distribution to participants (estimated to
be approximately $1.4 million as of the filing of this form 10-Q)
would be recorded as compensation expense upon distribution of such
shares to participants. The actual amount recorded as compensation
expense will be based upon the market price of the Corporation's
stock at the date the ESOP obligation is extinguished.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit - Index
<TABLE>
<CAPTION>
Exhibit Number Description Page No.
-------------- ----------- --------
<C> <S> <C>
3(i) Amended and Restated Certificate
of Incorporation
11 Statement regarding computation
of per share earnings
27 Financial Data Schedule
99.1 Employment Contracts
99.2 Supplemental Retirement Income
Plan Amendments
</TABLE>
b) Report on Form 8-K - There were no reports on Form 8-K
filed during the three months ended September 30, 1996.
Page 20
<PAGE> 23
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.
<TABLE>
<S><C>
CITFED BANCORP, INC.
(Registrant)
Date November 13, 1996 By /s/ Jerry L. Kirby
-------------------- --------------------------------
Jerry L. Kirby
Chairman of the Board, President and
Chief Executive Officer
(Duly Authorized Representative)
Date November 13, 1996 By /s/ William M. Vichich
-------------------- ---------------------------------
William M. Vichich
Executive Vice President,
Chief Operating Officer and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
</TABLE>
Page 21
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description Page No.
-------------- ----------- --------
<C> <S> <C>
3(i) Amended and Restated Certificate
of Incorporation
11 Statement regarding computation
of per share earnings
27 Financial Data Schedule
99.1 Employment Contracts
99.2 Supplemental Retirement Income
Plan Amendments
</TABLE>
Page 22
<PAGE> 1
EXHIBIT 3.i
Page 1
[STATE OF DELAWARE LETTERHEAD]
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "CITFED BANCORP, INC.", FILED IN THIS OFFICE ON THE NINTH DAY OF
OCTOBER, A.D. 1996, AT 12:30 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDED OF DEEDS FOR RECORDING.
[SEAL] Edward J. Freel
---------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
2253073 8100 8140673
DATE:
960293875 10-09-96
<PAGE> 2
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CITFED BANCORP, INC.
CitFed Bancorp, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. The name of the corporation is CitFed Bancorp, Inc. CitFed
Bancorp, Inc. was originally incorporated under the same name, and the original
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on January 24, 1991.
2. Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Amended and Restated Certificate of
Incorporation restates and integrates and further amends the provisions of the
Certificate of Incorporation of this corporation.
3. The stockholders of this corporation approved an amendment to
Article Fourth, Paragraph A. of the Certificate of Incorporation to increase
the total number of authorized shares of common stock to twenty million
(20,000,000) shares at the reconvened Annual Meeting of Stockholders of the
corporation held on September 20, 1996, by the requisite votes of the
outstanding shares of common stock, pursuant to notice given in accordance with
the provisions of Section 222 of the General Corporation Law of the State of
Delaware. That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of Sections 222 and 242 of the General Corporation
Law of the State of Delaware.
4. The text of the Amended and Restated Certificate of
Incorporation is hereby restated and further amended to read in its entirety as
follows:
FIRST: The name of the Corporation is CitFed Bancorp, Inc.
(hereinafter sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of Delaware.
<PAGE> 3
FOURTH:
A. The total number of shares of all classes of stock
which the Corporation shall have the authority to issue is twenty-five million
(25,000,000) consisting of:
(a) five million (5,000,000) shares of preferred
stock, par value one cent ($.01) per share (the "Preferred Stock");
and
(b) twenty million (20,000,000) shares of common
stock, par value one cent ($.01) per share (the "Common Stock").
B. The Board of Directors is hereby expressly
authorized, subject to any limitations prescribed by law, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware (such
certificate being hereinafter referred to as a "Preferred Stock Designation"),
to establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the
shares of each such series and any qualifications, limitations or restrictions
thereof. The number of authorized shares of the Preferred Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the Common
Stock, without a vote of the holders of the Preferred Stock, or of any series
thereof, unless a vote of any such holders is required pursuant to the terms of
any Preferred Stock Designation.
C. 1. Notwithstanding any other provision of this
Certificate of Incorporation, in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly,
by a person who, as of any record date for the determination of stockholders
entitled to vote on any matter, beneficially owns in excess of 10% of the
then-outstanding shares of Common Stock (the "Limit"), be entitled, or
permitted to cast any vote in respect of the shares held in excess of the
Limit. The number of votes which may be cast by any record owner by virtue of
the provisions hereof in respect of Common Stock beneficially owned by such
person owning shares in excess of the Limit shall be a number equal
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to the total number of votes which a single record owner of all Common Stock
owned by such person would be entitled to cast, multiplied by a fraction, the
numerator of which is the number of shares of such class or series beneficially
owned by such person and owned of record by such record owner and the
denominator of which is the total number of shares of Common Stock beneficially
owned by such person owning shares in excess of the Limit.
2. The following definitions shall apply to this section C of
this Article
FOURTH:
(a) An "affiliate" of a specified person
shall mean a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the person specified.
(b) "Beneficial ownership" shall be
determined pursuant to Rule 13d-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934 (or any successor rule or
statutory provision), or, if said Rule 13d-3 shall be rescinded and
there shall be no successor rule or statutory provision thereto,
pursuant to said Rule 13d-3 as in effect on December 1, 1990;
provided, however, that a person shall, in any event, also be deemed
the "beneficial owner" of any Common Stock:
(1) which such person or any of its affiliates
beneficially owns, directly or indirectly; or
(2) which such person or any of its
affiliates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding (but
shall not be deemed to be the beneficial owner of any voting
shares solely by reason of an agreement, contract, or other
arrangement with this Corporation to effect any transaction
which is described in any one or more of the clauses ofSection
A of Article EIGHTH) or upon the exercise of conversion
rights, exchange rights, warrants, or options or otherwise, or
(ii) sole or shared voting
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<PAGE> 5
or investment power with respect thereto pursuant to any
agreement, arrangement, understanding, relationship or
otherwise (but shall not be deemed to be the beneficial owner
of any voting shares solely by reason of a revocable proxy
granted for a particular meeting of stockholders, pursuant to
a public solicitation of proxies for such meeting, with
respect to shares of which neither such person nor any such
affiliate is otherwise deemed the beneficial owner); or
(3) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its affiliates acts as a
partnership, limited partnership, syndicate or other group
pursuant to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any
shares of capital stock of this Corporation;
and provided further, however, that (1) no director or officer of this
Corporation (or any affiliate of any such director or officer) shall,
solely by reason of any or all of such directors or officers acting in
their capacities as such, be deemed, for any purposes hereof, to
beneficially own any Common Stock beneficially owned by any other such
director or officer (or any affiliate thereof), and (2) neither any
employee stock ownership or similar plan of this Corporation or any
subsidiary of this Corporation nor any trustee with respect thereto
(or any affiliate of such trustee) shall, solely by reason of such
capacity of such trustee, be deemed, for any purposes hereof, to
beneficially own any Common Stock held under any such plan. For
purposes of computing the percentage beneficial ownership of Common
Stock of a person the outstanding Common Stock shall include shares
deemed owned by such person through application of this subsection but
shall not include any other Common Stock which may be
issuable by this Corporation pursuant to any agreement, or upon
exercise of conversion rights, warrants or options, or otherwise. For
all other purposes, the outstanding Common Stock shall include only
Common Stock then outstanding and shall not include any Common Stock
which may be
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<PAGE> 6
issuable by this Corporation pursuant to any agreement, or upon the
exercise of conversion rights, warrants or options, or otherwise.
(c) A "person" shall mean any
individual, firm, corporation, or other entity.
(d) The Board of Directors shall have
the power to construe and apply the provisions of this section and to
make all determinations necessary or desirable to implement such
provisions, including but not limited to matters with respect to (1)
the number of shares of Common Stock beneficially owned by any person,
(2) whether a person is an affiliate of another, (3) whether a person
has an agreement, arrangement, or understanding with another as to the
matters referred to in the definition of beneficial ownership, (4) the
application of any other definition or operative provision of the
section to the given facts, or (5) any other matter relating to the
applicability or effect of this section.
3. The Board of Directors shall have the right
to demand that any person who is reasonably believed to beneficially own Common
Stock in excess of the Limit (or holds of record Common Stock beneficially
owned by any person in excess of the Limit) (a "Holder in Excess") supply the
Corporation with complete information as to (1) the record owner(s) of all
shares beneficially owned by such Holder in Excess, and (2) any other factual
matter relating to the applicability or effect of this section as may
reasonably be requested of such Holder in Excess. The Board of Directors shall
further have the right to receive from any Holder in Excess reimbursement for
all expenses incurred by the Board in connection with its investigation of any
matters relating to the applicability or effect of this section on such Holder
in Excess, to the extent such investigation is deemed appropriate by the Board
of Directors as a result of the Holder in Excess refusing to supply the
Corporation with the information described in the previous sentence.
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<PAGE> 7
4. Except as otherwise provided by law or
expressly provided in this Section C, the presence, in person or by proxy, of
the holders of record of shares of capital stock of the Corporation entitling
the holders thereof to cast a majority of the votes (after giving effect, if
required, to the provisions of this section) entitled to be cast by the holders
of shares of capital stock of the Corporation entitled to vote shall constitute
a quorum at all meetings of the stockholders, and every reference in this
Certificate of Incorporation to a majority or other proportion of capital stock
(or the holders thereof) for purposes of determining any quorum requirement or
any requirement for stockholder consent or approval shall be deemed to refer to
such majority or other proportion of the votes (or the holders thereof) then
entitled to be cast in respect of such capital stock.
5. Any constructions, applications, or
determinations made by the Board of Directors, pursuant to this section in good
faith and on the basis of such information and assistance as was then
reasonably available for such purpose, shall be conclusive and binding upon the
Corporation and its stockholders.
6. In the event any provision (or portion
thereof) of this Section C shall be found to be invalid, prohibited or
unenforceable for any reason, the remaining provisions (or portions thereof) of
this Section shall remain in full force and effect, and shall be construed as
if such invalid, prohibited or unenforceable provision had been stricken
herefrom or otherwise rendered inapplicable, it being the intent of this
Corporation and its stockholders that each such remaining provision (or portion
thereof) of this Section C remain, to the fullest extent permitted by law,
applicable and enforceable as to all stockholders, including stockholders
owning an amount of stock over the Limit, notwithstanding any such finding.
FIFTH: The following provisions are inserted for the management of
the business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
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<PAGE> 8
(a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. In
addition to the powers and authority expressly conferred upon them by
Statute or by this Certificate of Incorporation or the By-laws of the
Corporation, the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by
the Corporation.
(b) The directors of the Corporation need not be elected
by written ballot unless the By-laws so provide.
(c) Any action required or permitted to be taken by the
stockholders of the Corporation, subject to the rights of holders of
any class or series of Preferred Stock of the Corporation, must be
effected at a duly called annual or special meeting of stockholders of
the Corporation and may not be effected by any consent in writing by
such stockholders.
(d) Special meetings of stockholders of the Corporation
may, subject to the rights of holders of any class or series of
Preferred Stock of the Corporation, be called only by the Board of
Directors pursuant to a resolution adopted by a majority of the total
number of directors which the Corporation would have if there were no
vacancies on the Board of Directors (the "Whole Board").
(e) Stockholders shall not be permitted to cumulate their
votes for the election of directors.
SIXTH:
A. The number of directors shall be fixed from time to
time exclusively by the Board of Directors pursuant to a resolution adopted by
a majority of the Whole Board. The directors, other than those who may be
elected by the holders of any class or series of Preferred Stock, shall be
divided into three classes, as nearly equal in number as reasonably possible,
with the term of office of the first class to expire at the conclusion of the
first annual meeting of stockholders, the term of office of the second class to
expire at the conclusion of the annual
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<PAGE> 9
meeting of stockholders one year thereafter and the term of office of
the third class to expire at the conclusion of the annual meeting of
stockholders two years thereafter, with each director to hold office until his
or her successor shall have been duly elected and qualified. At each annual
meeting of stockholders, commencing with the first annual meeting, directors
elected to succeed those directors whose terms expire shall be elected for a
term of office to expire at the conclusion of the third succeeding annual
meeting of stockholders after their election, with each director to hold office
until his or her successor shall have been duly elected and qualified.
B. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled only by a
majority vote of the directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at the annual meeting
of stockholders at which the term of office of the class to which they have
been elected expires, and until such director's successor shall have been duly
elected and qualified. The disqualification of a director pursuant to Section
F of this Article SIXTH shall not create a vacancy in the Board of Directors.
No decrease in the number of authorized directors constituting the Board of
Directors shall shorten the term of any incumbent director.
C. Advance notice of stockholder nominations for the
election of directors and of business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the manner
provided in the By-laws of the Corporation.
D. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least 80% of the voting power of
all of the then-outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (after giving effect to the
provisions of Article FOURTH of this Certificate of Incorporation), voting
together as a single class. Notwithstanding the foregoing, any director who
has at any time been disqualified from office pursuant to Section F of this
Article SIXTH may be removed from office by the affirmative vote of the holders
of at least a majority of the voting power of all of the then-outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors (after giving effect to the provisions of Article
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<PAGE> 10
FOURTH of this Certificate of Incorporation), voting together as a single
class. Notwithstanding the foregoing, any director who has at any time been
disqualified from office pursuant to Section F of this Article SIXTH may be
removed from office by the affirmative vote of the holders of at least a
majority of the voting power of all of the then-outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (after giving effect to the provisions of Article FOURTH of this
Certificate of Incorporation), voting together as a single class.
E. No person shall be eligible for election, reelection,
appointment or reappointment to the Board of Directors of the Corporation who:
1. beneficially owns less than 100 shares of
Common Stock; or
2. has not attained at least 25 years of age; or
3. has been convicted of any felony; or
4. is not eligible for whatever reason to serve
on the Board of Directors of a federally chartered
thrift institution; or
5. is at such time adjudicated or otherwise
legally declared an incapacitated person by reason of mental
weakness.
F. Any director who (i) beneficially owns less than 100
shares of Common Stock; or (ii) is convicted of any felony; or (iii) becomes
ineligible for whatever reason to serve on the Board of Directors of a
federally chartered thrift institution; or (iv) is adjudicated or otherwise
legally declared an incapacitated person by reason of mental weakness shall be
disqualified from office immediately without any further action of the Board of
Directors or stockholders of the Corporation. Any director who is disqualified
from office shall thereby have no rights or duties as a director whatsoever;
provided, however, that any disqualified director shall no longer be
disqualified at such time as such director shall no longer meet the
disqualification criteria set forth in the preceding sentence.
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<PAGE> 11
SEVENTH: The Board of Directors is expressly empowered to
adopt, amend or repeal By-laws of the Corporation. Any adoption, amendment or
repeal of the By-laws of the Corporation by the Board of Directors shall
require the approval of a majority of the Whole Board. The stockholders shall
also have power to adopt, amend or repeal the By-laws of the Corporation. In
addition to any vote of the holders of any class or series of stock of this
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least 80% of the voting power of all of
the then-outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of directors (after giving effect to the
provisions of Article FOURTH hereof), voting together as a single class, shall
be required to adopt, amend or repeal any provisions of the By-laws of the
Corporation.
EIGHTH:
A. In addition to any affirmative vote required by law
or this Certificate of Incorporation, and except as otherwise expressly
provided in this Section:
1. any merger or consolidation of the
Corporation or any Subsidiary (as hereinafter defined) with
(i) any Interested Stockholder (as hereinafter defined) or
(ii) any other corporation (whether or not itself an
Interested Stockholder) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined)
of an Interested Stockholder; or
2. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder, or any
Affiliate of any Interested Stockholder, of any assets of the
Corporation or any Subsidiary having an aggregate Fair Market
Value (as hereafter defined) equaling or exceeding 25% or more
of the combined assets of the Corporation and its
Subsidiaries; or
3. the issuance or transfer by the Corporation
or any Subsidiary (in one transaction or a series of
transactions) of any securities of the Corporation or
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any Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate Fair Market Value equaling or exceeding 25% of the
combined assets of the Corporation and its Subsidiaries except
pursuant to an employee benefit plan of the Corporation or any
Subsidiary thereof; or
4. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of any Interested Stockholder or any Affiliate of
any Interested Stockholder; or
5. any reclassification of securities (including
any reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the Corporation
with any of its Subsidiaries or any other transaction (whether
or not with or into or otherwise involving an Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares
of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder or any Affiliate of any
Interested Stockholder;
shall require the affirmative vote of the holders of at least 66 2/3% of the
voting power of the then-outstanding shares of stock of the Corporation
entitled to vote in the election of directors (the "Voting Stock"), voting
together as a single class. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a lesser
percentage may be specified, by law or by any other provisions of this
Certificate of Incorporation or any Preferred Stock Designation or in any
agreement with any national securities exchange or quotation system or
otherwise.
The term "Business Combination" as used in this Article EIGHTH shall
mean any transaction which is referred to in any one or more of paragraphs 1
through 5 of Section A of this Article EIGHTH.
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B. The provisions of Section A of this Article EIGHTH
shall not be applicable to any particular Business Combination, and such
Business Combination shall require only the affirmative vote of the majority of
the outstanding shares of capital stock entitled to vote, or such vote as is
required by law or by this Certificate of Incorporation, if, in the case of any
Business Combination that does not involve any cash or other consideration
being received by the stockholders of the Corporation solely in their capacity
as stockholders of the Corporation, the condition specified in the following
paragraph 1 is met or, in the case of any other Business Combination, all of
the conditions specified in either of the following paragraphs 1 and 2 are met:
1. The Business Combination shall have been
approved by a majority of the Disinterested Directors (as
hereinafter defined).
2. All of the following conditions shall have
been met:
(a) The aggregate amount of the cash and
the Fair Market Value as of the date of the
consummation of the Business Combination of
consideration other than cash to be received per
share by the holders of Common Stock in such Business
Combination shall at least be equal to the higher of
the following:
I. (if applicable) the Highest Per
Share Price, including any brokerage
commissions, transfer taxes and soliciting
dealers' fees, paid by the Interested
Stockholder or any of its Affiliates for any
shares of Common Stock acquired by it (X)
within the two-year period immediately prior
to the first public announcement of the
proposal of the Business Combination (the
"Announcement Date"), or (Y) in the
transaction in which it became an Interested
Stockholder, whichever is higher.
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II. the Fair Market Value per share
of Common Stock on the Announcement Date or
on the date on which the Interested
Stockholder became an Interested Stockholder
(such latter date is referred to in this
Article EIGHTH as the "Determination Date"),
whichever is higher.
(b) The aggregate amount of the cash and
the Fair Market Value as of the date of the
consummation of the Business Combination of
consideration other than cash to be received per
share by holders of shares of any class of
outstanding Voting Stock other than Common Stock
shall be at least equal to the highest of the
following (it being intended that the requirements of
this subparagraph (b) shall be required to be met
with respect to every such class of outstanding
Voting Stock, whether or not the Interested
Stockholder has previously acquired any shares of a
particular class of Voting Stock):
I. (if applicable) the Highest Per
Share Price (as hereinafter defined),
including any brokerage commissions, transfer
taxes and soliciting dealers' fees, paid by
the Interested Stockholder for any shares of
such class of Voting Stock acquired by it (X)
within the two-year period immediately prior
to the Announcement Date, or (Y) in the
transaction in which it became an Interested
Stockholder, whichever is higher;
II. (if applicable) the highest
preferential amount per share to which the
holders of shares of such class of Voting
Stock are entitled in the event of any
voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
and
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<PAGE> 15
III. the Fair Market Value per share
of such class of Voting Stock on the
Announcement Date or on the Determination
Date, whichever is higher.
(c) The consideration to be received by
holders of a particular class of outstanding Voting
Stock (including Common Stock) shall be in cash or in
the same form as the Interested Stockholder has
previously paid for shares of such class of Voting
Stock. If the Interested Stockholder has paid for
shares of any class of Voting Stock with varying
forms of consideration, the form of consideration to
be received per share by holders of shares of such
class of Voting Stock shall be either cash or the
form used to acquire the largest number of shares of
such class of Voting Stock previously acquired by the
Interested Stockholder. The price determined in
accordance with subparagraph B.2 of this Article
EIGHTH shall be subject to appropriate adjustment in
the event of any stock dividend, stock split,
combination of shares or similar event.
(d) After such Interested Stockholder
has become an Interested Stockholder and prior to the
consummation of such Business Combination; (i) except
as approved by a majority of the Disinterested
Directors, there shall have been no failure to
declare and pay at the regular date therefor any full
quarterly dividends (whether or not cumulative) on
any outstanding stock having preference over the
Common Stock as to dividends or liquidation; (ii)
there shall have been (X) no reduction in the annual
rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common
Stock), except as approved by a majority of the
Disinterested Directors, and (Y) an increase in such
annual rate of dividends as necessary to reflect any
reclassification
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(including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of Common Stock, unless
the failure to so increase such annual rate is
approved by a majority of the Disinterested
Directors, and (iii) neither such Interested
Stockholder nor any of its Affiliates shall have
become the beneficial owner of any additional shares
of Voting Stock except as part of the transaction
which results in such Interested Stockholder becoming
an Interested Stockholder.
(e) After such Interested Stockholder
has become an Interested Stockholder, such Interested
Stockholder shall not have received the benefit,
directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantages provided by the
Corporation, whether in anticipation of or in
connection with such Business Combination or
otherwise.
(f) A proxy or information statement
describing the proposed Business Combination and
complying with the requirements of the Securities
Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing
such Act, rules or regulations) shall be mailed to
stockholders of the Corporation at least 30 days
prior to the consummation of such Business
Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such
Act or subsequent provisions).
C. For the purposes of this Article EIGHTH:
1. A "Person" shall include an individual, a
group acting in concert, a corporation, a partnership, an association,
a joint venture, a pool, a joint stock
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<PAGE> 17
company, a trust, an unincorporated organization or similar company, a
syndicate or any other group formed for the purpose of acquiring,
holding or disposing of securities.
2. "Interested Stockholder" shall mean any
Person (other than the Corporation or any holding company or
Subsidiary thereof) who or which:
(a) is the beneficial owner, directly or
indirectly, of more than 10% of the voting power of
the outstanding Voting Stock; or
(b) is an Affiliate of the Corporation
and at any time within the two-year period
immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10% or
more of the voting power of the then-outstanding
Voting Stock; or
(c) is an assignee of or has otherwise
succeeded to any shares of Voting Stock which were at
any time within the two-year period immediately prior
to the date in question beneficially owned by any
Interested Stockholder, if such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a
public offering within the meaning of the Securities
Act of 1933.
3. A Person shall be a "beneficial
owner" of any Voting Stock:
(a) which such Person or any of its
Affiliates or Associates (as hereinafter defined)
beneficially owns, directly or indirectly within the
meaning of Rule 13d-3 under the Securities Exchange
Act of 1934, as in effect on December 1, 1990; or
(b) which such Person or any of its
Affiliates or Associates has (i) the right to acquire
(whether such right is exercisable immediately or
only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange
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<PAGE> 18
rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement,
arrangement or understanding (but neither such Person
nor any such Affiliate or Associate shall be deemed
to be the beneficial owner of any shares of Voting
Stock solely by reason of a revocable proxy granted
for a particular meeting of stockholders, pursuant to
a public solicitation of proxies for such meeting,
and with respect to which shares neither such Person
nor any such Affiliate or Associate is otherwise
deemed the beneficial owner); or
(c) which are beneficially owned, directly or
indirectly within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as in effect on
December 1, 1990, by any other Person with which such
Person or any of its Affiliates or Associates has any
agreement, arrangement or understanding for the
purposes of acquiring, holding, voting (other than
solely by reason of a revocable proxy as described in
Subparagraph (b) of this Paragraph 3) or in disposing
of any shares of Voting Stock;
provided, however, that in the case of any employee stock ownership or similar
plan of the Corporation or of any Subsidiary in which the beneficiaries thereof
possess the right to vote any shares of Voting Stock held by such plan, no such
plan nor any trustee with respect thereto (nor any Affiliate of such trustee),
solely by reason of such capacity of such trustee, shall be deemed, for any
purposes hereof, to beneficially own any shares of Voting Stock held under any
such plan.
4. For the purpose of determining whether a
Person is an Interested Stockholder pursuant to Paragraph 2 of this Section C,
the number of shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of Paragraph 3 of this Section C but
shall not include any other shares of Voting Stock which may be issuable
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<PAGE> 19
pursuant to any agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
5. "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect on
December 1, 1990.
6. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Corporation; provided, however, that for the purposes of the definition of
Interested Stockholder set forth in Paragraph 2 of this Section C, the term
"Subsidiary" shall mean only a corporation of which a majority of each class of
equity security is owned, directly or indirectly, by the Corporation.
7. "Disinterested Director" means any member of
the Board of Directors who is unaffiliated with the Interested Stockholder and
was a member of the Board of Directors prior to the time that the Interested
Stockholder became an Interested Stockholder, and any director who is
thereafter chosen to fill any vacancy on the Board of Directors or who is
elected and who, in either event, is unaffiliated with the Interested
Stockholder, and in connection with his or her initial assumption of office is
recommended for appointment or election by a majority of Disinterested
Directors then on the Board of Directors.
8. "Fair Market Value" means: (a) in the case of
stock, the highest closing sales price of the stock during the 30-day period
immediately preceding the date in question of a share of such stock of the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
System or any system then in use, or, if such stock is admitted to trading on a
principal United States securities exchange registered under the Securities
Exchange Act of 1934, Fair Market Value shall be the highest sale price
reported during the 30-day period preceding the date in question, or, if no
such quotations are available, the Fair Market Value on the date in question of
a share of such stock as determined by the Board of Directors in good faith, in
each case with respect to any class of stock, appropriately adjusted for any
dividend or
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<PAGE> 20
distribution in shares of such stock or in combination or reclassification of
outstanding shares of such stock into a smaller number of shares of such stock,
and (b) in the case of property other than cash or stock, the Fair Market Value
of such property on the date in question as determined by the Board of
Directors in good faith.
9. Reference to "Highest Per Share Price" shall
in each case with respect to any class of stock reflect an appropriate
adjustment for any dividend or distribution in shares of such stock or any
stock split or reclassification of outstanding shares of such stock into a
greater number of shares of such stock or any combination or reclassification
of outstanding shares of such stock into a smaller number of shares of such
stock.
10. In the event of any Business Combination in
which the Corporation survives, the phrase "other consideration to be received"
as used in Subparagraphs (a) and (b) of Paragraph 2 of Section B of this
Article EIGHTH shall include the shares of Common Stock and/or the shares of
any other class of outstanding Voting Stock retained by the holders of such
shares.
D. A majority of the Disinterested Directors of the
Corporation shall have the power and duty to determine for the purposes of this
Article EIGHTH, on the basis of information known to them after reasonable
inquiry, (a) whether a person is an Interested Stockholder; (b) the number of
shares of Voting Stock beneficially owned by any person; (c) whether a person
is an Affiliate or Associate of another; and (d) whether the assets which are
the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has an aggregate Fair Market Value
equaling or exceeding 25% of the combined assets of the Corporation and its
Subsidiaries. A majority of the Disinterested Directors shall have the further
power to interpret all of the terms and provisions of this Article EIGHTH.
E. Nothing contained in this Article EIGHTH shall be
construed to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
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<PAGE> 21
F. Notwithstanding any other provisions of this
Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote of the
holders of any particular class or series of the Voting Stock required by law,
this Certificate of Incorporation or any Preferred Stock Designation, the
affirmative vote of the holders of at least 66 2/3% of the voting power of all
of the then-outstanding shares of the Voting Stock, voting together as a single
class, shall be required to alter, amend or repeal this Article EIGHTH.
NINTH: The Board of Directors of the Corporation, when evaluating any
offer of another Person (as defined in Article EIGHTH hereof) to (A) make a
tender or exchange offer for any equity security of the Corporation, (B) merge
or consolidate the Corporation with another corporation or entity or (C)
purchase or otherwise acquire all or substantially all of the properties and
assets of the corporation, may, in connection with the exercise of its judgment
in determining what is in the best interest of the Corporation and its
stockholders, give due consideration to all relevant factors, including,
without limitation, the social and economic effect of acceptance of such offer
on the Corporation's present and future customers and employees and those of
its Subsidiaries (as defined in Article EIGHTH hereof); on the communities in
which the Corporation and its Subsidiaries operate or are located; on the
ability of the Corporation to fulfill its corporate objectives as a financial
institution holding company and on the ability of its subsidiary financial
institution to fulfill the objectives of a federally insured financial
institution under applicable statutes and regulations.
TENTH:
A. Except as set forth in Section B of this Article TENTH, in
addition to any affirmative vote of stockholders required by law or this
Certificate of Incorporation, any direct or indirect purchase or other
acquisition by the Corporation of any Equity Security (as hereinafter defined)
of any class from any Interested Person (as hereinafter defined) shall require
the affirmative vote of the holders of at least 66 2/3% of the Voting Stock of
the Corporation
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<PAGE> 22
that is not beneficially owned (for purposes of this Article TENTH beneficial
ownership shall be determined in accordance with Section C.2(b) of Article
FOURTH hereof) by such Interested Person, voting together as a single class.
Such affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that a lesser percentage may be specified, by law or by any
other provisions of this Certificate of Incorporation or any Preferred Stock
Designation or in any agreement with any national securities exchange or
quotation system, or otherwise. Certain defined terms used in this Article
TENTH are as set forth in Section C below.
B. The provisions of Section A of this Article TENTH shall not be
applicable with respect to:
(1) any purchase or other acquisition of securities made
as part of a tender or exchange offer by the Corporation or a
Subsidiary (which term, as used in this Article TENTH, is as defined
in the first clause of Section C.6 of Article EIGHTH hereof) of the
Corporation to purchase securities of the same class made on the same
terms to all holders of such securities and complying with the
applicable requirements of the Securities Exchange Act of 1934 and the
rules and regulations thereunder (or any subsequent provision
replacing such Act, rules or regulations);
(2) any purchase or acquisition made pursuant to an open
market purchase program approved by a majority of the Board of
Directors, including a majority of the Disinterested Directors (which
term, as used in this Article TENTH, is as defined in Article EIGHTH
hereof); or
(3) any purchase or acquisition which is approved by a
majority of the Board of Directors, including a majority of the
Disinterested Directors, and which is made at no more than the Market
Price (as hereinafter defined), on the date that the understanding
between the Corporation and the Interested Person is reached with
respect to such purchase (whether or not such purchase is made or a
written agreement relating to such
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<PAGE> 23
purchase is executed on such date), of shares of the class of Equity
Security to be purchased.
C. For the purposes of this Article TENTH:
(i) The term Interested Person shall mean any Person
(other than the Corporation, Subsidiaries of the Corporation, pension,
profit sharing, employee stock ownership or other employee benefit
plans of the Corporation and its Subsidiaries, entities organized or
established by the Corporation or any of its Subsidiaries pursuant to
the terms of such plans and trustees and fiduciaries with respect to
any such plan acting in such capacity) that is the direct or indirect
beneficial owner of 5% or more of the Voting Stock of the Corporation,
and any Affiliate or Associate of any such person.
(ii) The Market Price of shares of a class of Equity
Security on any day shall mean the highest sale price of shares of
such class of Equity Security on such day, or, if that day is not a
tradingday, on the trading day immediately preceding such day, on the
national securities exchange or the NASDAQ System or any other system
then in use on which such class of Equity Security is traded.
(iii) The term Equity Security shall mean any security
described in Section 3(a)(11) of the Securities Exchange Act of 1934,
as in effect on December 1, 1990, which is traded on a national
securities exchange or the NASDAQ System or any other system then in
use.
(iv) For purposes of this Article TENTH, all references to
the term Interested Stockholder in the definition of Disinterested
Director shall be deemed to refer to the term Interested Person.
ELEVENTH:
A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a
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<PAGE> 24
director or an officer of the Corporation or is or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid in settlement) reasonably incurred or suffered by such indemnitee in
connection therewith; provided, however, that, except as provided in Section C
hereof with respect to proceedings to enforce rights toindemnification,the
Corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if such proceeding (or part
thereof) was authorized by the Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of this
Article shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the Corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which
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<PAGE> 25
there is no further right to appeal (hereinafter a "final adjudication") that
such indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be
a director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article is not paid in
full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an advancement
of expenses, in which case the applicable period shall be twenty days, the
indemnitee may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim. If successful in whole or in part in
any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee
shall also be entitled to be paid the expense of prosecuting or defending such
suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to
enforce a right to an advancement of expenses) it shall be a defense that, and
(ii) in any suit by the Corporation to recover an advancement of expenses
pursuant to the terms of an undertaking the Corporation shall be entitled to
recover such expenses upon a final adjudication that, the indemnitee has not
met any applicable standard for indemnification set forth in the Delaware
General Corporation Law. Neither the failure of the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the circumstances because the
indemnitee has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of
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<PAGE> 26
conduct or, in the case of such a suit brought by the indemnitee, be a
defense to such suit. In any suit brought by the indemnitee to enforce a right
to indemnification or to an advancement of expenses hereunder, or by the
Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Article or
otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of
expenses conferred in this Article shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, By-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the Corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
F. The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation or any
person who is or was serving or has agreed to serve at the request of the
Corporation as an employee or agent of another corporation, including, without
limitation, any Subsidiary (as defined in Article EIGHTH herein) of the
Corporation, partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan, to the fullest extent of the
provisions of this Article with respect to the indemnification and advancement
of expenses of directors and officers of the Corporation.
TWELFTH: A director of this Corporation shall not be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Corporation or its
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<PAGE> 27
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. If the Delaware General
Corporation Law is hereafter amended to further eliminate or limit the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
THIRTEENTH: No amendment, addition, alteration, change, or repeal
of any provision of this Certificate of Incorporation shall be made, unless
such is first proposed by the Board of Directors of the Corporation, upon the
affirmative vote of at least two-thirds of the directors then in office at a
duly constituted meeting of the Board of Directors called expressly for such
purposes, and thereafter approved by the stockholders by a majority of the
total votes eligible to be cast at a duly constituted meeting of stockholders
called expressly for such purposes; provided, however, that, notwithstanding
any other provision of this Certificate of Incorporation or any provision of
law which might otherwise permit a lesser vote or no vote, but in addition to
any vote of the holders of any class or series of the stock of this Corporation
required by law or by this Certificate of Incorporation, the affirmative vote
of the holders of at least 80% of the voting power of all of the
then-outstanding shares of the capital stock of the Corporation entitled to
vote generally in the election of directors (after giving effect to the
provisions of Article FOURTH), voting together as a single class, shall be
required to amend or repeal this Article THIRTEENTH, clauses C.1, 2 and 3 of
Article FOURTH, clauses (c) or (d) of Article FIFTH, Article SIXTH, Article
SEVENTH, Article EIGHTH, Article TENTH or Article ELEVENTH.
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<PAGE> 28
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been signed by Jerry L. Kirby, its authorized officer this
4TH day of October, 1996
CITFED BANCORP, INC.
By: Jerry L. Kirby
---------------------------------------
Jerry L. Kirby, Chairman of the Board,
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 11
CITFED BANCORP, INC.
Computation of Per Share Earnings
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1996 Sept. 30, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Computation of Primary Earnings Per Share:
Weighted average number of common
shares outstanding 5,704,616 5,626,211 5,696,570 5,623,486
Add common stock equivalents for shares
issuable under the Stock Option Plan (1) 217,333 250,422 214,685 252,378
------------- -------------- -------------- --------------
Weighted average number of shares
outstanding adjusted for common
stock equivalents 5,921,949 5,876,633 5,911,255 5,875,864
============= ============== ============== ==============
Net income (loss) $ (1,886) $ 3,769 $ 3,150 $ 7,452
============= ============== ============== ==============
Earnings per common and common equivalent share $ (0.32) $ 0.64 $ 0.53 $ 1.27
============= ============== ============== ==============
</TABLE>
(1) Additional shares issuable were derived under the "treasury stock method"
using average market price during the period or the end of period close
price, whichever is higher.
Page 24
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 26,682
<INT-BEARING-DEPOSITS> 17,567
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 732,567
<INVESTMENTS-CARRYING> 223,221
<INVESTMENTS-MARKET> 222,674
<LOANS> 1,577,473
<ALLOWANCE> 17,811
<TOTAL-ASSETS> 2,747,617
<DEPOSITS> 1,561,842
<SHORT-TERM> 0
<LIABILITIES-OTHER> 30,620
<LONG-TERM> 980,126
0
0
<COMMON> 57
<OTHER-SE> 174,972
<TOTAL-LIABILITIES-AND-EQUITY> 2,747,617
<INTEREST-LOAN> 30,632
<INTEREST-INVEST> 16,266
<INTEREST-OTHER> 661
<INTEREST-TOTAL> 47,559
<INTEREST-DEPOSIT> 17,738
<INTEREST-EXPENSE> 30,696
<INTEREST-INCOME-NET> 16,863
<LOAN-LOSSES> 1,050
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 25,730
<INCOME-PRETAX> (2,547)
<INCOME-PRE-EXTRAORDINARY> (1,886)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,886)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
<YIELD-ACTUAL> 7.41
<LOANS-NON> 19,770
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 12,413
<ALLOWANCE-OPEN> 16,330
<CHARGE-OFFS> 318
<RECOVERIES> 299
<ALLOWANCE-CLOSE> 17,811
<ALLOWANCE-DOMESTIC> 17,811
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and GERALD E. MILLER, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
1
<PAGE> 2
representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
2
<PAGE> 3
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
3
<PAGE> 4
(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Gerald E. Miller
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- ----------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Gerald E. Miller
----------------------------------------
GERALD E. MILLER, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and HAZEL L. EICHELBERGER, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Hazel L. Eichelberger
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- ---------------------- -----------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Hazel L. Eichelberger
-------------------------------
HAZEL L. EICHELBERGER, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and JOHN H. CURP, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
and Legal Counsel of the Company and the Company's wholly-owned subsidiary,
Citizens Federal Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President and
Legal Counsel of the Company and/or the Bank. As such, the Executive shall
render administrative and management services as are customarily performed by
persons situated in similar executive capacities, and shall have such other
powers and duties as the Board or the Board of Directors of the Bank may
prescribe from time to time. The Executive shall also render services to any
Consolidated Subsidiary as requested by the Company or the Bank from time to
time consistent with his executive position. The Executive shall devote his
best efforts and reasonable time and attention to the business and affairs of
the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Executive may serve on corporate or charitable
boards or committees and manage personal investments, so long as such
activities do not interfere materially with the performance of his
responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his
employment for Good Reason, and (ii) the Executive offers to continue to
provide services as contemplated by this Agreement and such offer is declined
("Involuntary Termination"), then, subject to Section 7(e) of this Agreement,
the Company shall, during the lesser period of the Date of Termination through
the remaining term of this Agreement or three years following the Date of
Termination, as liquidated damages pay to the Executive monthly one-twelfth of
the Company Salary at the annual rate in effect at the time the Notice of
Termination is given and one-twelfth of the average annual amount of cash bonus
and cash incentive compensation of the Executive, based on the average amounts
of such compensation earned by the Executive for the three full fiscal years
preceding the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank,
or both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for
Cause. In the event that the Executive determines in good faith that he has
experienced an Involuntary Termination of his employment, he shall send a
written notice to the Company stating the circumstances that constitute such
Involuntary Termination and the date upon which his employment shall have
ceased due to such Involuntary Termination. In the event that the Executive
desires to effect a Voluntary Termination, he shall deliver a written notice to
the Company, stating the date upon which employment shall terminate, which date
shall be at least 30 days after the date upon which the notice is delivered,
unless the parties agree to a date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: John H. Curp
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ Hazel L. Eichelberger /s/ Allen M. Hill
- -------------------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ John H. Curp
----------------------------------------
JOHN H. CURP, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and JERRY L. KIRBY, (the "Executive").
WHEREAS, the Executive is currently serving as the President, Chief
Executive Officer and Chairman of the Board of the Company and the Company's
wholly-owned subsidiary, Citizens Federal Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute
at least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board or
whose nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person (as hereinabove defined) acquires more than 25%
of the combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets (or any transaction having a
similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the
Executive's express written consent, of a material diminution of or
interference with the Executive's duties, responsibilities or benefits,
including (without limitation) any of the following circumstances unless such
circumstances are fully corrected prior to the Date of Termination given in
respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of three years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Chairman of the Board,
President and Chief Executive Officer of the Company and/or the Bank. As such,
the Executive shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties as the Board or the Board of Directors
of the Bank may prescribe from time to time. The Executive shall also render
services to any Consolidated Subsidiary as requested by the Company or the Bank
from time to time consistent with his executive position. The Executive shall
devote his best efforts and reasonable time and attention to the business and
affairs of the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Executive may serve on corporate or charitable
boards or committees and manage personal investments, so long as such
activities do not interfere materially with the performance of his
responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the
remaining term of this Agreement or three years following the Date of
Termination, as liquidated damages pay to the Executive monthly one-twelfth of
the Company Salary at the annual rate in effect at the time the Notice of
Termination is given and one-twelfth of the average annual amount of cash bonus
and cash incentive compensation of the Executive, based on the average amounts
of such compensation earned by the Executive for the three full fiscal years
preceding the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or three years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to
the Company stating the circumstances that constitute such Involuntary
Termination and the date upon which his employment shall have ceased due to
such Involuntary Termination. In the event that the Executive desires to
effect a Voluntary Termination, he shall deliver a written notice to the
Company, stating the date upon which employment shall terminate, which date
shall be at least 30 days after the date upon which the notice is delivered,
unless the parties agree to a date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Jerry L. Kirby
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- ----------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Jerry L. Kirby
----------------------------------------
JERRY L. KIRBY, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and MARY L. LARKINS, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Mary L. Larkins
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- ----------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Mary L. Larkins
----------------------------------------
MARY L. LARKINS, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and NANCY A. HUSSONG, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Nancy A. Hussong
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- ----------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Nancy A. Hussong
------------------------------
NANCY A. HUSSONG, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and RICHARD C. BERG, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and of the mortgage banking subsidiary of the Company's
wholly-owned subsidiary, Citizens Federal Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
CitFed Mortgage Corporation of America, a consolidated subsidiary. As such,
the Executive shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties as the Board or the Board of Directors
of the Bank may prescribe from time to time. The Executive shall also render
services to any Consolidated Subsidiary as requested by the Company or the Bank
from time to time consistent with his executive position. The Executive shall
devote his best efforts and reasonable time and attention to the business and
affairs of the Company and the Bank to the extent necessary to discharge his
responsibilities hereunder. The Executive may serve on corporate or charitable
boards or committees and manage personal investments, so long as such
activities do not interfere materially with the performance of his
responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Richard C. Berg
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- --------------------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Richard C. Berg
------------------------------------------
RICHARD C. BERG, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and SEBASTIAN J. MELLUZZO, (the "Executive").
WHEREAS, the Executive is currently serving as the Senior Vice President
of the Company and the Company's wholly-owned subsidiary, Citizens Federal
Bank, F.S.B. (the "Bank"); and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute
at least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board or
whose nomination for election by the Company's stockholders was approved by
the nominating committee serving under an Incumbent Board, shall be considered
a member of the Incumbent Board; (iii) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) more than 50% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person (as hereinabove defined) acquires more than 25%
of the combined voting power of the Company's then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets (or any transaction having a
similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of one year
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Senior Vice President of
the Company and/or the Bank. As such, the Executive shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties as the Board or the Board of Directors of the Bank may prescribe from
time to time. The Executive shall also render services to any Consolidated
Subsidiary as requested by the Company or the Bank from time to time consistent
with his executive position. The Executive shall devote his best efforts and
reasonable time and attention to the business and affairs of the Company and
the Bank to the extent necessary to discharge his responsibilities hereunder.
The Executive may serve on corporate or charitable boards or committees and
manage personal investments, so long as such activities do not interfere
materially with the performance of his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a six month term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his
employment for Good Reason, and (ii) the Executive offers to continue to
provide services as contemplated by this Agreement and such offer is declined
("Involuntary Termination"), then, subject to Section 7(e) of this Agreement,
the Company shall, during the lesser period of the Date of Termination through
the remaining term of this Agreement or three years following the Date of
Termination, as liquidated damages pay to the Executive monthly one-twelfth of
the Company Salary at the annual rate in effect at the time the Notice of
Termination is given and one-twelfth of the average annual amount of cash bonus
and cash incentive compensation of the Executive, based on the average amounts
of such compensation earned by the Executive for the three full fiscal years
preceding the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank,
or both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
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notice is delivered, except in the case of Termination for
Cause. In the event that the Executive determines in good faith that he has
experienced an Involuntary Termination of his employment, he shall send a
written notice to the Company stating the circumstances that constitute such
Involuntary Termination and the date upon which his employment shall have
ceased due to such Involuntary Termination. In the event that the Executive
desires to effect a Voluntary Termination, he shall deliver a written notice to
the Company, stating the date upon which employment shall terminate, which date
shall be at least 30 days after the date upon which the notice is delivered,
unless the parties agree to a date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
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11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Sebastian J. Melluzzo
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
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any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- --------------------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ Sebastian J. Melluzzo
----------------------------------------
SEBASTIAN J. MELLUZZO, Individually
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this 1st day of April, 1996 (the "Commencement Date"), by and between CitFed
Bancorp, Inc., a Delaware corporation having an office at One Citizens Federal
Centre, Dayton, Ohio 45402 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 9(a)
hereof or which otherwise becomes bound by all of the terms and provisions of
this Agreement by operation of law, is hereinafter referred to as the
"Company"), and WILLIAM M. VICHICH, (the "Executive").
WHEREAS, the Executive is currently serving as the Chief Operating Office,
Chief Financial Officer and Executive Vice President of the Company and the
Company's wholly-owned subsidiary, Citizens Federal Bank, F.S.B. (the "Bank");
and
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that, as is the case with many publicly held corporations, the possibility of a
change in control of the Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the board believes it is in the best interests of the Company to
enter into this Agreement with the Executive in order to assure continuity of
management of the Company and the Bank and to reinforce and encourage the
continued attention and dedication of the Executive to the Executive's assigned
duties without distraction in the face of potentially disruptive circumstances
arising from the possibility of a change in control of the Company and/or the
Bank, although no such change is now contemplated; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement with the Executive;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, it is AGREED as follows:
1. CERTAIN DEFINITIONS.
(a) The term "Change in Control" means (i) any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (other than the Company, any Consolidated
Subsidiaries [as herein defined], any person [as hereinabove defined] acting on
behalf of the Company as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or
any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
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representing 25% or more of the combined voting power of the Company's then
outstanding securities; (ii) individuals who are members of the Board on the
Commencement Date (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Commencement Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board or whose
nomination for election by the Company's stockholders was approved by the
nominating committee serving under an Incumbent Board, shall be considered a
member of the Incumbent Board; (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(1) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (as hereinabove defined) acquires more than 25% of the combined voting
power of the Company's then outstanding securities; or (iv) the stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets (or any transaction having a similar effect).
(b) The term "Consolidated Subsidiaries" means any subsidiary or
subsidiaries of the Company that are part of the consolidated group of the
Company for federal income tax reporting.
(c) The term "Date of Termination" means (i) if the Executive's employment
is terminated for Disability (as hereinafter defined), 30 days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full time performance of his duties during such 30 day period), and (ii) if
the Executive's employment is terminated for Cause (as hereinafter defined) or
Good Reason (as hereinafter defined) or for any other reason (other than death
or Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than 30 days from the date
such Notice of Termination is given, and in the case of a termination for Good
Reason shall not be less than 15 nor more than 60 days from the date such
Notice of Termination is given); provided, however, that if within 15 days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this proviso), the party receiving
such Notice of Termination notifies the other party that a dispute exists
concerning the termination, then the Date of Termination shall be the date on
which the dispute is finally determined, whether by mutual written agreement of
the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
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reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive the Executive's full Company Salary
(as hereinafter defined) in effect when the notice giving rise to the dispute
was given and continue the Executive as a participant in all benefit and fringe
benefit plans (as provided in Section 5 hereof) in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Good Reason" means the occurrence, without the Executive's
express written consent, of a material diminution of or interference with the
Executive's duties, responsibilities or benefits, including (without
limitation) any of the following circumstances unless such circumstances are
fully corrected prior to the Date of Termination given in respect thereof:
(i) a requirement that the Executive be based at any
location not within 25 miles of Dayton, Ohio, or that he
substantially increase his travel on Company or Bank
business;
(ii) a material demotion of the Executive;
(iii) a material reduction in the number or seniority of
personnel reporting to the Executive or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Executive, other than as part of a Company-wide or Bank-wide
reduction in staff;
(iv) a reduction in the Executive's salary or a material
adverse change in the Executive's perquisites, benefits,
contingent benefits or vacation, other than as part of an
overall program applied uniformly and with equitable effect
to all members of the senior management of the Company or the
Bank;
(v) a material and extended increase in the required hours
of work or the workload of the Executive;
(vi) the failure of the Company to obtain a satisfactory
agreement from any successor to assume the obligations and
liabilities under this Agreement, as contemplated in Section
9(a) hereof; or
(vii) any purported termination of the Executive's
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8 hereof
(and, if applicable, the requirements of Section 1(e)
hereof), which purported termination shall not be effective
for purposes of this Agreement.
The Executive's right to terminate employment pursuant to this Section
1(d) shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
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(e) The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Executive with either the Company or the
Bank, as the case may be, because of the Executive's (i) intentional misconduct
and/or gross negligence that has a material adverse affect on the Company or
the Bank, monetarily or otherwise, or (ii) material breach of any provision of
this Agreement. No act or failure to act by the Executive shall be considered
intentional unless the Executive acted or failed to act with an absence of good
faith and without a reasonable belief that his action or failure to act was in
the best interest of the Company. Notwithstanding the foregoing, the Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board duly called and held for such
purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the
Board), stating that in the good faith opinion of the Board the Executive his
engaged in conduct described in the preceding sentence and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of two years
commencing on the Commencement Date, subject to earlier termination as provided
herein.
3. EMPLOYMENT. The Executive is employed as the Chief Operating Officer,
Chief Financial Officer and Executive Vice President of the Company and/or the
Bank. As such, the Executive shall render administrative and management
services as are customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties as the Board or the
Board of Directors of the Bank may prescribe from time to time. The Executive
shall also render services to any Consolidated Subsidiary as requested by the
Company or the Bank from time to time consistent with his executive position.
The Executive shall devote his best efforts and reasonable time and attention
to the business and affairs of the Company and the Bank to the extent necessary
to discharge his responsibilities hereunder. The Executive may serve on
corporate or charitable boards or committees and manage personal investments,
so long as such activities do not interfere materially with the performance of
his responsibilities hereunder.
4. CASH COMPENSATION.
(a) Salary. The Company agrees to pay the Executive during the term of
this Agreement a base salary, the annualized amount of which shall be not less
than the annualized aggregate amount of the Executive's base salary from the
Company and any Consolidated Subsidiaries in effect at the Commencement Date or
as subsequently increased (the "Company Salary"). While employed, any amounts
of salary actually paid to the Executive by any Consolidated Subsidiaries shall
reduce the amount to be paid by the Company to the Executive. The Company
Salary shall be paid no less frequently than monthly and shall be subject to
customary tax withholding. The amount of the Executive's Company Salary may be
increased (but shall not thereafter be decreased) from time to time in
accordance with the amounts of salary approved by the Board or the board of
directors of any of the Consolidated Subsidiaries after the Commencement Date.
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(b) Bonuses. The Executive shall be entitled to participate in an
equitable manner with all other executive officers of the Company and/or the
Bank in all performance-based and discretionary bonuses authorized by the Board
for executive officers of the Company or by the Board of Directors of the Bank
for executive officers of the Bank.
(c) Expenses. During the term of his employment hereunder, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in performing services under this Agreement in
accordance with the policies and procedures applicable to the executive
officers of the Company and the Bank.
5. BENEFITS.
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate to the same extent as executive officers of the Company and/or the
Bank generally, in all plans of the Company and/or the bank relating to
pension, retirement, savings, group or other life insurance, hospitalization,
medical and dental coverage, cash bonuses, and other retirement or employee
benefits or combinations thereof. In addition, the Executive shall be entitled
to be considered for benefits under all of the stock and stock option related
plans in which the Company's or the Bank's executive officers generally are
eligible or become eligible to participate. Nothing herein shall preclude the
Company from providing other benefits to the Executive independent of or
separate from those provided to other executive officers or its executives
generally.
(b) Fringe Benefits. The Executive shall be eligible to participate in,
and receive benefits under, any other fringe benefit plans or perquisites which
are or may become generally available to the Company's or the Bank's executive
officers, including, but not limited to, supplemental retirement, incentive
compensation, supplemental medical or life insurance plans, company cars, club
dues, physical examinations, financial planning and tax preparation services.
6. VACATIONS; LEAVE. The Executive shall be entitled to annual paid
vacation in accordance with the policies established by the Board and the board
of directors of the Bank for executive officers, in no event less than four
weeks per year, and to voluntary leaves of absence, with or without pay, from
time to time at such times and upon such conditions as the Board may determine
in its discretion. In the event that the Executive is employed hereunder
during a calendar year for less than all of that year, he shall be entitled in
that year to a number of paid vacation days which shall be prorated in
accordance with the number of days on which he is so employed in that year.
The Executive shall be entitled to all paid holidays given by the Company to
its executive officers.
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7. TERMINATION OF EMPLOYMENT.
(a) Death. In the event of the death of the Executive while employed
under this Agreement and prior to any termination of employment, (i) the
Company shall pay to the Executive's estate, or such person as the Executive
may have previously designated in writing, the Company Salary which was not
previously paid to the Executive plus the Company Salary which he would have
earned if he had continued to be employed under this Agreement through the
180th day after the date on which the Executive died, at the time such payments
would have been due; and (ii) the Company shall pay to the Executive's estate,
or such person as the Executive may have previously designated in writing, the
amounts of all benefits or awards which, pursuant to the terms of any
applicable plan or plans, were earned with respect to the fiscal year in which
the Executive died and which the Executive would have been entitled to receive
if he had continued to be employed, and the amount of any bonus or incentive
compensation for such fiscal year which the Executive would have been entitled
to receive if he had continued to be employed, pro-rated in accordance with the
portion of the fiscal year served prior to his death; provided that such
amounts shall be payable when and as ordinarily payable under the applicable
plans.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for 130 consecutive business
days, and within 30 days after a written Notice of Termination is given, shall
not have returned to the performance of his duties hereunder on a full-time
basis, the Company may terminate the Executive's employment hereunder for
"Disability." In the event the Executive is terminated for Disability, (i) the
Company shall pay to the Executive the Company Salary which was not previously
paid to the Executive plus the Company Salary which he would have earned if he
had continued to be employed under this Agreement for a one year term from the
time the Notice of Termination for Disability is given, at the time such
payments would have been due, less the amount of disability insurance payments
received during such period by the Executive on account of insurance maintained
by the Company or any of its Consolidated Subsidiaries for the benefit of the
Executive; and (ii) the Company shall pay to the Executive the amounts of all
benefits or awards which, pursuant to the terms of any applicable plan or
plans, were earned with respect to the fiscal year in which the Executive was
terminated due to Disability and which the Executive would have been entitled
to receive if he had continued to be employed, and the amount of any bonus or
incentive compensation for such fiscal year which the Executive would have been
entitled to receive if he had continued to be employed, pro-rated in accordance
with the portion of the fiscal year served prior to his termination due to
Disability; provided, that, such amounts shall be payable when and as
ordinarily payable under the applicable plans.
(c) Cause. In the event of Termination for Cause, the Company shall pay
to the Executive his Company Salary through the Date of Termination at the rate
in effect at the time the Notice of Termination is given and the Company shall
have no further obligation to the Executive under this Agreement.
(d) Involuntary Termination. In the event that (i) the Company terminates
the Executive's employment without the Executive's written consent other than
pursuant to Section
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7(a), 7(b) or 7(c) hereof, or the Executive terminates his employment for Good
Reason, and (ii) the Executive offers to continue to provide services as
contemplated by this Agreement and such offer is declined ("Involuntary
Termination"), then, subject to Section 7(e) of this Agreement, the Company
shall, during the lesser period of the Date of Termination through the remaining
term of this Agreement or three years following the Date of Termination, as
liquidated damages pay to the Executive monthly one-twelfth of the Company
Salary at the annual rate in effect at the time the Notice of Termination is
given and one-twelfth of the average annual amount of cash bonus and cash
incentive compensation of the Executive, based on the average amounts of such
compensation earned by the Executive for the three full fiscal years preceding
the Date of Termination.
(e) Reduction of the Company's Obligations Under Section 7(d). In the
event that the Executive becomes entitled to liquidated damages pursuant to
Section 7(d), the Company's obligation thereunder with respect to cash damages
shall be reduced by the amount of the Executive's income, if any, earned from
providing services other than to the Company or the Consolidated Subsidiaries
during the period of the lesser of the Date of Termination through the
remaining term of this Agreement or two years following the Date of
Termination.
(f) Voluntary Termination. The Executive may terminate his employment
voluntarily at any time by a notice pursuant to Section 8 of this Agreement.
In the event that the Executive voluntarily terminates his employment other
than for Good Reason ("Voluntary Termination"), the Company shall pay to the
Executive his Company Salary through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, at the time such
payments are due, and the Company shall have no further obligation to the
Executive under this Agreement.
(g) Change in Control. In the event that the Company shall terminate the
Executive's employment other than pursuant to Section 7(a), 7(b) or 7(c)
hereof, or the Executive shall terminate his employment for Good Reason, within
the 24 months following a Change in Control, in addition to any payments and
benefits to which the Executive is entitled under Section 7(d) hereof, the
Company shall (i) pay the Executive his Company Salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given, at the time such payments are due; plus (ii) pay to the Executive in a
lump sum in cash, within 25 days after the later of the date of such Change in
Control or the Date of Termination, an amount equal to 299% of the Executive's
"base amount" as determined under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), less the aggregate present value of the payments
or benefits, if any, in the nature of compensation for the benefit of the
Executive, arising under any other plans or arrangements (i.e., not this
Agreement) between the Company or any of the Consolidated Subsidiaries and the
Executive, which are contingent upon a Change in Control.
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While it is not contemplated that the Executive will receive any amounts
or benefits that will constitute "excess parachute payments" under Section 280G
of the Code, in the event that any payments or benefits provided or to be
provided to the Executive pursuant to this Agreement, in combination with
payments or benefits, if any, from other plans or arrangements maintained by
the Company or any of the Consolidated Subsidiaries, constitute "excess
parachute payments" under Section 280G of the Code that are subject to excise
tax under Section 4999 of the Code, the Company shall pay to the Executive in
cash an additional amount equal to the amount of the Gross Up Payment (as
hereinafter defined). The "Gross Up Payment" shall be the amount needed to
ensure that the amount of such payments and the value of such benefits received
by the Executive (net of such excise tax and any federal, state and local tax
on the Company's payment to him attributable to such excise tax) equals the
amount of such payments and value of such benefits as he would receive in the
absence of such excise tax and any federal, state and local tax on the
Company's payment to him attributable to such excise tax. The Company shall
pay the Gross Up Payment within 30 days after the Date of Termination. For
purposes of determining the amount of the Gross Up Payment, the value of any
non-cash benefits and deferred payments or benefits shall be determined by the
Company's independent auditors in accordance with the principles of Section
280G(d)(3) and (4) of the Code. In the event that, after the Gross Up Payment
is made, the amount of the excise tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment made by the
Company, the Executive shall repay to the Company, at the time that such
reduction in the amount of excise tax is finally determined, the portion of the
Gross Up Payment attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274 of the Code
from the date of the Gross Up Payment to the date of the repayment. The amount
of the reduction of the Gross Up Payment shall reflect any subsequent reduction
in excise taxes resulting from such repayment. In the event that, after the
Gross Up Payment is made, the amount of the excise tax is determined to exceed
the amount anticipated at the time the Gross Up Payment was made, the Company
shall pay to the Executive, in immediately available funds, at the time that
such additional amount of excise tax is finally determined, an additional
payment ("Additional Gross Up Payment") equal to such additional amount of
excise tax and any federal, state and local taxes thereon, plus all interest
and penalties, if any, owned by the Executive with respect to such additional
amount of excise and other tax. The Company shall have the right to challenge,
on the Executive's behalf, any excise tax assessment against him as to which
the Executive is entitled to (or would be entitled if such assessment is
finally determined to be proper) a Gross Up Payment or Additional Gross Up
Payment, provided that all costs and expenses incurred in such a challenge
shall be borne by the Company and the Company shall indemnify the Executive and
hold him harmless, on an after-tax basis, from any excise or other tax
(including interest and penalties with respect thereto) imposed as a result of
such payment of costs and expenses by the Company.
8. NOTICE OF TERMINATION. In the event that the Company or the Bank, or
both, desire to terminate the employment of the Executive during the term of
this Agreement, the Company and/or the Bank (as the case may be) shall deliver
to the Executive a written notice of termination, stating whether such
termination constitutes Termination for Disability, Termination for Cause or
Involuntary Termination, setting forth in reasonable detail the facts and
circumstances that are the basis for the termination, and specifying the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the
96
<PAGE> 97
notice is delivered, except in the case of Termination for Cause. In the event
that the Executive determines in good faith that he has experienced an
Involuntary Termination of his employment, he shall send a written notice to the
Company stating the circumstances that constitute such Involuntary Termination
and the date upon which his employment shall have ceased due to such Involuntary
Termination. In the event that the Executive desires to effect a Voluntary
Termination, he shall deliver a written notice to the Company, stating the date
upon which employment shall terminate, which date shall be at least 30 days
after the date upon which the notice is delivered, unless the parties agree to a
date sooner.
9. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder without
first obtaining the written consent of the other party; provided, however, that
the Company shall require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation, operation of law or otherwise) to all or
substantially all of the business and/or assets of the Company, by an
assumption agreement in form and substance satisfactory to the Executive, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession
or assignment shall be a breach of this Agreement and shall entitle the
Executive to compensation and benefits from the Company in the same amount and
on the same terms that he would be entitled to hereunder if he terminated his
employment for Good Reason, in addition to any payments and benefits to which
the Executive is entitled under Section 7(g) hereof. For purposes of
implementing the provisions of this Section 9(a), the date on which any such
succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Executive hereunder shall inure
to the benefit of and be enforceable by the Executive's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. In the event of the death of the Executive, unless
otherwise provided herein, all amounts payable hereunder shall be paid to the
Executive's devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate.
10. DEFERRED PAYMENTS. If following a termination of the Executive, the
aggregate payments to be made by the Company under this Agreement and all other
plans or arrangements maintained by the Company or any of the Consolidated
Subsidiaries would exceed $1,000,000 in any calendar year, any such amounts in
excess of $1,000,000 shall be mandatorily deferred with interest thereon at
7.0% per annum to a calendar year such that the amount to be paid to the
Executive in such calendar year, including deferred amounts, does not exceed
$1,000,000.
97
<PAGE> 98
11. NOTICES. For the purposes of this Agreement, all notices and other
communications to any party hereto shall be in writing and shall be deemed to
have been duly given when delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: William M. Vichich
At the address last appearing on the
personnel records of the Executive
If to the Company: CitFed Bancorp, Inc.
One Citizens Federal Centre
Dayton, OH 45402
ATTENTION: Corporate Secretary
or to such other address as such party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
13. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Ohio.
16. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by binding
arbitration, conducted before a panel of three arbitrators in a location
selected by the Executive within 100 miles of such Executive's job location
with the Company, in accordance with the rules of the American Arbitration
Association then in effect; provided, however, that the Executive shall be
entitled to seek specific performance of his rights under Section 1(c) during
the pendency of any dispute or controversy arising under or in connection with
this Agreement. Judgment may be entered on the arbitrator's award in any court
having jurisdiction.
17. REIMBURSEMENT OF EXPENSES. In the event any dispute shall arise
between the Executive and the Company or the Bank as to the terms or
interpretation of this Agreement, including this Section 17, whether instituted
by formal legal proceedings or otherwise, including any action taken by the
Executive to enforce the terms of this Section 17 or in defending against
98
<PAGE> 99
any action taken by the Company or the Bank, the Company shall reimburse the
Executive for all costs and expenses incurred by the Executive, including
reasonable attorney's fees, arising from such dispute, proceedings or actions,
unless a court of competent jurisdiction renders a final and nonappealable
judgment against the Executive as to the matter in dispute. Reimbursement of
the Executive's expenses shall be paid within ten days of the Executive
furnishing to the Company written evidence, which may be in the form, among
other things, of a canceled check or receipt, of any costs or expenses incurred
by the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: CITFED BANCORP, INC.
/s/ John H. Curp /s/ Allen M. Hill
- ----------------------------- ----------------------------------------
By: ALLEN M. HILL
Its: Director and Chairman of the
Compensation Committee
EXECUTIVE
/s/ William M. Vichich
----------------------------------------
WILLIAM M. VICHICH, Individually
99
<PAGE> 1
EXHIBIT 99.2
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED SUPPLEMENTAL BENEFITS AGREEMENT
DATED DECEMBER 28, 1993, BETWEEN CITIZENS FEDERAL BANK, F.S.B. (THE "BANK"),
CITFED BANCORP, INC., THE OWNER OF ALL OF THE OUTSTANDING SHARES OF THE BANK
(THE "HOLDING COMPANY") AND HAZEL L. EICHELBERGER OF DAYTON, OHIO
("EXECUTIVE").
For valuable consideration, the Bank Holding Company and Executive desire
to amend Article V of the Amended and Restated Supplemental Benefits Agreement
dated December 28, 1993, by and between the above captioned parties.
Now, therefore, the parties agree that said Article V of said Amended and
Restated Supplemental Benefits Agreement shall be amended and restated to read
as follows:
ARTICLE V - MEDICAL AND DENTAL BENEFITS
Except as provided in this Article V following the date that
Executive ceases to be employed by the Bank, the Bank shall
continue to provide (at the Bank's expense) medical and dental
benefits to Executive and his current spouse for the remainder of
the lives of each of them to the same extent as provided by the
Bank and/or the Holding Company prior to such termination of
employment but only to the extent that reimbursement or payment
pursuant to Medicare or any other insurance coverage or by a prior
employer is not sufficient.
The medical benefits payable to Executive and/or to
Executive's current spouse are subject to any amendment made to
the Bank's and/or the Holding Company's medical benefits plan
which are implemented on a uniform and non-discriminatory basis
and shall be reduced by any medical benefits made available by
another employer following Executive's termination of employment
with the Bank and/or Holding Company (even if Executive elects not
to be covered by the medical benefits provided by a subsequent
employer).
On the occurrence of a Threatened Change of Control, as
defined in Section 16.05, the Bank and/or the Holding Company
shall transfer cash, marketable securities or other property to
the trust described in Section 4.06 in an amount to cause the
trust to have sufficient funds to continue to provide the benefits
provided by this Article V and Section 6.03.
<PAGE> 2
In all other respects, all other terms and conditions of the Amended and
Restated Supplemental Benefits Agreement dated December 28, 1993, by and
between the Bank, the Holding Company and the Executive remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the Bank, the Holding Company, and Executive have
executed this Amendment No. 1 to the aforesaid amended and restated
Supplemental Benefits Agreement as of this 20th day of September, 1996.
EXECUTIVE
/s/ Hazel L. Eichelberger
--------------------------------------
Hazel L. Eichelberger
CITIZENS FEDERAL BANK, F.S.B.
[the "Bank"]
By: /s/ Allen M. Hill
-----------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
CITFED BANCORP, INC.
[the "Holding Company"]
By: /s/ Allen M. Hill
-----------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
<PAGE> 3
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED SUPPLEMENTAL BENEFITS AGREEMENT
DATED DECEMBER 28, 1993, BETWEEN CITIZENS FEDERAL BANK, F.S.B. (THE "BANK"),
CITFED BANCORP, INC., THE OWNER OF ALL OF THE OUTSTANDING SHARES OF THE BANK
(THE "HOLDING COMPANY") AND JOHN H. CURP OF DAYTON, OHIO ("EXECUTIVE").
For valuable consideration, the Bank Holding Company and Executive desire
to amend Article V of the Amended and Restated Supplemental Benefits Agreement
dated December 28, 1993, by and between the above captioned parties.
Now, therefore, the parties agree that said Article V of said Amended and
Restated Supplemental Benefits Agreement shall be amended and restated to read
as follows:
ARTICLE V - MEDICAL AND DENTAL BENEFITS
Except as provided in this Article V following the date that
Executive ceases to be employed by the Bank, the Bank shall
continue to provide (at the Bank's expense) medical and dental
benefits to Executive and his current spouse for the remainder of
the lives of each of them to the same extent as provided by the
Bank and/or the Holding Company prior to such termination of
employment but only to the extent that reimbursement or payment
pursuant to Medicare or any other insurance coverage or by a prior
employer is not sufficient.
The medical benefits payable to Executive and/or to
Executive's current spouse are subject to any amendment made to
the Bank's and/or the Holding Company's medical benefits plan
which are implemented on a uniform and non-discriminatory basis
and shall be reduced by any medical benefits made available by
another employer following Executive's termination of employment
with the Bank and/or Holding Company (even if Executive elects not
to be covered by the medical benefits provided by a subsequent
employer).
On the occurrence of a Threatened Change of Control, as
defined in Section 16.05, the Bank and/or the Holding Company
shall transfer cash, marketable securities or other property to
the trust described in Section 4.06 in an amount to cause the
trust to have sufficient funds to continue to provide the benefits
provided by this Article V and Section 6.03.
<PAGE> 4
In all other respects, all other terms and conditions of the Amended and
Restated Supplemental Benefits Agreement dated December 28, 1993, by and
between the Bank, the Holding Company and the Executive remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the Bank, the Holding Company, and Executive have
executed this Amendment No. 1 to the aforesaid amended and restated
Supplemental Benefits Agreement as of this 20th day of September, 1996.
EXECUTIVE
/s/ John H. Curp
-----------------------------------
John H. Curp
CITIZENS FEDERAL BANK, F.S.B.
[the "Bank"]
By: /s/ Allen M. Hill
---------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
CITFED BANCORP, INC.
[the "Holding Company"]
By: /s/ Allen M. Hill
---------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
<PAGE> 5
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED SUPPLEMENTAL BENEFITS AGREEMENT
DATED DECEMBER 28, 1993, BETWEEN CITIZENS FEDERAL BANK, F.S.B. (THE "BANK"),
CITFED BANCORP, INC., THE OWNER OF ALL OF THE OUTSTANDING SHARES OF THE BANK
(THE "HOLDING COMPANY") AND JERRY L. KIRBY OF DAYTON, OHIO ("EXECUTIVE").
For valuable consideration, the Bank Holding Company and Executive desire
to amend Article V of the Amended and Restated Supplemental Benefits Agreement
dated December 28, 1993, by and between the above captioned parties.
Now, therefore, the parties agree that said Article V of said Amended and
Restated Supplemental Benefits Agreement shall be amended and restated to read
as follows:
ARTICLE V - MEDICAL AND DENTAL BENEFITS
Except as provided in this Article V following the date that
Executive ceases to be employed by the Bank, the Bank shall
continue to provide (at the Bank's expense) medical and dental
benefits to Executive and his current spouse for the remainder of
the lives of each of them to the same extent as provided by the
Bank and/or the Holding Company prior to such termination of
employment but only to the extent that reimbursement or payment
pursuant to Medicare or any other insurance coverage or by a prior
employer is not sufficient.
The medical benefits payable to Executive and/or to
Executive's current spouse are subject to any amendment made to
the Bank's and/or the Holding Company's medical benefits plan
which are implemented on a uniform and non-discriminatory basis
and shall be reduced by any medical benefits made available by
another employer following Executive's termination of employment
with the Bank and/or Holding Company (even if Executive elects not
to be covered by the medical benefits provided by a subsequent
employer).
On the occurrence of a Threatened Change of Control, as
defined in Section 16.05, the Bank and/or the Holding Company
shall transfer cash, marketable securities or other property to
the trust described in Section 4.06 in an amount to cause the
trust to have sufficient funds to continue to provide the benefits
provided by this Article V and Section 6.03.
<PAGE> 6
In all other respects, all other terms and conditions of the Amended and
Restated Supplemental Benefits Agreement dated December 28, 1993, by and
between the Bank, the Holding Company and the Executive remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the Bank, the Holding Company, and Executive have
executed this Amendment No. 1 to the aforesaid amended and restated
Supplemental Benefits Agreement as of this 20th day of September, 1996.
EXECUTIVE
/s/ Jerry L. Kirby
------------------------------------
Jerry L. Kirby
CITIZENS FEDERAL BANK, F.S.B.
[the "Bank"]
By: /s/ Allen M. Hill
--------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
CITFED BANCORP, INC.
[the "Holding Company"]
By: /s/ Allen M. Hill
--------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
<PAGE> 7
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED SUPPLEMENTAL BENEFITS AGREEMENT
DATED DECEMBER 28, 1993, BETWEEN CITIZENS FEDERAL BANK, F.S.B. (THE "BANK"),
CITFED BANCORP, INC., THE OWNER OF ALL OF THE OUTSTANDING SHARES OF THE BANK
(THE "HOLDING COMPANY") AND MARY L. LARKINS OF DAYTON, OHIO ("EXECUTIVE").
For valuable consideration, the Bank Holding Company and Executive desire
to amend Article V of the Amended and Restated Supplemental Benefits Agreement
dated December 28, 1993, by and between the above captioned parties.
Now, therefore, the parties agree that said Article V of said Amended and
Restated Supplemental Benefits Agreement shall be amended and restated to read
as follows:
ARTICLE V - MEDICAL AND DENTAL BENEFITS
Except as provided in this Article V following the date that
Executive ceases to be employed by the Bank, the Bank shall
continue to provide (at the Bank's expense) medical and dental
benefits to Executive and his current spouse for the remainder of
the lives of each of them to the same extent as provided by the
Bank and/or the Holding Company prior to such termination of
employment but only to the extent that reimbursement or payment
pursuant to Medicare or any other insurance coverage or by a prior
employer is not sufficient.
The medical benefits payable to Executive and/or to
Executive's current spouse are subject to any amendment made to
the Bank's and/or the Holding Company's medical benefits plan
which are implemented on a uniform and non-discriminatory basis
and shall be reduced by any medical benefits made available by
another employer following Executive's termination of employment
with the Bank and/or Holding Company (even if Executive elects not
to be covered by the medical benefits provided by a subsequent
employer).
On the occurrence of a Threatened Change of Control, as
defined in Section 16.05, the Bank and/or the Holding Company
shall transfer cash, marketable securities or other property to
the trust described in Section 4.06 in an amount to cause the
trust to have sufficient funds to continue to provide the benefits
provided by this Article V and Section 6.03.
<PAGE> 8
In all other respects, all other terms and conditions of the Amended and
Restated Supplemental Benefits Agreement dated December 28, 1993, by and
between the Bank, the Holding Company and the Executive remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the Bank, the Holding Company, and Executive have
executed this Amendment No. 1 to the aforesaid amended and restated
Supplemental Benefits Agreement as of this 20th day of September, 1996.
EXECUTIVE
/s/ Mary L. Larkins
------------------------------------
Mary L. Larkins
CITIZENS FEDERAL BANK, F.S.B.
[the "Bank"]
By: /s/ Allen M. Hill
---------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
CITFED BANCORP, INC.
[the "Holding Company"]
By: /s/ Allen M. Hill
---------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
<PAGE> 9
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED SUPPLEMENTAL BENEFITS AGREEMENT
DATED DECEMBER 28, 1993, BETWEEN CITIZENS FEDERAL BANK, F.S.B. (THE "BANK"),
CITFED BANCORP, INC., THE OWNER OF ALL OF THE OUTSTANDING SHARES OF THE BANK
(THE "HOLDING COMPANY") AND WILLIAM M. VICHICH OF DAYTON, OHIO ("EXECUTIVE").
For valuable consideration, the Bank Holding Company and Executive desire
to amend Article V of the Amended and Restated Supplemental Benefits Agreement
dated December 28, 1993, by and between the above captioned parties.
Now, therefore, the parties agree that said Article V of said Amended and
Restated Supplemental Benefits Agreement shall be amended and restated to read
as follows:
ARTICLE V - MEDICAL AND DENTAL BENEFITS
Except as provided in this Article V following the date that
Executive ceases to be employed by the Bank, the Bank shall
continue to provide (at the Bank's expense) medical and dental
benefits to Executive and his current spouse for the remainder of
the lives of each of them to the same extent as provided by the
Bank and/or the Holding Company prior to such termination of
employment but only to the extent that reimbursement or payment
pursuant to Medicare or any other insurance coverage or by a prior
employer is not sufficient.
The medical benefits payable to Executive and/or to
Executive's current spouse are subject to any amendment made to
the Bank's and/or the Holding Company's medical benefits plan
which are implemented on a uniform and non-discriminatory basis
and shall be reduced by any medical benefits made available by
another employer following Executive's termination of employment
with the Bank and/or Holding Company (even if Executive elects not
to be covered by the medical benefits provided by a subsequent
employer).
On the occurrence of a Threatened Change of Control, as
defined in Section 16.05, the Bank and/or the Holding Company
shall transfer cash, marketable securities or other property to
the trust described in Section 4.06 in an amount to cause the
trust to have sufficient funds to continue to provide the benefits
provided by this Article V and Section 6.03.
<PAGE> 10
In all other respects, all other terms and conditions of the Amended and
Restated Supplemental Benefits Agreement dated December 28, 1993, by and
between the Bank, the Holding Company and the Executive remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, the Bank, the Holding Company, and Executive have
executed this Amendment No. 1 to the aforesaid amended and restated
Supplemental Benefits Agreement as of this 20th day of September, 1996.
EXECUTIVE
/s/ William M. Vichich
------------------------------------
William M. Vichich
CITIZENS FEDERAL BANK, F.S.B.
[the "Bank"]
By: /s/ Allen M. Hill
---------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
CITFED BANCORP, INC.
[the "Holding Company"]
By: /s/ Allen M. Hill
---------------------------------
Allen M. Hill
Director and Chairman of the
Compensation Committee
