<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998.
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 0-19985
WESTCO BANCORP, INC.
--------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3823760
-------- ----------
(State or other jurisdiction I.R.S. Employer
of incorporation or Identification
organization) Number
2121 South Mannheim Road, Westchester, Illinois 60154
----------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (708) 865-1100
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes (X) No ( )
As of May 7, 1998, the Registrant had 2,465,013 shares of Common stock
issued and outstanding.
<PAGE>
WESTCO BANCORP, INC.
Part I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Statement of Financial Condition
March 31, 1998 (Unaudited) and December 31, 1997 1
Consolidated Statement of Income, Three Months
Ended March 31, 1998 and 1997 (Unaudited) 2
Consolidated Statement of Changes in Stockholders'
Equity, Three Months Ended March 31, 1998 (Unaudited) 3
Consolidated Statement of Cash Flows, Three Months Ended
March 31, 1998 and 1997 (Unaudited) 4
Notes to Unaudited Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 9
Item 3. Quantitative and Qualitative Discussion About
Market Risk 9
Part II. OTHER INFORMATION 10
<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------- -------------
(Unaudited)
Assets
- ------
<S> <C> <C>
Cash and amounts due from
depository institutions $ 5,967,608 3,797,551
Interest-bearing deposits 6,906,597 10,158,974
------------ -----------
Total cash and cash equivalents 12,874,205 13,956,525
Investment securities held for investment
(market value of $55,864,244 at
March 31, 1998 and $53,973,913 at
December 31, 1997) 55,863,131 53,968,243
Investment securities held for trade 1,618,172 1,462,220
Loans receivable, net 242,272,818 240,097,597
Real estate owned - -
Stock in Federal Home Loan Bank of Chicago 1,997,000 1,997,000
Office properties and equipment, net 2,089,969 2,091,639
Accrued interest receivable 1,473,586 1,476,004
Prepaid expenses and other assets 941,491 894,505
------------ -----------
Total assets 319,130,372 315,943,733
============ ===========
Liabilities and Stockholders' Equity
- ----------- --- ------------- ------
Deposits 261,692,362 259,610,699
Advance payments by borrowers for taxes
and insurance 2,829,262 3,183,539
Other liabilities 5,332,526 4,562,544
------------ -----------
Total liabilities 269,854,150 267,356,782
------------ -----------
Stockholders' Equity:
Common Stock 35,251 35,216
Additional paid-in capital 23,049,597 23,020,242
Retained earnings 42,338,780 41,583,949
Treasury stock (15,836,335) (15,679,170)
Common stock acquired by ESOP (311,071) (373,286)
------------ -----------
Total stockholders' equity 49,276,222 48,586,951
------------ -----------
Total liabilities and
stockholders's equity $319,130,372 $315,943,733
=========== ===========
</TABLE>
($.01 par value; 5,000,000 shares authorized; 3,521,570 shares issued and
2,462,253 shares outstanding at March 31, 1998; and 3,525,070 shares issued
and 2,464,353 shares outstanding at December 31, 1997)
See notes to consolidated financial statements.
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<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
------------ ------------
(Unaudited)
<S> <C> <C>
Interest Income:
Interest on loans $4,961,921 4,682,417
Interest on investment securities 782,299 950,837
Interest on interest-bearing deposits 129,724 107,335
Dividends on investments held for trade 5,993 2,730
Dividends on FHLB stock 32,622 31,133
---------- ---------
Total interest income 5,912,559 5,774,452
---------- ---------
Interest expense:
Interest on deposits 3,197,536 3,069,408
---------- ---------
Total interest expense 3,197,536 3,069,408
---------- ---------
Net interest income 2,715,023 2,705,044
---------- ---------
Non-interest income:
Loan fees and service charges 71,709 60,420
Commission income 53,030 69,369
Gain (loss) on sale of trading securities 85,900 21,280
Unrealized gain (loss) on trading securities 56,422 3,414
Other income 64,537 57,537
---------- ---------
Total non-interest income 331,598 212,020
---------- ---------
Non-interest expense:
Staffing costs 768,231 810,438
Advertising 32,480 32,475
Occupancy and equipment expenses 116,867 125,959
Data processing 61,441 58,156
Federal deposit insurance premiums 40,500 41,400
Other 190,127 159,898
---------- ---------
Total non-interest expense 1,209,646 1,228,326
---------- ---------
Income before income taxes 1,836,975 1,688,738
Provision for income taxes 660,269 610,100
---------- ---------
Net income $1,176,706 1,078,638
========== =========
Earnings per share - basic $.48 .42
Earnings per share - diluted $.44 .39
Dividends declared per common share $.17 .15
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended March 31, 1998 (Unaudited)
<TABLE>
Additional Stock
Common Paid-In Retained Treasury Acquired
Stock Capital Earnings Stock By ESOP Total
-------- ---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1997 $35,216 23,020,242 41,583,949 (15,679,170) (373,286) 48,586,951
Net income 1,176,706 1,176,706
Adjustments to
determine
comprehensive income 0 0
---------- ----------
Comprehensive income 1,176,706 1,176,706
Purchase of
treasury stock
(6,000 Shares) (163,125) (163,125)
Exercise of
stock options 35 23,310 (3,292) 5,960 26,013
Tax benefit related
to employee stock
plan 6,045 6,045
Contribution to
fund ESOP 62,215 62,215
Dividend declared
on common stock (418,583) (418,583)
------ ---------- ---------- ---------- ------- ----------
$35,251 23,049,597 42,338,780 (15,836,335) (311,071) 49,276,222
====== ========== ========== ========== ======= ==========
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities: (Unaudited)
Net income $ 1,176,706 1,078,638
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 44,768 49,069
Amortization of premiums and discounts
on investment securities - net (39,243) (35,150)
Amortization of cost of stock benefit plans 62,215 124,885
(Gain) loss on sale of trading securities (85,900) (75,721)
Unrealized (gain) loss on trading securities (56,422) (3,414)
Purchase of trading securities (1,275,027) (920,827)
Proceeds from sale and redemption of
trading securities 1,261,397 862,724
Decrease in deferred income (80,979) (64,486)
Increase in current & deferred federal income tax 635,174 318,015
Decrease in interest receivable 2,418 15,539
Increase (Decrease) in interest payable 5,054 (2,916)
Change in prepaid and accrued items, net 89,170 (684,744)
------------ -----------
Net cash provided by operating activities 1,739,331 661,612
------------ -----------
Cash flows from investing activities:
Proceeds from maturities of investments 13,000,000 15,193,003
Purchase of investment securities (14,855,645) (8,823,680)
Disbursements for loans (15,807,994) (13,314,170)
Loan repayments 13,713,752 10,327,882
Property and equipment expenditures (43,098) (41,675)
------------ -----------
Net cash (used in) provided by investing activities (3,992,985) 3,341,360
------------ -----------
Cash flows from financing activities:
Proceeds from exercise of stock options 26,013 28,676
Deposit account receipts 63,845,739 59,713,801
Deposit account withdrawals (64,668,319) (63,365,522)
Interest credited to deposit accounts 2,904,243 2,793,159
Decrease in advance payments for borrowers
for taxes and insurance (354,277) (308,602)
Payment of dividends (418,940) (385,058)
Purchase of treasury stock (163,125) (453,125)
------------ -----------
Net cash provided by (for) financing activities 1,171,334 (1,976,671)
------------ -----------
Net change in cash and cash equivalents (1,082,320) 2,026,301
Cash and cash equivalents at beginning of period 13,956,525 11,389,326
------------ -----------
Cash and cash equivalents at end of period $ 12,874,205 13,415,627
============ ===========
Cash paid during the period for:
Interest $ 3,196,283 3,076,125
Income taxes 25,095 -
Non-cash transfer of loans to real estate owned $ - 113,636
See notes to consolidated financial statements.
</TABLE>
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<PAGE>
WESTCO BANCORP, INC. AND SUBSIDIARIES
Notes to Financial Statements
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with instructions to Form 10-Q and therefore, do not include
information or footnotes necessary for fair presentation of financial position,
results of operations and changes in financial condition in conformity with
generally accepted accounting principles. However, in the opinion of
management, all adjustments (which are normal and recurring in nature) necessary
for a fair presentation have been included. The results of operations for the
three months ended March 31, 1998 are not necessarily indicative of the results
which may be expected for the entire year.
Note B - Principles of Consolidation
The accompanying unaudited consolidated financial statements include the
accounts of the Holding Company and its wholly-owned subsidiaries First Federal
Savings and Loan Association of Westchester (the "Association") and Westco, Inc.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
Note C - Stock Conversion and Stock Split
On February 13, 1992 the Board of Directors of First Federal Savings and Loan
Association of Westchester approved a plan to convert from a federally chartered
mutual savings association to a federally chartered stock savings association.
The stock conversion plan included, as part of the conversion, the concurrent
formation of a Holding Company. The stock offering of the Association's parent,
Westco Bancorp, Inc. (the "Company") was closed on June 26, 1992 with the sale
of 2,300,000 shares at $10.00 per share. The Company purchased all the shares
of stock of the Association for $10,962,363 upon completion of its stock
offering. On May 17, 1996 a three for two stock split occurred with fractional
shares being paid in cash.
Note D - Stock Repurchase
Since the June, 1992 conversion, the Company's Board of Directors has approved
seven separate stock repurchase programs. The current stock repurchase program
permits the repurchase of up to 200,000 shares; and, as of April 30, 1998,
54,040 shares remain to be repurchased in the open market.
Note E - Earnings Per Share
Earnings per share are determined by dividing net income for the period by the
weighted average number of both basic and diluted shares of common stock and
common stock equivalents outstanding. Stock options are regarded as common
stock equivalents and are considered in diluted earnings per share calculations.
Common stock equivalents are computed using the treasury stock method. Earnings
per share data for 1997 have been restated for comparative purposes to reflect
the implementation of Statement of Financial Accounting Standards No. 128.
-5-
<PAGE>
Management's Discussions and Analysis
of Financial Condition and Results of Operations
Liquidity and Capital Resources:
- --------- --- ------- ---------
The Company's primary sources of funds are deposits, proceeds from
principal and interest payments on loans and proceeds from the maturing of
investment securities. While maturities and scheduled amortization of loans and
investment securities are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions, and competition from various financial markets. The primary
business activity of the Company, that of making conventional mortgage loans on
residential housing, is likewise affected by economic conditions.
The Association is required to maintain minimum levels of liquid assets as
defined by Office of Thrift Supervision ("OTS") regulations. This requirement,
which may be varied at the direction 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 4.0%. The Association has
historically maintained a high level of liquid assets. At March 31, 1998, the
Association's liquidity ratio was 36.4%.
The Company maintains a large part of the assets in overnight deposits and
a laddered portfolio of U.S. Treasury and Agency securities. This strategy
results in a relatively short weighted average maturity of these assets. At
March 31, 1998, these investments totalled $62.8 million, or 19.7% of assets,
with a weighted average life of approximately 7.5 months. At December 31, 1997,
these investments totalled $64.1 million, or 20.3% of assets, with a weighted
average life of approximately 8 months.
The Company's most liquid assets are cash and cash equivalents. The levels
of these assets are dependent on the Company's operating, financing, lending and
investing activities, as well as the slope of the yield curve, during any given
period. At March 31, 1998, cash and cash equivalents totalled $12.9 million.
The primary investing activity of the Company is the origination of
mortgage loans. During the three months ended March 31, 1998 and 1997, the
Company disbursed loans in the amounts of $15.8 million and $13.3 million,
respectively. Other investing activities include the purchase of investment
securities, which totalled $14.9 million for the three months ended March 31,
1998 and $8.8 million for the three months ended March 31, 1997. These
activities in 1998 were funded primarily by principal repayments on loans
totalling $13.7 million and maturities of investment securities totalling $13.0
million. The three month activity for 1997 was funded by principal repayments
on loans and maturities of investment securities in the amounts of $10.3 million
and $15.2 million respectively.
At March 31, 1998, the Company had outstanding loan commitments of $3.7
million. There were no commitments to purchase loans at that date. The Company
anticipates that it will have sufficient funds available to meet its current
loan commitments. Certificates of deposit which are scheduled to mature in one
year or less from March 31, 1998 totalled $100.6 million. Management believes
that a significant portion of such deposits will remain with the Company.
The regulatory standards of the OTS impose the following capital
requirements: a risk based capital standard expressed as a percent of risk based
assets, a leverage ratio of core capital to total adjusted assets, and a
tangible capital ratio expressed as a percent of total adjusted
-6-
<PAGE>
assets.
As of March 31, 1998, the Association exceeded all regulatory capital
standards.
Capital requirements, ratios and balances are as follows (in thousands):
<TABLE>
<CAPTION>
Actual Required Actual Excess
Capital Capital Capital Capital Capital
Required Ratio Amount Amount Amount
-------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
At December 31, 1997:
Tangible 1.5% 13.1% $4,635 $41,502 $36,867
Core 3.0 13.1 9,270 41,502 32,232
Risk Based:
Tier I (core) 4.0 30.0 5,761 41,502 35,741
Total 8.0 30.5 11,523 42,230 30,707
At March 31, 1998:
Tangible 1.5% 13.7% $4,690 $42,676 $37,986
Core 3.0 13.7 9,379 42,676 33,297
Risk Based:
Tier I (core) 4.0 29.5 5,780 42,676 36,896
Total 8.0 30.0 11,560 43,404 31,844
</TABLE>
CHANGE IN FINANCIAL CONDITION OVER THE THREE MONTHS ENDED MARCH 31, 1998:
- ------ -- --------- --------- ---- --- ----- ------ ----- ----- --- ----
Total assets increased $3.2 million, or 1.0%, to $319.1 million at March
31, 1998 from $315.9 million at December 31, 1997. This increase is primarily
attributable to an increase in savings deposits of $2.1 million and an increase
in other liabilities of $800,000.
Net loans receivable increased $2.1 million, or 0.9%, to $242.3 million
from $240.1 million at December 31, 1997 as loan principal disbursements
exceeded loan repayments. Loans disbursed totalled $15.8 million, for the three
months ended March 31, 1998, while loan repayments totalled $13.7 million.
Investment securities increased $1.9 million, or 3.5%, to $55.9 million at
March 31, 1998 from $54.0 million at December 31,1997. Cash and cash
equivalents totalled $12.9 million at March 31, 1998 compared to $14.0 million
at December 31, 1997.Investments held for trading increased $156,000 to $1.6
million at March 31, 1998 from $1.5 million at December 31, 1997.
Savings deposits increased $2.1 million, or 0.8%, to $261.7 million at
March 31, 1998 from $259.6 million at December 31, 1997. The Company
experienced a net deposit outflow of $823,000 (before interest credited) for the
three month period ended March 31, 1998. Management believes this net outflow
occurred primarily as a result of withdrawals made by depositors for real estate
tax and income tax payment purposes and the movement of funds by some depositors
to perceived higher returns in the stock market.
The balance of non-performing loans, totalling $1.4 million at March 31,
1998, increased $650,000, or 59.7%, from $786,000 at December 31, 1997 due to
the additional delinquency of residential loans to four borrowers with the
largest of these loans totalling $249,000. The ratio of non-performing loans to
total loans was 0.59% at March 31, 1998 compared to 0.33% at December 31, 1997.
Net of a $175,000 specific valuation reserve carried against a $318,000 loan
secured by a 36 unit apartment building, management believes that these loans
are adequately secured by the underlying real estate. Non-performing loans
represented all of the Company's non-performing assets at both March 31, 1998
and December 31, 1997. The Company's allowance for loan losses totalled
$902,800 at March 31, 1998, and there were no additions, charge-offs or
recoveries during the quarter.
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<PAGE>
During 1992, the Association's ESOP borrowed $1,840,000 from an unrelated third
party to fund the Association's ESOP plan which was established in connection
with the conversion. During 1993, Westco Bancorp, Inc. refinanced this loan on
essentially the same terms as the original lender. The March 31, 1998 balance of
$311,000 is eliminated in the consolidation of the Company's financial
statements.
Retained earnings increased $755,000, or 1.8%, to $42.3 million as a result
of earnings for the three month period ended March 31, 1998 and the declaration
of a dividend payment to stockholders during the quarter ended March 31, 1998.
Stockholders' equity totalled $49.3 million or 15.4% of total assets at March
31, 1998, and the book value per common share outstanding was $20.01. On April
27, 1998, with the approval of its Board of Directors and the OTS 1st Federal
Savings and Loan Association of Westchester paid a dividend in the amount of
$4.7 million to the parent company.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1998
- ---------- -- --------- ------- --- --- ----- ------ ----- ----- --- ----
AND MARCH 31, 1997:
- --- ----- --- ----
Net income for the quarter ended March 31, 1998 increased $98,000, or 9.1%,
to $1.2 million from $1.1 million for the quarter ended March 31, 1997. In the
quarter ended March 31, 1998 net interest income increased $10,000, or 0.4%, due
primarily to the increase in invested assets. The Company's net interest spread
decreased for the quarter ended March 31, 1998 to 2.75% from 2.85% for the
quarter ended March 31, 1997. The Company's net interest margin for the first
quarter of 1998 decreased to 3.55% from 3.62% for the first quarter of 1997.
Management cannot predict the affects changes in the Federal Reserve's monetary
policy may have on the Company's interest margin and spread, because those
changes, if any, are not yet known.
During the three months ended March 31, 1998 and March 31, 1997 no
additional provision for loan losses was made based upon (1) the absence of any
extraordinary asset quality problems, (2) the current level of general loan loss
reserves, and (3) management's assessment of the inherent risk in the Company's
mortgage portfolio and possible prospective economic and regulatory conditions.
Likewise, there were no charge offs or recoveries during the quarter.
Non-interest income for the first quarter of 1998 increased $120,000 over
the same quarter in 1997 primarily as a result of both realized and unrealized
gains in 1998 of $142,000 as compared to gains of $25,000 which occurred in
1997. These gains, along with a $12,000 increase in loan fees and service
charges and a $7,000 increase in miscellaneous income, were offset by a decrease
of $16,000 in commissions on insurance and investment products.
Non-interest expense decreased $19,000, or 1.5%, for the three months ended
March 31, 1998 to $1.21 million from the $1.33 million for the three months
ended March 31, 1997. This decrease resulted from a $48,000 decrease in benefit
plan costs, a $9,000 decrease in officer expenses and a $9,000 decrease in
office occupancy and equipment expenses. These decreases were offset by a
$15,000 increase in salaries, a $12,000 increase in legal expenses and a $20,000
increase in other operating expenses.
IMPACT OF NEW ACCOUNTING STANDARDS
- ------ -- --- ---------- ---------
In February 1998, the FASB issued Statement of Financial Accounting
Standards No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits" ("SFAS 132"). SFAS 132 alters current disclosure
requirements regarding pensions and other postretirement benefits in the
financial statements
-8-
<PAGE>
of employers who sponsor such benefit plans. The revised disclosure requirements
are designed to provide additional information to assist readers in evaluating
future costs related to such plans. Additionally, the revised disclosures are
designed to provide changes in the components of pension and benefit costs in
addition to the year end components of those factors in the resulting asset or
liability related to such plans. The statement is effective for fiscal years
beginning after December 15, 1997 with earlier application available.
The foregoing does not constitute a comprehensive summary of all material
changes or developments affecting the manner in which the Company keeps its
books and records and performs its financial accounting responsibilities. It is
intended only as a summary of some of the recent pronouncements made by the FASB
which are of particular interest to financial institutions.
THRIFT RECHARTERING LEGISLATION
- ------ ------------ -----------
The Deposit Insurance Funds Act provides that the BIF and SAIF will merge
on January 1, 1999 if there are no more savings associations as of that date.
Congress is currently considering legislation which addresses this issue,
including a proposal to eliminate the federal thrift charter, as well as others
which deal with the modernization of the banking industry. Management cannot
predict whether such legislation will be enacted or the extent to which any
legislation would affect the Company's operations.
YEAR 2000 ANALYSIS
- ---- ---- --------
The Company, including its subsidiaries, does not own or use proprietary
software. The Association has a contract with NCR Corporation for data
processing services on savings and loan accounts, and NCR, as well as vendors
supplying software for other internal uses, has assured the Company that all
systems will be Year 2000 Compliant by mid-1999. Intermediate testing and an
exam by the Office of Thrift Supervision are scheduled during the second quarter
of 1998,
Management does not expect the total cost to become Year 2000 compliant to
be significant.
Item 3. QUANTITATIVE AND QUALITATIVE DISCUSSION ABOUT MARKET RISK
- ------- ------------ --- ----------- ---------- ----- ------ ----
The Company's financial instrument assets and liabilities are subject to
varying degrees of actual or theoretical market risk. The only significant
exposure of these instruments results from the interest rate risk embedded in
them based upon their contractual terms.
As of December 31, 1997, an OTS analysis of the Association's estimated
interest rate risk, as measured by changes in the Net Portfolio Value of the
Association's financial assets and liabilities for instantaneous and sustained
parallel shifts in interest rates, indicated that the Net Portfolio Value would
decrease 14% (essentially the same as the previous quarter) and 31% for 200 and
400 basis point increases in interest rates respectively and increase 6% and 12%
for 200 and 400 basis point decreases in interest rates respectively, compared
to 4% and 11% respectively for the previous quarter.
The Board of Directors has established parameters for monitoring the
Association's interest rate risk.
-9-
<PAGE>
PART II - OTHER INFORMATION
WESTCO BANCORP, INC.
Item 1. LEGAL PROCEEDINGS
----- -----------
From time to time, the Association is a party to legal proceedings in the
ordinary course of business. The Company and the Association are not engaged in
any legal proceedings of a material nature at the present time.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - Not applicable
------- -- ---------- --- --- -- --------
Item 3. DEFAULTS UPON SENIOR SECURITIES - Not applicable
-------- ---- ------ ----------
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------- -- ------- -- - ---- -- -------- -------
The following items were presented to shareholders at the Company's Annual
Meeting on April 21, 1998:
1. The election of James E. Dick and Robert E. Vorel, Jr. to serve as
directors for terms of three years or until successors have been
elected and qualified.
2. The ratification of the appointment of Cobitz, VandenBerg & Fennessy
as auditors for the Company for the fiscal year ending December 31,
1998.
Both of the above items were approved by shareholders at the meeting. The
election of James E. Dick was approved by a vote of 2,166,683 in favor and 1,906
withheld. The election of Robert E. Vorel, Jr. was approved by a vote of
2,166,683 in favor and 1,906 withheld. The appointment of Cobitz, VandenBerg &
Fennessy was ratified by a vote of 2,167,352 in favor, 637 against, and 600
abstaining. In the ratification of the auditor appointment, there were no
broker non-votes. The continuing directors are David C. Burba, Rosalyn M.
Lesak, Edward A. Matuga and Thomas J. Nowicki.
Item 5. OTHER INFORMATION
----- -----------
STOCK OPTIONS EXERCISED BY OTHERS
During the first quarter of 1998, in accordance with the provisions of the
Westco Bancorp, Inc. 1992 Incentive Stock Option Plan, which was approved by a
vote of the shareholders on September 29, 1992, Vice President Kenneth J.
Kaczmarek exercised 3,500 Common Stock options of the options granted to him on
June 26, 1992, Vice President & Secretary Mary S. Suffi exercised 400 Common
Stock options of the options granted to her on June 26, 1992 and one retiree
exercised 2,760 Common Stock options of the options granted to her on June 26,
1992.
STOCK REPURCHASE PROGRAM
The Company began its seventh common stock repurchase plan in February,
1998. Under the terms of the repurchase plan, as approved by the Board of
Directors, up to 200,000 shares may be repurchased. As of April 30, 1998,
145,960 shares had been repurchased.
COMMON STOCK SHARES OUTSTANDING
As a result of the exercise of options and shares repurchased in accordance
with the repurchase plan previously described, the number of common shares
outstanding on May 7, 1998 totalled 2,465,013 shares.
-10-
<PAGE>
PART II - OTHER INFORMATION
(Continued)
WESTCO BANCORP, INC.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
-------- --- ------- -- ---- ---
(a) The following exhibits are filed as part of this report:
3.1 Certificate of Incorporation of Westco Bancorp, Inc.*
3.2 Bylaws of Westco Bancorp, Inc.*
4.0 Stock Certificate of Westco Bancorp, Inc.*
10.1 Amended and Restated Employment Agreement between
David C. Burba and the Company (filed herewith)
10.2 Amended and Restated Employment Agreement between
Gregg P. Goossens and the Company (filed herewith)
10.3 Amended and Restated Employment Agreement between
Richard A. Brechlin and the Company (filed herewith)
10.4 Amended and Restated Employment Agreement between
David C. Burba and the Bank (filed herewith)
10.5 Amended and Restated Employment Agreement between
Gregg P. Goossens and the Bank (filed herewith)
10.6 Amended and Restated Employment Agreement between
Richard A. Brechlin and the Bank (filed herewith)
10.7 Amended and Restated Supplemental Executives'
Retirement Plan (filed herewith)
11.0 Computation of earnings per share (filed herewith)
27.0 Financial Data Schedule (filed herewith)
* Incorporated herein by reference in this document from the
Exhibits to Form S-1, Registration Statement, filed on March 23,
1992 and any amendments thereto, Registration No. 33-46441.
(b) No reports on Form 8-K were filed this quarter.
-11-
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WESTCO BANCORP, INC.
-------------------------
Registrant
DATE: May 15, 1998 BY: /s/ David C. Burba
-------------------------
President,
Chief Executive Officer
DATE: May 15, 1998 BY: /s/ Richard A. Brechlin
-------------------------
Executive Vice President and Treasurer,
Chief Financial Officer
DATE: May 15, 1998 BY: /s/ Kenneth J. Kaczmarek
-------------------------
Vice President,
Chief Accounting Officer
<PAGE>
Exhibit 10.1
WESTCO BANCORP, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
WHEREAS, Westco Bancorp, Inc. (the "Holding Company") entered into the
Westco Bancorp, Inc. Employment Agreement (the "Agreement") with David C. Burba,
("Executive") as of June 21, 1993; and
WHEREAS, the Holding Company wishes to amend and restate the Agreement to
clarify the payments upon a Change in Control, as that term is used in Section 5
of the Agreement and make certain other amendments to the Agreement; and
WHEREAS, the Holding Company, in its best interest and the best interest of
the Executive, wishes to amend the treatment of excess parachute payments under
the Agreement.
NOW THEREFORE, upon mutual agreement of the parties to the Agreement as
evidenced by their signatures below, the Agreement is hereby amended and
restated, effective ______________, as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Holding Company. The Executive
shall render administrative and management services to the Holding Company such
as are customarily performed by persons in a similar executive capacity. During
said period, Executive also agrees to serve, if elected, as an officer and
director of any subsidiary of the Holding Company. Failure to reelect Executive
as President and Chief Executive Officer of the Holding Company, failure to
nominate Executive as a director of the Holding Company, or failure to reelect
Executive as President and Chief Executive Officer of the First Federal Savings
and Loan Association (the "Association") without the consent of the Executive
shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of this Agreement shall be deemed to have commenced as of
June 21, 1993, and shall continue for a period of thirty-six (36) full calendar
months thereafter. Commencing on the first anniversary date of this Agreement,
and continuing at each anniversary date thereafter, the Agreement shall renew
for an additional year such that the remaining term shall be three (3) years
unless written notice is provided to Executive at least ten (10) days and not
more than twenty (20) days prior to such anniversary date, that this Agreement
shall cease at the end of thirty-six (36) months following such anniversary
date. Prior to the written notice period for nonrenewal, the board of directors
of the Holding Company ("Board") will conduct a formal performance evaluation of
the Executive for purposes of determining whether to extend
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the Agreement, and the results thereof shall be included in the minutes of the
Board's meeting. In the event of a Change in Control as hereinafter defined in
Section 5, this Agreement shall automatically renew upon the date of the Change
in Control such that the remaining term of the Agreement shall be three (3)
years.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Holding Company and participation in community
and civic organizations; provided, however, that, with the approval of the
Board, as evidenced by a resolution of such Board, from time to time, Executive
may serve, or continue to serve, on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which, in such
Board's judgment, will not present any conflict of interest with the Holding
Company, or materially affect the performance of Executive's duties pursuant to
this Agreement.
(c) In the event that Executive's duties and responsibilities with respect
to the Association are temporarily or permanently terminated pursuant to
Sections 8 or 16 of the Employment Agreement dated June 21, 1993, between
Executive and the Association ("Association Agreement") and the course of
conduct upon which such termination is based would not constitute grounds for
Termination for Cause under Section 8 of this Agreement then Executive shall, to
the extent practicable, assume such duties and responsibilities formerly
performed at the Association as part of his duties and responsibilities as
President and Chief Executive Officer of the Holding Company. Nothing in this
provision shall be interpreted as restricting the Holding Company's right to
remove Executive for Cause in accordance with Section 8 of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Holding
Company shall pay Executive as compensation a salary of not less than
$181,700.00 per year ("Base Salary"). Such Base Salary shall be payable bi-
weekly. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by a
Committee designated by the Board, and the Board may increase Executive's Base
Salary. In addition to the Base Salary provided in this Section 3(a), the
Holding Company shall provide Executive at no cost to Executive with all such
other benefits as are provided uniformly to permanent full-time employees of the
Holding Company and the Association.
(b) The Holding Company will provide Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was
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participating or otherwise deriving benefit from immediately prior to the
beginning of the term of this Agreement, and the Holding Company will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing provisions
of this Subsection (b), Executive will be entitled to participate in or receive
benefits under any employee benefit plans including, but not limited to,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, health-and-accident plan, medical coverage or any other employee benefit
plan or arrangement made available by the Holding Company in the future to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company in which Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable travel and other reasonable expenses incurred by Executive performing
his obligations under this Agreement and may provide such additional
compensation in such form and such amounts as the Board may from time to time
determine.
(d) In the event that Executive assumes additional duties and
responsibilities pursuant to Section 2(c) of this Agreement by reason of one of
the circumstances contained in Section 2(c) of this Agreement, and the Executive
receives or will receive less than the full amount of compensation and benefits
formerly entitled to him under the Association Agreement, the Holding Company
shall assume the obligation to provide Executive with his compensation and
benefits in accordance with the Association Agreement less any compensation and
benefits received from the Association, subject to the terms and conditions of
this Agreement including the termination for cause provisions in Section 8.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Section 8.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than a Change in Control, as defined in Section 5(a)
hereof, disability, as defined in Section 6(a) hereof, retirement, as defined in
Section 7 hereof, or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Holding Company's
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employ, upon any (A) failure to elect or reelect or to appoint or reappoint
Executive as President and Chief Executive Officer or failure to nominate
Executive as a director, unless consented to by Executive, (B) unless consented
to by the Executive, a material change in Executive's function, duties, or
responsibilities, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, (and any such material change shall be
deemed a continuing breach of this Agreement), (C) a relocation of Executive's
principal place of employment by more than 30 miles from its location at the
effective date of this Agreement, or a material reduction in the benefits and
perquisites to the Executive from those being provided as of the effective date
of this Agreement, (D) liquidation or dissolution of the Association or Holding
Company or (E) breach of this Agreement by the Holding Company. Upon the
occurrence of any event described in clauses (A), (B), (C), (D) or (E), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days written notice given
within a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the payments due
for the remaining term of the Agreement including Base Salary, bonuses and any
other cash or deferred compensation paid, or to be paid, to the Executive, and
the amount of any benefits received pursuant to any employee benefit plans
maintained by the Association or the Holding Company during the term of the
Agreement. At the election of the Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum or paid monthly during the remaining term of the agreement
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement. Such payments shall not be reduced in the event the
Executive obtains other employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Holding Company
will cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association or the
Holding Company for Executive prior to his termination. Such coverage shall
cease upon the expiration of the remaining term of this Agreement.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
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5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Association shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the Rules and Regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 20% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof 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 Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board, or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Holding Company or
similar transaction occurs or is effectuated in which the Association or Holding
Company is not the resulting entity; provided, however, that such an event
listed above will be deemed to have occurred or to have been effectuated upon
the receipt of all required federal regulatory approvals not including the lapse
of any statutory waiting periods, or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Association with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Association or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Association or Holding
Company then outstanding.
5
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(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e), and (f) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement
(regardless of whether such termination results from his dismissal or his
resignation at any time during the term of this Agreement following any
demotion, loss of title, office or significant authority or responsibility,
reduction in the annual compensation or benefits or relocation of his principal
place of employment by more than 30 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
termination for Cause or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Holding Company shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or both, a sum equal
to the greater of the payments due for the remaining term of the Agreement or
three (3) times the average of the three (3) preceding years' compensation,
including, but not limited to, Base Salary, bonuses, any other cash or deferred
compensation paid to, or accrued on behalf of the Executive during such years,
any amounts taken into income by the Executive with respect to the exercise of
stock option(s) or the vesting of restricted stock (including stock transferred
to the Executive under the Association Recognition and Retention Plan), and the
amount of any contributions made to any employee benefit plans, on behalf of the
Executive, maintained by the Association or the Holding Company during such
years, except to the extent such benefits are otherwise payable to the Executive
under such plan solely as a result of a Change in Control. At the election of
the Executive, which election is to be made within thirty (30) days of the Date
of Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the thirty-six (36) months
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Holding Company will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of thirty-six (36) months.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
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(f) Notwithstanding the preceding paragraphs of this Section 5, in each
calendar year the Executive is entitled to receive payments or benefits under
this Agreement the independent accountants of the Holding Company shall
determine if an excess parachute payment (as defined in Section 4999) of the
Internal Revenue Code of 1986, as amended, and any successor provision thereto,
(the "Code") exists (taking into account any other plan, arrangement or other
agreement under which the Executive is entitled to benefit in connection with
the Change in Control (as defined herein)). Such determination shall be made
after taking any reductions permitted pursuant to Section 280G of the Code and
the regulations thereunder. Any amount determined to be an excess parachute
payment after taking into account such reductions shall be hereafter referred to
as the "Initial Excess Parachute Payment." As soon as practicable after a
Change in Control, the Initial Excess Parachute Payment shall be determined. If
there exists such Initial Excess Parachute Payment then upon the Executive's
termination following a Change in Control, the Holding Company shall pay the
Executive, subject to applicable withholding requirements under the applicable
state or federal law an amount equal to:
(1) twenty (20) percent of the Initial Excess Parachute Payment (or
such other amount equal to the tax imposed under Section 4999 of
the Code); and
(2) such additional amount (tax allowance) as may be necessary to
compensate Executive for the payment by Executive of state and
federal income, employment and excise taxes on the payment
provided under clause (1) and on any payments under this clause
(2). In computing such tax allowance the payment to be made under
clause (1) shall be multiplied by the "gross up percentage"
("GUP"). The GUP shall be determined as follows:
Tax Rate
GUP = _________
1-Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the sum
of the highest marginal federal and state income and employment-
related tax rate, as well as any applicable excise tax rate,
applicable to the Executive in the year in which payment under
clause (1) is made.
(g) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is different from the Initial
Excess Parachute Payment (such different amount being hereafter referred to as
the "Determinative Excess Parachute Payment") then the Holding Company's
independent accountants shall determine the amount (the "Adjustment Amount") the
Holding
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Company must pay to the Executive in order to put the Executive in the
same position as the Executive would have been if the Initial Excess Parachute
Payment had been equal to the Determinative Excess Parachute Payment; PROVIDED
HOWEVER, that the Executive shall under no circumstances be required to return
any monies to the Holding Company by operation of this paragraph for any reason.
In determining the Adjustment Amount, the independent accountants shall take
into account any and all taxes (including any penalties and interest) paid by or
for Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical or mental
illness, he shall have been absent from his duties with the Holding Company on a
full-time basis for twelve (12) consecutive months, and within thirty (30) days
after written notice of potential termination is given he shall not have
returned to the full-time performance of his duties, the Holding Company may
terminate Executive's employment for "Disability."
(b) The Holding Company will pay Executive, as disability pay, a bi-weekly
payment equal to seventy-five percent (75%) of Executive's bi-weekly rate of
Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
employment of the Holding Company in the same capacity as he was employed prior
to his termination for Disability and pursuant to an employment agreement
between Executive and the Holding Company; (ii) Executive's full-time employment
by another employer; (iii) Executive attaining the normal age of retirement or
receiving benefits under the Association's Defined Benefit Plan; (iv)
Executive's death; or (v) Executive's eligibility to collect payments under the
disability provision of the Association's Defined Benefit Plan. The benefits
provided for by this paragraph shall be in addition to any payments made to
Executive under the terms of any disability income insurance for Executive
provided by the Association.
(c) The Holding Company will cause to be continued life, medical, dental
and disability coverage substantially identical to the coverage maintained by
the Holding Company for Executive prior to his termination for Disability. This
coverage and payments shall cease upon the earlier of (i) the date Executive
returns to the full-time employment of the Holding Company, in the same capacity
as he was employed prior to his termination for Disability and pursuant to an
employment agreement between Executive and the Holding Company; (ii) Executive's
full-time employment by another employer; (iii) Executive's attaining the normal
age of retirement or receiving benefits under the Association's Defined Benefit
Plan; (iv) the Executive's death; or (v) the Executive's eligibility to collect
payments under the disability provision of the Defined Benefit Plan.
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(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT.
Termination by the Holding Company of the Executive based on "Retirement"
shall mean termination in accordance with the Holding Company's or Association's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive
upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Holding Company or the Association and other plans to
which Executive is a party.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean intentional failure to perform
stated duties, personal dishonesty which results in loss to the Company or one
of its affiliates, willful violation of any law, rule, regulation (other than
traffic violations or similar offenses) or final cease and desist order which
results in substantial loss to the Company or one of its affiliates, or any
material breach of this Agreement. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Holding Company or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying termination for Cause and specifying
the particulars thereof in detail. The Executive shall not have the right to
receive compensation or other benefits for any period after termination for
Cause. Any stock options and related limited rights granted to Executive under
any stock option plan, or any unvested awards granted to Executive under any
other stock benefit plan of the Association, the Holding Company or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by or delivered to Executive at any time
subsequent to such Termination for Cause.
9. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the
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specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
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 (the
time for appeal there from having expired and no appeal having 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 reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, Base Salary) and continue him
as a participant in all compensation, benefit and insurance plans in which he
was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Holding Company as may reasonably be required by the Holding
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party.
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11. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
an Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Holding Company for a period of one (1)
year following such termination in any city, town or county in which the
Association and/or the Holding Company has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
date of such termination, except as agreed to pursuant to a resolution duly
adopted by the Board. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Association and/or the Holding Company. The parties hereto, recognizing that
irreparable injury will result to the Association and/or the Holding Company,
its business and property in the event of Executive's breach of this Subsection
11(a) agree that in the event of any such breach by Executive, the Association
and/or the Holding Company will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employers, employees and all
persons acting for or with Executive. Executive represents and admits that in
the event of the termination of his employment pursuant to Section 8 hereof,
Executive's experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Association and/or the Holding Company, and that the enforcement of a
remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Association
and/or the Holding Company from pursuing any other remedies available to the
Association and/or the Holding Company for such breach or threatened breach,
including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Holding Company. In the event of a breach or
threatened breach by the Executive of the provisions of this Section, the
Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or affiliates thereof, or
from rendering any services to any person, firm, corporation, other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
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be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 14
hereof.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any predecessor of the Holding Company and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
14. EFFECT OF ACTION UNDER ASSOCIATION AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
full compensation payments and benefits are paid to or received by Executive
under the Employment Agreement dated June 21, 1993, between Executive and the
Association, such compensation payments and benefits paid by the Association
will be subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
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(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois,
unless otherwise specified herein.
21. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
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EXHIBIT 10.2
WESTCO BANCORP, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
WHEREAS, Westco Bancorp, Inc. (the "Holding Company") entered into the
Westco Bancorp, Inc. Employment Agreement (the "Agreement") with Gregg P.
Goossens, ("Executive") as of June 21, 1993; and
WHEREAS, the Holding Company wishes to amend and restate the Agreement to
clarify the payments upon a Change in Control, as that term is used in Section 5
of the Agreement and make certain other amendments to the Agreement; and
WHEREAS, the Holding Company, in its best interest and the best interest of
the Executive, wishes to amend the treatment of excess parachute payments under
the Agreement.
NOW THEREFORE, upon mutual agreement of the parties to the Agreement as
evidenced by their signatures below, the Agreement is hereby amended and
restated, effective ______________, as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President of the Holding Company. The Executive shall render
administrative and management services to the Holding Company such as are
customarily performed by persons in a similar executive capacity. During said
period, Executive also agrees to serve, if elected, as an officer and director
of any subsidiary of the Holding Company. Failure to reelect Executive as
Executive Vice President of the Holding Company or failure to reelect Executive
as Executive Vice President and Chief Lending Officer of the First Federal
Savings and Loan Association (the "Association") without the consent of the
Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of this Agreement shall be deemed to have commenced as of
June 21, 1993, and shall continue for a period of twenty-four (24) full calendar
months thereafter. Commencing on the first anniversary date of this Agreement,
and continuing at each anniversary date thereafter, the Agreement shall renew
for an additional year such that the remaining term shall be two (2) years
unless written notice is provided to Executive at least ten (10) days and not
more than twenty (20) days prior to such anniversary date, that this Agreement
shall cease at the end of twelve (12) months following such anniversary date.
Prior to the written notice period for nonrenewal, the board of directors of the
Holding Company ("Board") will conduct a formal performance evaluation of the
Executive for purposes of determining whether to extend the Agreement, and the
results thereof shall be included in the minutes of the Board's meeting.
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In the event of a Change in Control as hereinafter defined in Section 5, this
Agreement shall automatically renew upon the date of the Change in Control such
that the remaining term of the Agreement shall be (2) years.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Holding Company and participation in community
and civic organizations; provided, however, that, with the approval of the
Board, as evidenced by a resolution of such Board, from time to time, Executive
may serve, or continue to serve, on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which, in such
Board's judgment, will not present any conflict of interest with the Holding
Company, or materially affect the performance of Executive's duties pursuant to
this Agreement.
(c) In the event that Executive's duties and responsibilities with respect
to the Association are temporarily or permanently terminated pursuant to
Sections 8 or 16 of the Employment Agreement dated June 21, 1993, between
Executive and the Association ("Association Agreement") and the course of
conduct upon which such termination is based would not constitute grounds for
Termination for Cause under Section 8 of this Agreement then Executive shall, to
the extent practicable, assume such duties and responsibilities formerly
performed at the Association as part of his duties and responsibilities as
Executive Vice President of the Holding Company. Nothing in this provision
shall be interpreted as restricting the Holding Company's right to remove
Executive for Cause in accordance with Section 8 of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Holding
Company shall pay Executive as compensation a salary of not less than $82,450.00
per year ("Base Salary"). Such Base Salary shall be payable bi-weekly. During
the period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Holding Company
shall provide Executive at no cost to Executive with all such other benefits as
are provided uniformly to permanent full-time employees of the Holding Company
and the Association.
(b) The Holding Company will provide Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of
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this Agreement, and the Holding Company will not, without Executive's prior
written consent, make any changes in such plans, arrangements or perquisites
which would adversely affect Executive's rights or benefits thereunder. Without
limiting the generality of the foregoing provisions of this Subsection (b),
Executive will be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, health-and-
accident plan, medical coverage or any other employee benefit plan or
arrangement made available by the Holding Company in the future to its senior
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Executive will be entitled to incentive compensation and bonuses
as provided in any plan of the Holding Company in which Executive is eligible to
participate. Nothing paid to the Executive under any such plan or arrangement
will be deemed to be in lieu of other compensation to which the Executive is
entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable travel and other reasonable expenses incurred by Executive performing
his obligations under this Agreement and may provide such additional
compensation in such form and such amounts as the Board may from time to time
determine.
(d) In the event that Executive assumes additional duties and
responsibilities pursuant to Section 2(c) of this Agreement by reason of one of
the circumstances contained in Section 2(c) of this Agreement, and the Executive
receives or will receive less than the full amount of compensation and benefits
formerly entitled to him under the Association Agreement, the Holding Company
shall assume the obligation to provide Executive with his compensation and
benefits in accordance with the Association Agreement less any compensation and
benefits received from the Association, subject to the terms and conditions of
this Agreement including the termination for cause provisions in Section 8.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Section 8.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than a Change in Control, as defined in Section 5(a)
hereof, disability, as defined in Section 6(a) hereof, retirement, as defined in
Section 7 hereof, or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Holding Company's employ, upon any (A) failure to elect or
reelect or to appoint or reappoint Executive as Executive
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Vice President, (B) unless consented to by the Executive, a material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal place of employment by
more than 30 miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement, (D) liquidation or
dissolution of the Association or Holding Company or (E) breach of this
Agreement by the Holding Company. Upon the occurrence of any event described in
clauses (A), (B), (C), (D) or (E), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days written notice given within a reasonable period of
time not to exceed, except in case of a continuing breach, four calendar months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the payments due
for the remaining term of the Agreement including Base Salary, bonuses and any
other cash or deferred compensation paid, or to be paid, to the Executive, and
the amount of any benefits received pursuant to any employee benefit plans
maintained by the Association or the Holding Company during the term of the
Agreement. At the election of the Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum or paid monthly during the remaining term of the agreement
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement. Such payments shall not be reduced in the event the
Executive obtains other employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Holding Company
will cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association or the
Holding Company for Executive prior to his termination. Such coverage shall
cease upon the expiration of the remaining term of this Agreement.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
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5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Association shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the Rules and Regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 20% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof 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 Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board, or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Holding Company or
similar transaction occurs or is effectuated in which the Association or Holding
Company is not the resulting entity; provided, however, that such an event
listed above will be deemed to have occurred or to have been effectuated upon
the receipt of all required federal regulatory approvals not including the lapse
of any statutory waiting periods, or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Association with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Association or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Association or Holding
Company then outstanding.
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(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e), and (f) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement
(regardless of whether such termination results from his dismissal or his
resignation at any time during the term of this Agreement following any
demotion, loss of title, office or significant authority or responsibility,
reduction in the annual compensation or benefits or relocation of his principal
place of employment by more than 30 miles from its location immediately prior to
the Change in Control), unless such termination is because of his death,
termination for Cause or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Holding Company shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or both, a sum equal
to the greater of the payments due for the remaining term of the Agreement or
two (2) times the average of the three (3) preceding years' compensation,
including, but not limited to, Base Salary, bonuses, any other cash or deferred
compensation paid to, or accrued on behalf of the Executive during such years,
any amounts taken into income by the Executive with respect to the exercise of
stock option(s) or the vesting of restricted stock (including stock transferred
to the Executive under the Association Recognition and Retention Plan), and the
amount of any contributions made to any employee benefit plans, on behalf of the
Executive, maintained by the Association or the Holding Company during such
years, except to the extent such benefits are otherwise payable to the Executive
under such plan solely as a result of a Change in Control. At the election of
the Executive, which election is to be made within thirty (30) days of the Date
of Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the twenty-four (24) months
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Holding Company will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of twenty-four (24)
months.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
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(f) Notwithstanding the preceding paragraphs of this Section 5, in each
calendar year the Executive is entitled to receive payments or benefits under
this Agreement the independent accountants of the Holding Company shall
determine if an excess parachute payment (as defined in Section 4999) of the
Internal Revenue Code of 1986, as amended, and any successor provision thereto,
(the "Code") exists (taking into account any other plan, arrangement or other
agreement under which the Executive is entitled to benefit in connection with
the Change in Control (as defined herein)). Such determination shall be made
after taking any reductions permitted pursuant to Section 280G of the Code and
the regulations thereunder. Any amount determined to be an excess parachute
payment after taking into account such reductions shall be hereafter referred to
as the "Initial Excess Parachute Payment." As soon as practicable after a Change
in Control, the Initial Excess Parachute Payment shall be determined. If there
exists such Initial Excess Parachute Payment then upon the Executive's
termination following a Change in Control, the Holding Company shall pay the
Executive, subject to applicable withholding requirements under the applicable
state or federal law an amount equal to:
(1) twenty (20) percent of the Initial Excess Parachute Payment (or
such other amount equal to the tax imposed under Section 4999 of
the Code); and
(2) such additional amount (tax allowance) as may be necessary to
compensate Executive for the payment by Executive of state and
federal income, employment and excise taxes on the payment
provided under clause (1) and on any payments under this clause
(2). In computing such tax allowance the payment to be made
under clause (1) shall be multiplied by the "gross up
percentage" ("GUP"). The GUP shall be determined as follows:
Tax Rate
GUP = ----------
1-Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the
sum of the highest marginal federal and state income and
employment-related tax rate, as well as any applicable excise
tax rate, applicable to the Executive in the year in which
payment under clause (1) is made.
(g) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is different from the Initial
Excess Parachute Payment (such different amount being hereafter referred to as
the "Determinative Excess Parachute Payment") then the Holding Company's
independent accountants shall determine the amount (the "Adjustment Amount") the
Holding
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Company must pay to the Executive in order to put the Executive in the same
position as the Executive would have been if the Initial Excess Parachute
Payment had been equal to the Determinative Excess Parachute Payment; PROVIDED
HOWEVER, that the Executive shall under no circumstances be required to return
any monies to the Holding Company by operation of this paragraph for any reason.
In determining the Adjustment Amount, the independent accountants shall take
into account any and all taxes (including any penalties and interest) paid by or
for Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical or mental
illness, he shall have been absent from his duties with the Holding Company on a
full-time basis for twelve (12) consecutive months, and within thirty (30) days
after written notice of potential termination is given he shall not have
returned to the full-time performance of his duties, the Holding Company may
terminate Executive's employment for "Disability."
(b) The Holding Company will pay Executive, as disability pay, a bi-weekly
payment equal to seventy-five percent (75%) of Executive's bi-weekly rate of
Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
employment of the Holding Company in the same capacity as he was employed prior
to his termination for Disability and pursuant to an employment agreement
between Executive and the Holding Company; (ii) Executive's full-time employment
by another employer; (iii) Executive attaining the normal age of retirement or
receiving benefits under the Association's Defined Benefit Plan; (iv)
Executive's death; or (v) Executive's eligibility to collect payments under the
disability provision of the Association's Defined Benefit Plan. The benefits
provided for by this paragraph shall be in addition to any payments made to
Executive under the terms of any disability income insurance for Executive
provided by the Association.
(c) The Holding Company will cause to be continued life, medical, dental
and disability coverage substantially identical to the coverage maintained by
the Holding Company for Executive prior to his termination for Disability. This
coverage and payments shall cease upon the earlier of (i) the date Executive
returns to the full-time employment of the Holding Company, in the same capacity
as he was employed prior to his termination for Disability and pursuant to an
employment agreement between Executive and the Holding Company; (ii) Executive's
full-time employment by another employer; (iii) Executive's attaining the normal
age of retirement or receiving benefits under the Association's Defined Benefit
Plan; (iv) the Executive's death; or (v) the Executive's eligibility to collect
payments under the disability provision of the Defined Benefit Plan.
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(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT.
Termination by the Holding Company of the Executive based on "Retirement"
shall mean termination in accordance with the Holding Company's or Association's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive
upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Holding Company or the Association and other plans to
which Executive is a party.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean intentional failure to perform
stated duties, personal dishonesty which results in loss to the Company or one
of its affiliates, willful violation of any law, rule, regulation (other than
traffic violations or similar offenses) or final cease and desist order which
results in substantial loss to the Company or one of its affiliates, or any
material breach of this Agreement. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Holding Company or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying termination for Cause and specifying
the particulars thereof in detail. The Executive shall not have the right to
receive compensation or other benefits for any period after termination for
Cause. Any stock options and related limited rights granted to Executive under
any stock option plan, or any unvested awards granted to Executive under any
other stock benefit plan of the Association, the Holding Company or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by or delivered to Executive at any time
subsequent to such Termination for Cause.
9. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the
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specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
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 (the
time for appeal there from having expired and no appeal having 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 reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, Base Salary) and continue him
as a participant in all compensation, benefit and insurance plans in which he
was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Holding Company as may reasonably be required by the Holding
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party.
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11. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
an Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Holding Company for a period of one (1)
year following such termination in any city, town or county in which the
Association and/or the Holding Company has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
date of such termination, except as agreed to pursuant to a resolution duly
adopted by the Board. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Association and/or the Holding Company. The parties hereto, recognizing that
irreparable injury will result to the Association and/or the Holding Company,
its business and property in the event of Executive's breach of this Subsection
11(a) agree that in the event of any such breach by Executive, the Association
and/or the Holding Company will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employers, employees and all
persons acting for or with Executive. Executive represents and admits that in
the event of the termination of his employment pursuant to Section 8 hereof,
Executive's experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Association and/or the Holding Company, and that the enforcement of a
remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Association
and/or the Holding Company from pursuing any other remedies available to the
Association and/or the Holding Company for such breach or threatened breach,
including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Holding Company. In the event of a breach or
threatened breach by the Executive of the provisions of this Section, the
Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or affiliates thereof, or
from rendering any services to any person, firm, corporation, other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
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be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 14
hereof. The Holding Company may use insurance proceeds especially obtained
therefore as partial payment in the event of disability.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
14. EFFECT OF ACTION UNDER ASSOCIATION AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
full compensation payments and benefits are paid to or received by Executive
under the Employment Agreement dated June 21, 1993, between Executive and the
Association, such compensation payments and benefits paid by the Association
will be subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
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16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois,
unless otherwise specified herein.
21. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
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EXHIBIT 10.3
WESTCO BANCORP, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
WHEREAS, Westco Bancorp, Inc. (the "Holding Company") entered into the
Westco Bancorp, Inc. Employment Agreement (the "Agreement") with Richard A.
Brechlin, ("Executive") as of June 21, 1993; and
WHEREAS, the Holding Company wishes to amend and restate the Agreement to
clarify the payments upon a Change in Control ,as that term is used in Section 5
of the Agreement and make certain other amendments to the Agreement; and
WHEREAS, the Holding Company, in its best interest and the best interest of
the Executive, wishes to amend the treatment of excess parachute payments under
the Agreement and make certain other amendments to the Agreement.
NOW THEREFORE, upon mutual agreement of the parties to the Agreement as
evidenced by their signatures below, the Agreement is hereby amended and
restated, effective ______________, as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President and Treasurer of the Holding Company. The Executive
shall render administrative and management services to the Holding Company such
as are customarily performed by persons in a similar executive capacity. During
said period, Executive also agrees to serve, if elected, as an officer and
director of any subsidiary of the Holding Company. Failure to reelect Executive
as Executive Vice President and Treasurer of the Holding Company or failure to
reelect Executive as Executive Vice President and Chief Financial Officer of the
First Federal Savings and Loan Association (the "Association") without the
consent of the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of this Agreement shall be deemed to have commenced as of
June 21, 1993 and shall continue for a period of twenty-four (24) full calendar
months thereafter. Commencing on the first anniversary date of this Agreement,
and continuing at each anniversary date thereafter, the Agreement shall renew
for an additional year such that the remaining term shall be two (2) years
unless written notice is provided to Executive at least ten (10) days and not
more than twenty (20) days prior to such anniversary date, that this Agreement
shall cease at the end of twelve (12) months following such anniversary date.
Prior to the written notice period for nonrenewal, the board of directors of the
Holding Company ("Board") will conduct a formal
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performance evaluation of the Executive for purposes of determining whether to
extend the Agreement, and the results thereof shall be included in the minutes
of the Board's meeting. In the event of a Change in Control as hereinafter
defined in Section 5, this Agreement shall automatically renew upon the date of
the Change in Control such that the remaining term of the Agreement shall be two
(2) years.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Holding Company and participation in community
and civic organizations; provided, however, that, with the approval of the
Board, as evidenced by a resolution of such Board, from time to time, Executive
may serve, or continue to serve, on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which, in such
Board's judgment, will not present any conflict of interest with the Holding
Company, or materially affect the performance of Executive's duties pursuant to
this Agreement.
(c) In the event that Executive's duties and responsibilities with respect
to the Association are temporarily or permanently terminated pursuant to
Sections 8 or 16 of the Employment Agreement dated June 21, 1993, between
Executive and the Association ("Association Agreement") and the course of
conduct upon which such termination is based would not constitute grounds for
Termination for Cause under Section 8 of this Agreement then Executive shall, to
the extent practicable, assume such duties and responsibilities formerly
performed at the Association as part of his duties and responsibilities as
Executive Vice President and Treasurer of the Holding Company. Nothing in this
provision shall be interpreted as restricting the Holding Company's right to
remove Executive for Cause in accordance with Section 8 of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Holding
Company shall pay Executive as compensation a salary of not less than $97,250.00
per year ("Base Salary"). Such Base Salary shall be payable bi-weekly. During
the period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Holding Company
shall provide Executive at no cost to Executive with all such other benefits as
are provided uniformly to permanent full-time employees of the Holding Company
and the Association.
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(b) The Holding Company will provide Executive with employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Holding Company will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive will be entitled to participate in
or receive benefits under any employee benefit plans including, but not limited
to, retirement plans, supplemental retirement plans, pension plans, profit-
sharing plans, health-and-accident plan, medical coverage or any other employee
benefit plan or arrangement made available by the Holding Company in the future
to its senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company in which Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable travel and other reasonable expenses incurred by Executive performing
his obligations under this Agreement and may provide such additional
compensation in such form and such amounts as the Board may from time to time
determine.
(d) In the event that Executive assumes additional duties and
responsibilities pursuant to Section 2(c) of this Agreement by reason of one of
the circumstances contained in Section 2(c) of this Agreement, and the Executive
receives or will receive less than the full amount of compensation and benefits
formerly entitled to him under the Association Agreement, the Holding Company
shall assume the obligation to provide Executive with his compensation and
benefits in accordance with the Association Agreement less any compensation and
benefits received from the Association, subject to the terms and conditions of
this Agreement including the termination for cause provisions in Section 8.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Section 8.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than a Change in Control, as defined in Section 5(a)
hereof,
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disability, as defined in Section 6(a) hereof, retirement, as defined in
Section 7 hereof, or for Cause, as defined in Section 8 hereof; (ii) Executive's
resignation from the Holding Company's employ, upon any (A) failure to elect or
reelect or to appoint or reappoint Executive as Executive Vice President and
Treasurer, (B) unless consented to by the Executive, a material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal place of employment by
more than 30 miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement, (D) liquidation or
dissolution of the Association or Holding Company or (E) breach of this
Agreement by the Holding Company. Upon the occurrence of any event described in
clauses (A), (B), (C), (D) or (E), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days written notice given within a reasonable period of
time not to exceed, except in case of a continuing breach, four calendar months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, the Holding Company
shall be obligated to pay Executive, or, in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the payments due
for the remaining term of the Agreement including Base Salary, bonuses and any
other cash or deferred compensation paid, or to be paid, to the Executive, and
the amount of any benefits received pursuant to any employee benefit plans
maintained by the Association or the Holding Company during the term of the
Agreement. At the election of the Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum or paid monthly during the remaining term of the agreement
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement. Such payments shall not be reduced in the event the
Executive obtains other employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Holding Company
will cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association or the
Holding Company for Executive prior to his termination. Such coverage shall
cease upon the expiration of the remaining term of this Agreement.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
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5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Association shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the Rules and Regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 20% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof 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 Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board, or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Holding Company or
similar transaction occurs or is effectuated in which the Association or Holding
Company is not the resulting entity; provided, however, that such an event
listed above will be deemed to have occurred or to have been effectuated upon
the receipt of all required federal regulatory approvals not including the lapse
of any statutory waiting periods, or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Association with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Association or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Association or Holding
Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive
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shall be entitled to the benefits provided in paragraphs (c), (d), (e), and (f)
of this Section 5 upon his subsequent termination of employment at any time
during the term of this Agreement (regardless of whether such termination
results from his dismissal or his resignation at any time during the term of
this Agreement following any demotion, loss of title, office or significant
authority or responsibility, reduction in the annual compensation or benefits or
relocation of his principal place of employment by more than 30 miles from its
location immediately prior to the Change in Control), unless such termination is
because of his death, termination for Cause or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Holding Company shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or both, a sum equal
to the greater of the payments due for the remaining term of the Agreement or
two (2) times the average of the three (3) preceding years' compensation,
including, but not limited to, Base Salary, bonuses, any other cash or deferred
compensation paid to, or accrued on behalf of the Executive during such years,
any amounts taken into income by the Executive with respect to the exercise of
stock option(s) or the vesting of restricted stock (including stock transferred
to the Executive under the Association Recognition and Retention Plan), and the
amount of any contributions made to any employee benefit plans, on behalf of the
Executive, maintained by the Association or the Holding Company during such
years, except to the extent such benefits are otherwise payable to the Executive
under such plan solely as a result of a Change in Control. At the election of
the Executive, which election is to be made within thirty (30) days of the Date
of Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the twenty-four (24) months
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Holding Company will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of twenty-four (24)
months.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
(f) Notwithstanding the preceding paragraphs of this Section 5, in each
calendar year the Executive is entitled to receive payments or benefits under
this Agreement the independent
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accountants of the Holding Company shall determine if an excess parachute
payment (as defined in Section 4999) of the Internal Revenue Code of 1986, as
amended, and any successor provision thereto, (the "Code") exists (taking into
account any other plan, arrangement or other agreement under which the Executive
is entitled to benefit in connection with the Change in Control (as defined
herein)). Such determination shall be made after taking any reductions permitted
pursuant to Section 280G of the Code and the regulations thereunder. Any amount
determined to be an excess parachute payment after taking into account such
reductions shall be hereafter referred to as the "Initial Excess Parachute
Payment." As soon as practicable after a Change in Control, the Initial Excess
Parachute Payment shall be determined. If there exists such Initial Excess
Parachute Payment then upon the Executive's termination following a Change in
Control, the Holding Company shall pay the Executive, subject to applicable
withholding requirements under the applicable state or federal law an amount
equal to:
(1) twenty (20) percent of the Initial Excess Parachute Payment (or
such other amount equal to the tax imposed under Section 4999 of
the Code); and
(2) such additional amount (tax allowance) as may be necessary to
compensate Executive for the payment by Executive of state and
federal income, employment and excise taxes on the payment
provided under clause (1) and on any payments under this clause
(2). In computing such tax allowance the payment to be made under
clause (1) shall be multiplied by the "gross up percentage"
("GUP"). The GUP shall be determined as follows:
Tax Rate
GUP = ---------
1-Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the sum
of the highest marginal federal and state income and employment-
related tax rate, as well as any applicable excise tax rate,
applicable to the Executive in the year in which payment under
clause (1) is made.
(g) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is different from the Initial
Excess Parachute Payment (such different amount being hereafter referred to as
the "Determinative Excess Parachute Payment") then the Holding Company's
independent accountants shall determine the amount (the "Adjustment Amount") the
Holding Company must pay to the Executive in order to put the Executive in the
same position as the Executive would have been if the Initial Excess Parachute
Payment had been equal to the
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Determinative Excess Parachute Payment; PROVIDED HOWEVER, that the Executive
shall under no circumstances be required to return any monies to the Holding
Company by operation of this paragraph for any reason. In determining the
Adjustment Amount, the independent accountants shall take into account any and
all taxes (including any penalties and interest) paid by or for Executive or
refunded to Executive or for Executive's benefit. As soon as practicable after
the Adjustment Amount has been so determined, the Holding Company shall pay the
Adjustment Amount to Executive.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical or mental
illness, he shall have been absent from his duties with the Holding Company on a
full-time basis for twelve (12) consecutive months, and within thirty (30) days
after written notice of potential termination is given he shall not have
returned to the full-time performance of his duties, the Holding Company may
terminate Executive's employment for "Disability."
(b) The Holding Company will pay Executive, as disability pay, a bi-weekly
payment equal to seventy-five percent (75%) of Executive's bi-weekly rate of
Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
employment of the Holding Company in the same capacity as he was employed prior
to his termination for Disability and pursuant to an employment agreement
between Executive and the Holding Company; (ii) Executive's full-time employment
by another employer; (iii) Executive attaining the normal age of retirement or
receiving benefits under the Association's Defined Benefit Plan; (iv)
Executive's death; or (v) Executive's eligibility to collect payments under the
disability provision of the Association's Defined Benefit Plan. The benefits
provided for by this paragraph shall be in addition to any payments made to
Executive under the terms of any disability income insurance for Executive
provided by the Association.
(c) The Holding Company will cause to be continued life, medical, dental
and disability coverage substantially identical to the coverage maintained by
the Holding Company for Executive prior to his termination for Disability. This
coverage and payments shall cease upon the earlier of (i) the date Executive
returns to the full-time employment of the Holding Company, in the same capacity
as he was employed prior to his termination for Disability and pursuant to an
employment agreement between Executive and the Holding Company; (ii) Executive's
full-time employment by another employer; (iii) Executive's attaining the normal
age of retirement or receiving benefits under the Association's Defined Benefit
Plan; (iv) the Executive's death; or (v) the Executive's eligibility to collect
payments under the disability provision of the Defined Benefit Plan.
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(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT.
Termination by the Holding Company of the Executive based on "Retirement"
shall mean termination in accordance with the Holding Company's or Association's
retirement policy or in accordance with any retirement arrangement established
with Executive's consent with respect to him. Upon termination of Executive
upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Holding Company or the Association and other plans to
which Executive is a party.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean intentional failure to perform
stated duties, personal dishonesty which results in loss to the Company or one
of its affiliates, willful violation of any law, rule, regulation (other than
traffic violations or similar offenses) or final cease and desist order which
results in substantial loss to the Company or one of its affiliates, or any
material breach of this Agreement. For purposes of this Section, no act, or the
failure to act, on Executive's part shall be "willful" unless done, or omitted
to be done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Holding Company or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying termination for Cause and specifying
the particulars thereof in detail. The Executive shall not have the right to
receive compensation or other benefits for any period after termination for
Cause. Any stock options and related limited rights granted to Executive under
any stock option plan, or any unvested awards granted to Executive under any
other stock benefit plan of the Association, the Holding Company or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by or delivered to Executive at any time
subsequent to such Termination for Cause.
9. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this
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Agreement, a "Notice of Termination" shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
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 (the
time for appeal there from having expired and no appeal having 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 reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, Base Salary) and continue him
as a participant in all compensation, benefit and insurance plans in which he
was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Holding Company as may reasonably be required by the Holding
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party.
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11. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Holding Company for a period of one (1)
year following such termination in any city, town or county in which the
Association and/or the Holding Company has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
date of such termination, except as agreed to pursuant to a resolution duly
adopted by the Board. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Association and/or the Holding Company. The parties hereto, recognizing
that irreparable injury will result to the Association and/or the Holding
Company, its business and property in the event of Executive's breach of this
Subsection 11(a) agree that in the event of any such breach by Executive, the
Association and/or the Holding Company will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, servants, employers,
employees and all persons acting for or with Executive. Executive represents
and admits that in the event of the termination of his employment pursuant to
Section 8 hereof, Executive's experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Association and/or the Holding Company, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood. Nothing herein will be construed as prohibiting the
Association and/or the Holding Company from pursuing any other remedies
available to the Association and/or the Holding Company for such breach or
threatened breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Holding Company. In the event of a breach or
threatened breach by the Executive of the provisions of this Section, the
Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or affiliates thereof, or
from rendering any services to any person, firm, corporation, other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
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be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 14
hereof.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
14. EFFECT OF ACTION UNDER ASSOCIATION AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
full compensation payments and benefits are paid to or received by Executive
under the Employment Agreement dated June 21, 1993, between Executive and the
Association, such compensation payments and benefits paid by the Association
will be subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement.
15. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
16. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
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(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois,
unless otherwise specified herein.
21. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
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Exhibit 10.4
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
OF WESTCHESTER
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
WHEREAS, First Federal Savings and Loan Association of Westchester (the
"Association") and Westcorp Bancorp Inc., a corporation organized under the laws
of the State of Delaware and which is the holding company for the Association
(the "Holding Company"), entered into the First Federal Savings and Loan
Association of Westchester Employment Agreement (the "Agreement") with David C.
Burba ("Executive") as of June 21, 1993; and
WHEREAS, the Association wishes to amend and restate the Agreement to
clarify the payments upon a Change in Control, as that term is used in Section 5
of the Agreement and make certain other amendments to the Agreement; and
NOW THEREFORE, upon mutual agreement of the parties to the Agreement as
evidenced by their signatures below, the Agreement is hereby amended and
restated, effective ______________, as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Association. The Executive shall
render administrative and management services to the Association such as are
customarily performed by persons situated in a similar executive capacity.
Failure to reelect Executive as President and Chief Executive Officer or failure
to nominate Executive as a director of the Association without the consent of
the Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of June 21, 1993, and shall continue for a period of
thirty-six (36) full calendar months thereafter (the "initial term").
Commencing on the first anniversary date of this Agreement, and continuing on
each anniversary thereafter, the disinterested members of the board of directors
of the Association ("Board") may extend the Agreement an additional year such
that the remaining term of the Agreement shall be three (3) years unless the
Executive elects not to extend the term of this Agreement by giving written
notice in accordance with Section 9 of this Agreement. The Board will review the
Agreement and the Executive's performance annually for purposes of determining
whether to extend the Agreement, and the results thereof shall be included in
the minutes of the Board's meeting. In the event of a Change in Control as
hereinafter defined in Section 5, this Agreement shall automatically renew upon
the date of the Change in Control such that the remaining term of the Agreement
shall be three (3) years.
<PAGE>
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Association, or materially
affect the performance of Executive's duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Association
shall pay Executive as compensation a salary of not less than $181,700.00 per
year ("Base Salary"). Such Base Salary shall be payable bi-weekly. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to permanent full-time employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive will be entitled to participate in
or receive benefits under any employee benefit plans including but not limited
to, retirement plans, supplemental retirement plans, pension plans, profit-
sharing plans, health-and-accident plan, medical coverage or any other employee
benefit plan or arrangement made available by the Association in the future to
its senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Association in which Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other reasonable
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expenses incurred by Executive performing his obligations under this Agreement
and may provide such additional compensation in such form and such amounts as
the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 8 and 16.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association or the Holding Company of Executive's full-time
employment hereunder for any reason other than a Change in Control, as defined
in Section 5(a) hereof, disability, as defined in Section 6(a) hereof,
retirement, as defined in Section 7 hereof, or for Cause, as defined in Section
8 hereof; (ii) Executive's resignation from the Association's employ, upon any
(A) failure to elect or reelect or to appoint or reappoint Executive as
President and Chief Executive Officer or failure to nominate Executive as a
director, unless consented to by the Executive, (B) material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal place of employment by
more than 30 miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement, (D) liquidation or
dissolution of the Association or Holding Company, or (E) breach of this
Agreement by the Association. Upon the occurrence of any event described in
clauses (A), (B), (C), (D) or (E), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days written notice given within a reasonable period of
time not to exceed, except in case of a continuing breach, four calendar months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 9, the Association shall be obligated to pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due for the remaining term of the
Agreement including Base Salary, bonuses and any other cash or deferred
compensation paid, or to be paid, to the Executive, and the amount of any
benefits received pursuant to any employee benefit plans maintained by the
Association during such years; provided, however, that if the Association is not
-------- -------
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
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requirements, such payments shall be deferred until such time as the Association
is in capital compliance. At the election of the Executive, which election is
to be made within thirty (30) days of the Executive's Date of Termination, such
payments shall be made in a lump sum or paid monthly during the remaining term
of the agreement following the Executive's termination. In the event that no
election is made, payment to the Executive will be made on a monthly basis
during the remaining term of the agreement. Such payments shall not be reduced
in the event the Executive obtains other employment following termination of
employment.
(c) Upon the occurrence of an Event of Termination, the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Association shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the Rules and Regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 20% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof 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 Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are
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Incumbent Board members, shall be, for purposes of this clause (B), considered
as though he were a member of the Incumbent Board, or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Association or the Holding Company or similar transaction occurs
or is effectuated in which the Association or Holding Company is not the
resulting entity; provided, however, that such an event listed above will be
deemed to have occurred or to have been effectuated upon the receipt of all
required federal regulatory approvals not including the lapse of any statutory
waiting periods, or (D) a proxy statement has been distributed soliciting
proxies from stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or
Association with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Association or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Association or Holding
Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e) and (f) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement
(regardless of whether such termination results from his dismissal or his
resignation at any time during the term of this Agreement following any
demotion, loss of title, office or significant reduction in authority or
responsibility, significant reduction in annual compensation or benefits or
relocation of his principal place of employment by more than 30 miles from its
location immediately prior to the Change in Control), unless such termination is
because of his death, termination for Cause or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to the
greater of the payments due for the remaining term of the Agreement or three (3)
times the average of the three (3) preceding years' compensation, including, but
not limited to, Base Salary, bonuses, any other cash or deferred compensation
paid to, or accrued on behalf of the Executive during such years, any amounts
taken into income by the Executive with respect to the exercise of stock
option(s) or the vesting of restricted stock (including stock transferred to the
Executive under the Association Recognition and Retention Plan), and the amount
of any contributions made to any employee benefit plans, on behalf of the
Executive, maintained by the Association or the Holding Company during such
years, except to the extent such benefits are otherwise payable to the Executive
under such plan solely as a result of a Change in Control. At the election of
the Executive, which election is to be made within thirty (30) days of the Date
of Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the thirty-six (36) months
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following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement.
(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of thirty-six (36) months.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
(f) Notwithstanding the preceding paragraphs of this Section 5, in the
event that:
(i) the aggregate payments or benefits to be made or afforded to
Executive under said paragraph (the "Termination Benefits") would be
deemed to include an "excess parachute payment" under Section 280G of
the Internal Revenue Code of 1986 (the "Code") or any successor
thereto (taking into account any other plan, arrangement or other
agreement under which the Executive is entitled to benefit in
connection with the Change in Control (as defined herein)), and
(ii) if such Termination Benefits were reduced to an amount (the "Non-
Triggering Amount"), the value of which is one dollar ($1.00) less
than an amount equal to three (3) times Executive's "base amount", as
determined in accordance with said Section 280G, and the Non-
Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus the amount of tax
required to be paid by Executive thereon by Section 4999 of the Code,
then the Termination Benefits shall be reduced to the Non-Triggering
Amount. The allocation of the reduction required by the preceding
paragraphs of this Section 5 shall be determined by the Executive.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical or mental
illness, he shall have been absent from his duties with the Association on a
full-time basis for twelve (12) consecutive months, and within thirty (30) days
after written notice of potential termination is given he shall not have
returned to the full-time performance of his duties, the Association or Holding
Company may terminate Executive's employment for "Disability." For purposes of
this Agreement, any incapacity to physical or mental illness causing the
Executive to be absent from his duties for less than twelve consecutive months
shall be a "Temporary Disability".
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(b) The Association will pay Executive, as disability pay, a bi-weekly
payment equal to seventy-five percent (75%) of Executive's bi-weekly rate of
Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
employment of the Association in the same capacity as he was employed prior to
his termination for Disability and pursuant to an employment agreement between
Executive and the Association; (ii) Executive's full-time employment by another
employer; (iii) Executive attaining the normal age of retirement or receiving
benefits under the Association's Defined Benefit Plan; (iv) Executive's death;
or (v) Executive's eligibility to collect payments under the disability
provision of the Defined Benefit Plan. The benefits provided for by this
paragraph shall be in addition to any payments made to Executive under the terms
of any disability income insurance for Executive provided by the Association.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This
coverage shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Association, in the same capacity as he was employed
prior to his termination for Disability and pursuant to an employment agreement
between Executive and the Association; (ii) Executive's full-time employment by
another employer; (iii) Executive's attaining the normal age of retirement or
receiving benefits under the Association's Defined Benefit Plan; (iv) the
Executive's death; or (v) the Executive's eligibility to collect payments under
the disability provision of the Defined Benefit Plan.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT.
Termination by the Association of the Executive based on "Retirement" shall
mean termination in accordance with the Association's retirement policy or in
accordance with any retirement arrangement established with Executive's consent
with respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Association
and other plans to which Executive is a party.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of the
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, regulation (other than traffic
violations or similar offenses) or final cease-and-desist order or any material
breach of this Agreement. In determining incompetence, the acts or omissions
shall be measured against standards generally prevailing in the savings
institutions industry. For
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purposes of this section, no act or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interests
of the Association and its affiliates. Notwithstanding the foregoing, Executive
shall not be deemed to have been Terminated for Cause unless and until there
shall have been delivered to him a Notice of Termination which shall include a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the members of the Board at a meeting of the Board called and held
for that purpose (after reasonable notice to Executive and an opportunity for
him, together with counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. Any stock options and related limited
rights granted to Executive under any stock option plan or unvested awards
granted to Executive under any other stock benefit plan of the Association, the
Holding Company or any subsidiary or affiliate thereof, shall become null and
void effective upon Executive's receipt of Notice of Termination for Cause
pursuant to Section 9 hereof, and shall not be exercisable by or delivered to
Executive at any time subsequent to such Termination for Cause.
9. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall be
immediate).
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Association as may reasonably be required by the Association
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.
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11. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
an Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Association and/or the Holding Company for a period of one (1)
year following such termination in any city, town or county in which the
Association and/or the Holding Company has an office or has filed an application
for regulatory approval to establish an office, determined as of the effective
date of such termination, except as agreed to pursuant to a resolution duly
adopted by the Board. Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Association and/or the Holding Company. The parties hereto, recognizing
that irreparable injury will result to the Association and/or the Holding
Company, its business and property in the event of Executive's breach of this
Subsection 11(a) agree that in the event of any such breach by Executive, the
Association and/or the Holding Company will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, servants, employers,
employees and all persons acting for or with Executive. Executive represents
and admits that in the event of the termination of his employment pursuant to
Section 8 hereof, Executive's experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Association and/or the Holding Company, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood. Nothing herein will be construed as prohibiting the
Association and/or the Holding Company from pursuing any other remedies
available to the Association and/or the Holding Company for such breach or
threatened breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section 11, the Association
will be entitled to an injunction restraining Executive from disclosing, in
whole or in part, the knowledge of the past, present, planned or considered
business activities of the Association or affiliates thereof, or from rendering
any services to any person, firm, corporation, other entity to whom such
knowledge, in whole or in part, has been disclosed or is threatened to be
disclosed. Nothing herein will be construed as prohibiting the Association from
pursuing any other remedies available to the
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Association for such breach or threatened breach, including the recovery of
damages from Executive.
12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Holding Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Association are not timely paid or provided by the Association, such amounts and
benefits shall be paid or provided by the Holding Company.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Association and their respective successors and assigns.
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
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16. REQUIRED PROVISIONS.
(a) The Association may terminate the Executive's employment at any time,
but any termination by the Association, other than Termination for Cause, shall
not prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 8
hereinabove.
(b) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Association's affairs by a
notice served under Section 8(e)(3) (12 USC 1818(e)(3)) or 8(g)(1) (12 USC
1818(g)(1)) of the Federal Deposit Insurance Act, the Association's obligations
under this contract shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion (i) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were suspended.
(c) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) (12 USC (S)1818(e)(4)) or 8(g)(1) (12 USC (S)1818(g)(1))
of the Federal Deposit Insurance Act, all obligations of the Association under
this contract shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
(d) If the Association is in default as defined in Section 3(x)(1) (12 USC
1813(x)(1)) of the Federal Deposit Insurance Act, all obligations of the
Association under this contract shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Association under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution, (i) by the Federal
Deposit Insurance Corporation, at the time FDIC enters into an agreement to
provide assistance to or on behalf of the Association under the authority
contained in Section 13(c) (12 USC (S)1823(c)) of the Federal Deposit Insurance
Act; or (ii) by the Office of Thrift Supervision ("OTS") at the time the OTS or
its District Director approves a supervisory merger to resolve problems related
to the operations of the Association or when the Association is determined by
the OTS or FDIC to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
(S)1828(k) and any regulations promulgated thereunder.
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17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois but
only to the extent not preempted by federal law.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association if Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
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22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under federal law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Association (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities). Such expenses
and liabilities include, but are not to be limited to, judgments, court costs
and attorneys' fees and the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION.
The Association shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Association or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Association's obligations under this Agreement, in the same manner and to the
same extent that the Association would be required to perform if no such
succession or assignment had taken place.
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Exhibit 10.5
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
OF WESTCHESTER
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
WHEREAS, First Federal Savings and Loan Association of Westchester (the
"Association") and Westcorp Bancorp Inc., a corporation organized under the laws
of the State of Delaware and which is the holding company for the Association
(the "Holding Company"), entered into the First Federal Savings and Loan
Association of Westchester Employment Agreement (the "Agreement") with Gregg P.
Goossens ("Executive") as of June 21, 1993; and
WHEREAS, the Association wishes to amend and restate the Agreement to
clarify the payments upon a Change in Control, as that term is used in Section 5
of the Agreement and make certain other amendments to the Agreement; and
NOW THEREFORE, upon mutual agreement of the parties to the Agreement as
evidenced by their signatures below, the Agreement is hereby amended and
restated, effective ______________, as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President and Chief Lending Officer of the Association. The
Executive shall render administrative and management services to the Association
such as are customarily performed by persons situated in a similar executive
capacity. Failure to reelect Executive as Executive Vice President and Chief
Lending Officer of the Association without the consent of the Executive shall
constitute a breach of this Agreement.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of June 21, 1993, and shall continue for a period of
twenty-four (24) full calendar months thereafter. Commencing on the first
anniversary date of this Agreement, and continuing at each anniversary date
thereafter, the board of directors of the Association ("Board") may extend the
Agreement an additional year such that the remaining term of the Agreement shall
be two (2) years unless the Executive elects not to extend the term of this
Agreement by giving written notice in accordance with Section 9 of this
Agreement. The Board will review the Agreement and the Executive's performance
annually for purposes of determining whether to extend the Agreement, and the
results thereof shall be included in the minutes of the Board's meeting. In the
event of a Change in Control as hereinafter defined in Section 5, this Agreement
shall automatically renew upon the date of the Change in Control such that the
remaining term of the Agreement shall be (2) years.
<PAGE>
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Association, or materially
affect the performance of Executive's duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Association
shall pay Executive as compensation a salary of not less than $82,450.00 per
year ("Base Salary"). Such Base Salary shall be payable bi-weekly. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to permanent full-time employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive will be entitled to participate in
or receive benefits under any employee benefit plans including but not limited
to, retirement plans, supplemental retirement plans, pension plans, profit-
sharing plans, health-and-accident plan, medical coverage or any other employee
benefit plan or arrangement made available by the Association in the future to
its senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Association in which Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other reasonable
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expenses incurred by Executive performing his obligations under this Agreement
and may provide such additional compensation in such form and such amounts as
the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 8 and 16.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association or the Holding Company of Executive's full-time
employment hereunder for any reason other than a Change in Control, as defined
in Section 5(a) hereof, disability, as defined in Section 6(a) hereof,
retirement, as defined in Section 7 hereof, or for Cause, as defined in Section
8 hereof; (ii) Executive's resignation from the Association's employ, upon any
(A) failure to elect or reelect or to appoint or reappoint Executive as
Executive Vice President and Chief Lending Officer, (B) material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal place of employment by
more than 30 miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement, (D) liquidation or
dissolution of the Association or Holding Company, or (E) breach of this
Agreement by the Association. Upon the occurrence of any event described in
clauses (A), (B), (C), (D) or (E), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days written notice given within a reasonable period of
time not to exceed, except in case of a continuing breach, four calendar months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 9, the Association shall be obligated to pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due for the remaining term of the
Agreement including Base Salary, bonuses and any other cash or deferred
compensation paid, or to be paid, to the Executive, and the amount of any
benefits received pursuant to any employee benefit plans maintained by the
Association during such years; provided, however, that if the Association is not
-------- -------
in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. At the election of the Executive, which election is
to be made within thirty (30) days of the Executive's Date of Termination, such
payments shall be made in a lump sum or paid
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monthly during the remaining term of the agreement following the Executive's
termination. In the event that no election is made, payment to the Executive
will be made on a monthly basis during the remaining term of the agreement. Such
payments shall not be reduced in the event the Executive obtains other
employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Association shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the Rules and Regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 20% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof 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 Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board, or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Holding Company or
similar
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transaction occurs or is effectuated in which the Association or Holding Company
is not the resulting entity; provided, however, that such an event listed above
will be deemed to have occurred or to have been effectuated upon the receipt of
all required federal regulatory approvals not including the lapse of any
statutory waiting periods, or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Association with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Association or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Association or Holding
Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e) and (f) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement
(regardless of whether such termination results from his dismissal or his
resignation at any time during the term of this Agreement following any
demotion, loss of title, office or significant reduction in authority or
responsibility, significant reduction in annual compensation or benefits or
relocation of his principal place of employment by more than 30 miles from its
location immediately prior to the Change in Control), unless such termination is
because of his death, termination for Cause or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to the
greater of the payments due for the remaining term of the Agreement or two (2)
times the average of the three (3) preceding years' compensation, including, but
not limited to, Base Salary, bonuses, any other cash or deferred compensation
paid to, or accrued on behalf of the Executive during such years, any amounts
taken into income by the Executive with respect to the exercise of stock
option(s) or the vesting of restricted stock (including stock transferred to the
Executive under the Association Recognition and Retention Plan), and the amount
of any contributions made to any employee benefit plans, on behalf of the
Executive, maintained by the Association or the Holding Company during such
years, except to the extent such benefits are otherwise payable to the Executive
under such plan solely as a result of a Change in Control. At the election of
the Executive, which election is to be made within thirty (30) days of the Date
of Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the twenty-four (24) months
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement.
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(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of twenty-four (24)
months.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
(f) Notwithstanding the preceding paragraphs of this Section 5, in the
event that:
(i) the aggregate payments or benefits to be made or afforded to Executive
under said paragraph (the "Termination Benefits") would be deemed to
include an "excess parachute payment" under Section 280G of the
Internal Revenue Code of 1986 (the "Code") or any successor thereto
(taking into account any other plan, arrangement or other agreement
under which the Executive is entitled to benefit in connection with
the Change in Control (as defined herein)), and
(ii) if such Termination Benefits were reduced to an amount (the "Non-
Triggering Amount"), the value of which is one dollar ($1.00) less
than an amount equal to three (3) times Executive's "base amount", as
determined in accordance with said Section 280G, and the Non-
Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus the amount of tax
required to be paid by Executive thereon by Section 4999 of the Code,
then the Termination Benefits shall be reduced to the Non-Triggering
Amount. The allocation of the reduction required by the preceding
paragraphs of this Section 5 shall be determined by the Executive.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical or mental
illness, he shall have been absent from his duties with the Association on a
full-time basis for twelve (12) consecutive months, and within thirty (30) days
after written notice of potential termination is given he shall not have
returned to the full-time performance of his duties, the Association or the
Holding Company may terminate Executive's employment for "Disability."
(b) The Association will pay Executive, as disability pay, a bi-weekly
payment equal to seventy-five percent (75%) of Executive's bi-weekly rate of
Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
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employment of the Association in the same capacity as he was employed prior to
his termination for Disability and pursuant to an employment agreement between
Executive and the Association; (ii) Executive's full-time employment by another
employer; (iii) Executive attaining the normal age of retirement or receiving
benefits under the Association's Defined Benefit Plan; (iv) Executive's death;
or (v) Executive's eligibility to collect payments under the disability
provision of the Defined Benefit Plan. The benefits provided for by this
paragraph shall be in addition to any payments made to Executive under the terms
of any disability income insurance for Executive provided by the Association.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This
coverage shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Association, in the same capacity as he was employed
prior to his termination for Disability and pursuant to an employment agreement
between Executive and the Association; (ii) Executive's full-time employment by
another employer; (iii) Executive's attaining the normal age of retirement or
receiving benefits under the Association's Defined Benefit Plan; (iv) the
Executive's death; or (v) the Executive's eligibility to collect payments under
the disability provision of the Defined Benefit Plan.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT.
Termination by the Association of the Executive based on "Retirement" shall
mean termination in accordance with the Association's retirement policy or in
accordance with any retirement arrangement established with Executive's consent
with respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Association
and other plans to which Executive is a party.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of the
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, regulation (other than traffic
violations or similar offenses) or final cease-and-desist order or any material
breach of this Agreement. In determining incompetence, the acts or omissions
shall be measured against standards generally prevailing in the savings
institutions industry. For purposes of this section, no act or the failure to
act, on Executive's part shall be "willful" unless done, or omitted to be done,
not in good faith and without reasonable belief that the action or omission was
in the best interests of the Association and its affiliates. Notwithstanding
the foregoing, Executive shall not be deemed to have been Terminated for Cause
unless and until
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there shall have been delivered to him a Notice of Termination which shall
include a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. Any stock options and related limited
rights granted to Executive under any stock option plan or unvested awards
granted to Executive under any other stock benefit plan of the Association, the
Holding Company or any subsidiary or affiliate thereof, shall become null and
void effective upon Executive's receipt of Notice of Termination for Cause
pursuant to Section 9 hereof, and shall not be exercisable by or delivered to
Executive at any time subsequent to such Termination for Cause.
9. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall be
immediate).
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Association as may reasonably be required by the Association
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.
11. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
an Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the
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Association and/or the Holding Company for a period of one (1) year following
such termination in any city, town or county in which the Association and/or the
Holding Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. Executive agrees that during such period and within said cities, towns
and counties, Executive shall not work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the depository, lending or other business activities of the Association and/or
the Holding Company. The parties hereto, recognizing that irreparable injury
will result to the Association and/or the Holding Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Holding
Company will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive's partners, agents, servants, employers, employees and all persons
acting for or with Executive. Executive represents and admits that in the event
of the termination of his employment pursuant to Section 8 hereof, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the
Association and/or the Holding Company, and that the enforcement of a remedy by
way of injunction will not prevent Executive from earning a livelihood. Nothing
herein will be construed as prohibiting the Association and/or the Holding
Company from pursuing any other remedies available to the Association and/or the
Holding Company for such breach or threatened breach, including the recovery of
damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section 11, the Association
will be entitled to an injunction restraining Executive from disclosing, in
whole or in part, the knowledge of the past, present, planned or considered
business activities of the Association or affiliates thereof, or from rendering
any services to any person, firm, corporation, other entity to whom such
knowledge, in whole or in part, has been disclosed or is threatened to be
disclosed. Nothing herein will be construed as prohibiting the Association from
pursuing any other remedies available to the Association for such breach or
threatened breach, including the recovery of damages from Executive.
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12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Holding Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Association are not timely paid or provided by the Association, such amounts and
benefits shall be paid or provided by the Holding Company.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Association and their respective successors and assigns.
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
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16. REQUIRED PROVISIONS.
(a) The Association may terminate the Executive's employment at any time,
but any termination by the Association, other than Termination for Cause, shall
not prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 8
hereinabove.
(b) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Association's affairs by a
notice served under Section 8(e)(3) (12 USC 1818(e)(3)) or 8(g)(1) (12 USC
1818(g)(1)) of the Federal Deposit Insurance Act, the Association's obligations
under this contract shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion (i) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were suspended.
(c) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) (12 USC (S)1818(e)(4)) or 8(g)(1) (12 USC (S)1818(g)(1))
of the Federal Deposit Insurance Act, all obligations of the Association under
this contract shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
(d) If the Association is in default as defined in Section 3(x)(1) (12 USC
1813(x)(1)) of the Federal Deposit Insurance Act, all obligations of the
Association under this contract shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Association under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution, (i) by the Federal
Deposit Insurance Corporation, at the time FDIC enters into an agreement to
provide assistance to or on behalf of the Association under the authority
contained in Section 13(c) (12 USC (S)1823(c)) of the Federal Deposit Insurance
Act; or (ii) by the Office of Thrift Supervision ("OTS") at the time the OTS or
its District Director approves a supervisory merger to resolve problems related
to the operations of the Association or when the Association is determined by
the OTS or FDIC to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
(S)1828(k) and any regulations promulgated thereunder.
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17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois but
only to the extent not preempted by federal law.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association if Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
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22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under federal law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Association (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION.
The Association shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Association or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Association's obligations under this Agreement, in the same manner and to the
same extent that the Association would be required to perform if no such
succession or assignment had taken place.
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Exhibit 10.6
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
OF WESTCHESTER
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
WHEREAS, First Federal Savings and Loan Association of Westchester (the
"Association") and Westcorp Bancorp Inc., a corporation organized under the
laws of the State of Delaware and which is the holding company for the
Association (the "Holding Company"), entered into the First Federal Savings and
Loan Association of Westchester Employment Agreement (the "Agreement") with
Richard A. Brechlin, ("Executive") as of June 21, 1993; and
WHEREAS, the Association wishes to amend and restate the Agreement to
clarify the payments upon a Change in Control, as that term is used in Section 5
of the Agreement and make certain other amendments to the Agreement; and
NOW THEREFORE, upon mutual agreement of the parties to the Agreement as
evidenced by their signatures below, the Agreement is hereby amended and
restated, effective ______________, as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Executive Vice President and Chief Financial Officer of the Association. The
Executive shall render administrative and management services to the Association
such as are customarily performed by persons situated in a similar executive
capacity. Failure to reelect Executive as Executive Vice President and Chief
Financial Officer of the Association without the consent of the Executive shall
constitute a breach of this Agreement.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of June 21, 1993, and shall continue for a period of
twenty-four (24) full calendar months thereafter. Commencing on the first
anniversary date of this Agreement, and continuing at each anniversary date
thereafter, the board of directors of the Association ("Board") may extend the
Agreement an additional year. The Board will review the Agreement and the
Executive's performance annually for purposes of determining whether to extend
the Agreement, and the results thereof shall be included in the minutes of the
Board's meeting. In the event of a Change in Control as hereinafter defined in
Section 5, this Agreement shall automatically renew upon the date of the Change
in Control such that the remaining term of the Agreement shall be two (2) years.
<PAGE>
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Association and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Association, or materially
affect the performance of Executive's duties pursuant to this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Association
shall pay Executive as compensation a salary of not less than $97,250.00 per
year ("Base Salary"). Such Base Salary shall be payable bi-weekly. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase Executive's Base Salary. In
addition to the Base Salary provided in this Section 3(a), the Association shall
provide Executive at no cost to Executive with all such other benefits as are
provided uniformly to permanent full-time employees of the Association.
(b) The Association will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive will be entitled to participate in
or receive benefits under any employee benefit plans including but not limited
to, retirement plans, supplemental retirement plans, pension plans, profit-
sharing plans, health-and-accident plan, medical coverage or any other employee
benefit plan or arrangement made available by the Association in the future to
its senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Association in which Executive is
eligible to participate. Nothing paid to the Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which the
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3, the Association shall pay or reimburse Executive for all reasonable
travel and other reasonable
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expenses incurred by Executive performing his obligations under this Agreement
and may provide such additional compensation in such form and such amounts as
the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 8 and 16.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association or the Holding Company of Executive's full-time
employment hereunder for any reason other than a Change in Control, as defined
in Section 5(a) hereof, disability, as defined in Section 6(a) hereof,
retirement, as defined in Section 7 hereof, or for Cause, as defined in Section
8 hereof; (ii) Executive's resignation from the Association's employ, upon any
(A) failure to elect or reelect or to appoint or reappoint Executive as
Executive Vice President and Chief Financial Officer, (B) material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
(and any such material change shall be deemed a continuing breach of this
Agreement), (C) a relocation of Executive's principal place of employment by
more than 30 miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to the Executive from those
being provided as of the effective date of this Agreement, (D) liquidation or
dissolution of the Association or Holding Company, or (E) breach of this
Agreement by the Association. Upon the occurrence of any event described in
clauses (A), (B), (C), (D) or (E), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days written notice given within a reasonable period of
time not to exceed, except in case of a continuing breach, four calendar months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 9, the Association shall be obligated to pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the payments due for the remaining term of the
Agreement including Base Salary, bonuses and any other cash or deferred
compensation paid, or to be paid, to the Executive, and the amount of any
benefits received pursuant to any employee benefit plans maintained by the
Association during such years; provided, however, that if the Association is not
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in compliance with its minimum capital requirements or if such payments would
cause the Association's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Association
is in capital compliance. At the election of the Executive, which election is
to be made within thirty (30) days of the Executive's Date of Termination, such
payments shall be made in a lump sum or paid
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monthly during the remaining term of the agreement following the Executive's
termination. In the event that no election is made, payment to the Executive
will be made on a monthly basis during the remaining term of the agreement. Such
payments shall not be reduced in the event the Executive obtains other
employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association for
Executive prior to his termination. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Association shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Association or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the Rules and Regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 20% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof 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 Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board, or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Holding Company or
similar
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transaction occurs or is effectuated in which the Association or Holding Company
is not the resulting entity; provided, however, that such an event listed above
will be deemed to have occurred or to have been effectuated upon the receipt of
all required federal regulatory approvals not including the lapse of any
statutory waiting periods, or (D) a proxy statement has been distributed
soliciting proxies from stockholders of the Holding Company, by someone other
than the current management of the Holding Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Holding Company or
Association with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Association or the Holding Company shall be distributed, or (E) a tender offer
is made for 20% or more of the voting securities of the Association or Holding
Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e) and (f) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement
(regardless of whether such termination results from his dismissal or his
resignation at any time during the term of this Agreement following any
demotion, loss of title, office or significant reduction in authority or
responsibility, significant reduction in annual compensation or benefits or
relocation of his principal place of employment by more than 30 miles from its
location immediately prior to the Change in Control), unless such termination is
because of his death, termination for Cause or termination for Disability.
(c) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association shall pay Executive, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, a sum equal to the
greater of the payments due for the remaining term of the Agreement or two (2)
times the average of the three (3) preceding years' compensation, including, but
not limited to, Base Salary, bonuses, any other cash or deferred compensation
paid to, or accrued on behalf of, the Executive during such years, any amounts
taken into income by the Executive with respect to the exercise of stock
option(s) or the vesting of restricted stock (including stock transferred to the
Executive under the Association Recognition and Retention Plan), and the amount
of any contributions made to any employee benefit plans, on behalf of the
Executive, maintained by the Association or the Holding Company during such
years, except to the extent such benefits are otherwise payable to the Executive
under such plan solely as a result of a Change in Control. At the election of
the Executive, which election is to be made within thirty (30) days of the Date
of Termination following a Change in Control, such payment may be made in a lump
sum or paid in equal monthly installments during the twenty-four (24) months
following the Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the remaining
term of the Agreement.
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(d) Upon the occurrence of a Change in Control followed by the Executive's
termination of employment, the Association will cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Association for Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of twenty-four (24)
months.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
(f) Notwithstanding the preceding paragraphs of this Section 5, in the
event that:
(i) the aggregate payments or benefits to be made or afforded to Executive
under said paragraph (the "Termination Benefits") would be deemed to
include an "excess parachute payment" under Section 280G of the
Internal Revenue Code of 1986 (the "Code") or any successor thereto
(taking into account any other plan, arrangement or other agreement
under which the Executive is entitled to benefit in connection with
the Change in Control (as defined herein)), and
(ii) if such Termination Benefits were reduced to an amount (the "Non-
Triggering Amount"), the value of which is one dollar ($1.00) less
than an amount equal to three (3) times Executive's "base amount", as
determined in accordance with said Section 280G, and the Non-
Triggering Amount would be greater than the aggregate value of the
Termination Benefits (without such reduction) minus the amount of tax
required to be paid by Executive thereon by Section 4999 of the Code,
then the Termination Benefits shall be reduced to the Non-Triggering
Amount. The allocation of the reduction required by the preceding
paragraphs of this Section 5 shall be determined by the Executive.
6. TERMINATION FOR DISABILITY.
(a) If, as a result of Executive's incapacity due to physical or mental
illness, he shall have been absent from his duties with the Association on a
full-time basis for twelve (12) consecutive months, and within thirty (30) days
after written notice of potential termination is given he shall not have
returned to the full-time performance of his duties, the Association or the
Holding Company may terminate Executive's employment for "Disability."
(b) The Association will pay Executive, as disability pay, a bi-weekly
payment equal to seventy-five percent (75%) of Executive's bi-weekly rate of
Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
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<PAGE>
employment of the Association in the same capacity as he was employed prior to
his termination for Disability and pursuant to an employment agreement between
Executive and the Association; (ii) Executive's full-time employment by another
employer; (iii) Executive attaining the normal age of retirement or receiving
benefits under the Association's Defined Benefit Plan; (iv) Executive's death;
or (v) Executive's eligibility to collect payments under the disability
provision of the Defined Benefit Plan. The benefits provided for by this
paragraph shall be in addition to any payments made to Executive under the terms
of any disability income insurance for Executive provided by the Association.
(c) The Association will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Association for Executive prior to his termination for Disability. This
coverage shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Association, in the same capacity as he was employed
prior to his termination for Disability and pursuant to an employment agreement
between Executive and the Association; (ii) Executive's full-time employment by
another employer; (iii) Executive's attaining the normal age of retirement or
receiving benefits under the Association's Defined Benefit Plan; (iv) the
Executive's death; or (v) the Executive's eligibility to collect payments under
the disability provision of the Defined Benefit Plan.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT.
Termination by the Association of the Executive based on "Retirement" shall
mean termination in accordance with the Association's retirement policy or in
accordance with any retirement arrangement established with Executive's consent
with respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Association
and other plans to which Executive is a party.
8. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of the
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, regulation (other than traffic
violations or similar offenses) or final cease-and-desist order or any material
breach of this Agreement. In determining incompetence, the acts or omissions
shall be measured against standards generally prevailing in the savings
institutions industry. For purposes of this section, no act or the failure to
act, on Executive's part shall be "willful" unless done, or omitted to be done,
not in good faith and without reasonable belief that the action or omission was
in the best interests of the Association and its affiliates. Notwithstanding
the foregoing, Executive shall not be deemed to have been Terminated for Cause
unless and until
7
<PAGE>
there shall have been delivered to him a Notice of Termination which shall
include a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. Any stock options and related limited
rights granted to Executive under any stock option plan or unvested awards
granted to Executive under any other stock benefit plan of the Association, the
Holding Company or any subsidiary or affiliate thereof, shall become null and
void effective upon Executive's receipt of Notice of Termination for Cause
pursuant to Section 9 hereof, and shall not be exercisable by or delivered to
Executive at any time subsequent to such Termination for Cause.
9. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall be
immediate).
10. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Association as may reasonably be required by the Association
in connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party.
11. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the
8
<PAGE>
Association and/or the Holding Company for a period of one (1) year following
such termination in any city, town or county in which the Association and/or the
Holding Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. Executive agrees that during such period and within said cities, towns
and counties, Executive shall not work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the depository, lending or other business activities of the Association and/or
the Holding Company. The parties hereto, recognizing that irreparable injury
will result to the Association and/or the Holding Company, its business and
property in the event of Executive's breach of this Subsection 11(a) agree that
in the event of any such breach by Executive, the Association and/or the Holding
Company will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive's partners, agents, servants, employers, employees and all persons
acting for or with Executive. Executive represents and admits that in the event
of the termination of his employment pursuant to Section 8 hereof, Executive's
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the
Association and/or the Holding Company, and that the enforcement of a remedy by
way of injunction will not prevent Executive from earning a livelihood. Nothing
herein will be construed as prohibiting the Association and/or the Holding
Company from pursuing any other remedies available to the Association and/or the
Holding Company for such breach or threatened breach, including the recovery of
damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. In the event of a breach or threatened
breach by the Executive of the provisions of this Section 11, the Association
will be entitled to an injunction restraining Executive from disclosing, in
whole or in part, the knowledge of the past, present, planned or considered
business activities of the Association or affiliates thereof, or from rendering
any services to any person, firm, corporation, other entity to whom such
knowledge, in whole or in part, has been disclosed or is threatened to be
disclosed. Nothing herein will be construed as prohibiting the Association from
pursuing any other remedies available to the Association for such breach or
threatened breach, including the recovery of damages from Executive.
9
<PAGE>
12. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Holding Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Association are not timely paid or provided by the Association, such amounts and
benefits shall be paid or provided by the Holding Company.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Association and their respective successors and assigns.
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
10
<PAGE>
16. REQUIRED PROVISIONS.
(a) The Association may terminate the Executive's employment at any time,
but any termination by the Association, other than Termination for Cause, shall
not prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 8
hereinabove.
(b) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Association's affairs by a
notice served under Section 8(e)(3) (12 USC 1818(e)(3)) or 8(g)(1) (12 USC
1818(g)(1)) of the Federal Deposit Insurance Act, the Association's obligations
under this contract shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion (i) pay the Executive all or part of the
compensation withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were suspended.
(c) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) (12 USC (S)1818(e)(4)) or 8(g)(1) (12 USC (S)1818(g)(1))
of the Federal Deposit Insurance Act, all obligations of the Association under
this contract shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
(d) If the Association is in default as defined in Section 3(x)(1) (12 USC
1813(x)(1)) of the Federal Deposit Insurance Act, all obligations of the
Association under this contract shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Association under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution, (i) by the Federal
Deposit Insurance Corporation, at the time FDIC enters into an agreement to
provide assistance to or on behalf of the Association under the authority
contained in Section 13(c) (12 USC (S)1823(c)) of the Federal Deposit Insurance
Act; or (ii) by the Office of Thrift Supervision ("OTS") at the time the OTS or
its District Director approves a supervisory merger to resolve problems related
to the operations of the Association or when the Association is determined by
the OTS or FDIC to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
(S)1828(k) and any regulations promulgated thereunder.
11
<PAGE>
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Illinois but
only to the extent not preempted by federal law.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Association, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
21. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Association if Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
12
<PAGE>
22. INDEMNIFICATION.
The Association shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under federal law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Association (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
23. SUCCESSOR TO THE ASSOCIATION.
The Association shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Association or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Association's obligations under this Agreement, in the same manner and to the
same extent that the Association would be required to perform if no such
succession or assignment had taken place.
13
<PAGE>
Exhibit 10.7
FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
OF WESTCHESTER
SUPPLEMENTAL EXECUTIVES' RETIREMENT PLAN
AMENDED AND RESTATED AS OF ____________, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FOREWORD........................................................... i
SECTION ONE........................................................ 1
DEFINITIONS................................................... 1
1.1 "Beneficiary"....................................... 1
-----------
1.2 "Board of Directors"................................ 1
------------------
1.3 "Chief Executive Officer"........................... 1
-----------------------
1.4 "Code".............................................. 1
----
1.5 "Committee"......................................... 1
---------
1.6 "Discretionary Contributions"....................... 1
---------------------------
1.7 "Effective Date".................................... 2
--------------
1.8 "Employee".......................................... 2
--------
1.9 "Employer".......................................... 2
--------
1.10 "ERISA"............................................. 2
-----
1.11 "ESOP".............................................. 2
----
1.12 "Participant"....................................... 2
-----------
1.13 "Plan".............................................. 2
----
1.14 "Plan Year"......................................... 2
---------
1.15 "Retirement Plan"................................... 3
---------------
1.16 "401(k) Plan"....................................... 3
-----------
SECTION TWO........................................................ 3
PARTICIPATION................................................. 3
2.1 Designation to Participate.......................... 3
--------------------------
2.2 Continuation of Participation....................... 3
-----------------------------
SECTION THREE...................................................... 3
BENEFIT REQUIREMENTS AND PAYMENTS............................. 3
3.1 Supplemental Retirement Plan Benefits............... 3
-------------------------------------
3.2 Supplemental 401(k) Plan Contributions.............. 4
--------------------------------------
3.3 Supplemental ESOP Contributions..................... 5
-------------------------------
3.4 Incidents of Supplemental Retirement Payments....... 6
---------------------------------------------
3.5 Form of Supplemental Retirement Payments............ 6
----------------------------------------
3.6 Form of Supplemental 401(k) Plan and ESOP Payments.. 7
--------------------------------------------------
3.7 Payment of Certain Taxes............................ 7
------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION FOUR....................................................... 8
GENERAL MATTERS............................................... 8
4.1 Benefits from General Assets....................... 8
----------------------------
4.2 No Assignment...................................... 8
-------------
4.3 Administrator of Plan.............................. 8
---------------------
4.4 Expenses of Plan................................... 9
----------------
4.5 Amendment or Termination........................... 9
------------------------
4.6 Limitation on Benefits and Payments................ 9
-----------------------------------
4.7 Immediately Payable Lump Sum....................... 10
----------------------------
4.8 Participation by Subsidiaries and Affiliates....... 10
--------------------------------------------
4.9 Claims Procedure................................... 11
----------------
4.10 Limitation on Liability............................ 11
-----------------------
4.11 Agent for Service of Process....................... 12
----------------------------
4.12 Delivery of Elections to Committee................. 12
----------------------------------
4.13 Delivery of Notice to Participants................. 12
----------------------------------
SECTION FIVE....................................................... 13
CONSTRUCTION OF THE PLAN...................................... 13
5.1 Construction of the Plan........................... 13
------------------------
5.2 Counterparts....................................... 13
------------
</TABLE>
<PAGE>
FOREWORD
First Federal Savings and Loan Association of Westchester adopted the First
Federal Savings and Loan Association of Westchester Supplemental Executives'
Retirement Plan (the "Plan") for the benefit of certain of its executives. The
benefits provided under the Plan (as described below) are intended to constitute
a deferred compensation plan for "a select group of management or highly
compensated employees" for purposes of the Employee Retirement Income Security
Act of 1974, as amended.
The Plan is intended to provide Participants (as defined herein) and their
surviving spouses, contingent pensioners and beneficiaries with the amount of:
(a) Employer-provided pension benefits under the First Federal Savings and
Loan Association of Westchester Retirement Plan ("Retirement Plan");
(b) Employer-provided contributions under the First Federal Savings and
Loan Association of Westchester Profit Sharing Plan ("401(k) Plan");
and
(c) Employer-provided contributions under the First Federal Savings and
Loan Association of Westchester Employee Stock Ownership Plan ("ESOP");
that these plans are not permitted to provide because of the limitations on
benefits and allocations imposed by Section 415 of the Internal Revenue Code
(the "Code"), the limitation on compensation that may be recognized under tax
qualified plans imposed by Section 401 (a)(17) of the Code, the limitations on
the amount of Section 401(k) elective deferrals imposed by Section 402(g) of the
Code.
Except to the extent otherwise indicated, and to the extent otherwise
inappropriate, the provisions of the Retirement Plan, the 401(k) Plan and the
ESOP hereby are incorporated by reference.
i
<PAGE>
SECTION ONE
DEFINITIONS
Where the following words and phrases appear in the Plan, they shall have
the respective meaning as set forth below unless the context clearly indicates
the contrary. Except to the extent otherwise indicated herein, and to the extent
otherwise inappropriate in the context, the definitions contained in Section 1
of the Retirement Plan, Section 1 of the 401(k) Plan, and Section 2 of the ESOP
are applicable under the Plan.
1.1 "Beneficiary" means the person or persons designated by the
-----------
Participant under the Retirement Plan, 401(k) Plan and ESOP (as is applicable)
to receive benefits in the event of the Participant's death.
1.2 "Board of Directors" means the Board of Directors of First Federal
------------------
Savings and Loan Association of Westchester.
1.3 "Chief Executive Officer" means the Chief Executive Officer of the
-----------------------
Employer.
1.4 "Code" means the Internal Revenue Code of 1986, as amended from time
----
to time. Reference to a specific provision of the Code shall include such
provision, any valid regulation or ruling promulgated thereunder and any
comparable provision of future law that amends, supplements or supersedes such
provision.
1.5 "Committee" means the Compensation Committee of the Board of
---------
Directors.
1.6 "Discretionary Contributions" means cash or deferred contributions
---------------------------
under the terms of the 401(k) Plan.
1
<PAGE>
1.7 "Effective Date" means February 14, 1995.
--------------
1.8 "Employee" means an employee of the Employer on whose behalf benefits
--------
are payable under the Retirement Plan, the 401(k) Plan, or the ESOP.
1.9 "Employer" means First Federal Savings and Loan Association of
--------
Westchester with respect to its employees, and any successors by merger,
purchase, reorganization or otherwise. If a subsidiary or affiliate of the
Employer adopts the Plan, it shall be deemed the Employer with respect to its
employees.
1.10 "ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time. Reference to a specific provision of ERISA shall
include such provision, any valid regulation or ruling promulgated thereunder
and any comparable provision of future law that amends, supplements or
supersedes such provision.
1.11 "ESOP" means the First Federal Savings and Loan Association of
----
Westchester Employee Stock Ownership Plan, as in effect from time to time.
1.12 "Participant" means an Employee who has been designated for
-----------
participation in this Plan pursuant to Section 2. 1.
1.13 "Plan" means this, the First Federal Savings and Loan Association of
----
Westchester Supplemental Executives' Retirement Plan, as set forth herein and as
may be amended from time to time.
1.14 "Plan Year" means the period from January 1, 1995 through
---------
December 31, 1995, and each calendar year thereafter.
2
<PAGE>
1.15 "Retirement Plan" means the First Federal Savings Association of
---------------
Westchester Retirement Plan, as amended from time to time.
1.16 "401(k) Plan" means the First Federal Savings and Loan
-----------
Association of Westchester Profit Sharing Plan, as amended from time to time.
SECTION TWO
PARTICIPATION
2.1 Designation to Participate
--------------------------
Upon the designation of the Chief Executive Officer, and subject to the
approval of the Committee, Employees may become Participants at any time during
the Plan Year.
2.2 Continuation of Participation
-----------------------------
An Employee who has become a Participant shall remain a Participant so long
as benefits are payable to or with respect to such Participant under the Plan.
SECTION THREE
BENEFIT REQUIREMENTS AND PAYMENTS
3.1 Supplemental Retirement Plan Benefits
-------------------------------------
A Participant whose benefits under the Retirement Plan are limited by the
application of Sections 401(a)(1)(17) or 415 of the Code shall be entitled to
receive a monthly benefit from this Plan equal to the excess, if any, of:
(a) the retirement income that would have been payable to or with respect
to the
3
<PAGE>
Participant under the Retirement Plan had: (i) the limitations
of Section 415 of the Code imposed on benefits under the Retirement
Plan not been applicable, and (ii) the limitations imposed by Section
401(a)(17) of the Code on the amount of the Participant's earnings
that may be included in the term "Compensation" under the Retirement
Plan, not been applicable, over
(b) the retirement income payable to or with respect to the Participant
under the Retirement Plan.
3.2 Supplemental 401(k) Plan Contributions
--------------------------------------
A Participant whose Matching Employer Contributions or Discretionary
Contributions under the 401(k) Plan are limited by the application of Sections
401(a)(17), 402(g), or 415 of the Code shall be entitled to receive the excess,
if any, of:
(a) the amount of Matching Employer Contributions and/or Discretionary
Contributions which would have been made on behalf of a Participant
pursuant to the 401(k) Plan had (i) the limitations of Section 415 of
the Code imposed on allocations under the 401(k) Plan not been
applicable, (ii) the limitations imposed by Section 401(a)(17) of the
Code on the amount of the Participant's compensation that may be
included in the term Compensation under the 401(k) Plan, not been
applicable; and (iii) the limitation on the amount of Section 401(k)
elective deferrals imposed by Section 402(g) of the Code, not been
applicable, over
(b) the amount of Matching Employer Contributions and Discretionary
Contributions actually made on behalf of the Participant to the 401(k)
Plan; plus
4
<PAGE>
(c) Deemed earnings on such excess. Deemed earnings for purposes of this
Section 3.2 shall be earnings at the rate of investment return under
the [name fund] (as annualized) under the 401(k) Plan for the
appropriate period.
A bookkeeping account shall be maintained for each affected Participant to
record the amount of such Matching Employer Contributions and/or Discretionary
Contributions.
3.3 Supplemental ESOP Contributions
-------------------------------
A Participant whose Employers' contributions allocated under the ESOP are
limited by the application of Sections 415 or 401(a)(17) of the Code shall be
entitled to receive the excess, if any, of:
(a) the amount of Employers' Contributions which would have been made on
behalf of a Participant pursuant to Section 4 of the ESOP had the
limitations imposed by Sections 415 and 401(a)(17) of the Code on (i)
the amount of the annual additions that may be made to the Account of
the Participant and (ii) the amount of the Participant's compensation
that may be included in the term "Compensation" under the ESOP, not
been applicable; over
(b) the amount of Employers' Contributions actually made on behalf of the
Participant to the ESOP; plus
(c) "Deemed earnings" on such excess. "Deemed earnings" for purposes of
this Section 3.3 shall be the increase in value of the Stock
(including any dividends) under the ESOP had such contributions
actually been allocated to the Participant in the form of Stock.
5
<PAGE>
A bookkeeping account shall be maintained for each affected Participant to
record the amount of Employers' Contributions.
3.3.1 Limitation on Benefits
----------------------
Effective February 14, 1995, the total benefits provided in paragraphs
3.1, 3.2 and 3.3 will be limited to $60,000 in 1995 and $48,000 in Plan Years
thereafter. The annual allocation to each Executive will first include the
necessary amount due for the benefit provided in paragraph 3.1. The remainder of
total annual benefits will be allocated proportionately based upon the
calculation of the combined amounts due for benefits provided under paragraphs
3.2 and 3.3. A bookkeeping account for each affected Participant will be
maintained to record the actual amounts due.
3.4 Incidents of Supplemental Retirement Payments
---------------------------------------------
Retirement benefits under this Section 3 shall include all incidents in
which payment is made from the Retirement Plan, including but not limited to:
(a) Retirement whether normal, early, or late;
(b) Disability;
(c) Death; or
(d) Termination of employment.
3.5 Form of Supplemental Retirement Payments
----------------------------------------
A Participant's Supplemental Retirement Payments ("SRP") under this Plan
shall be paid to or with respect to the Participant in the same form and at the
same time as the Participant's retirement benefits under the Retirement Plan.
SRP under this Plan shall cease coincident with the cessation of the payment of
benefits to the Participant, Surviving Spouse,
6
<PAGE>
contingent annuitant, or his or her Beneficiary under the Retirement Plan. To
the extent that no benefits are payable to the Participant under the Retirement
Plan, SRP payable under this Plan shall commence and cease as if they were
payable under the Retirement Plan and the Participant had satisfied all vesting
provisions of the Retirement Plan. However notwithstanding the preceding, in the
event of a Change in Control, the SRP may, in the discretion of the Board, be
paid out in a lump sum, such lump sum payment to equal an actuarially equal
present value of payments anticipated to be otherwise made. For purposes of this
Section "Change in Control" is to be defined and interpreted identically as such
term is defined in the Employment Agreement between the Participant and Westco
Bancorp, Inc., as amended from time to time.
3.6 Form of Supplemental 401(k) Plan and ESOP Payments
--------------------------------------------------
Matching Employer Contributions, Discretionary Contributions, and
Employers' Contributions (including deemed earnings) payable to or with respect
to a Participant shall be paid in a lump sum in cash or, if so elected by the
Participant with respect to the Supplemental ESOP benefit in the form of whole
shares of Stock equal to such value, directly to such Participant, or to his or
her Surviving Spouse or Beneficiary, as applicable, at the same time as the
distribution of the Participant's Accounts under the 401(k) Plan or the ESOP, as
is applicable.
7
<PAGE>
SECTION FOUR
GENERAL MATTERS
4.1 Benefits from General Assets
----------------------------
Benefits under the Plan will be paid from the general assets of the
Employer. in the event that the Employer shall decide to establish an advance
accrual reserve on its books against the future expense of benefit payments or
contributions, or establish a "grantor trust" (within the meaning of Sections
671 through 679 of the Code), such reserve or grantor trust shall not under any
circumstances be deemed to be an asset of this Plan but, at all times, shall
remain a part of the general assets of the Employer, subject to claims of the
Employer's creditors.
Neither a Participant nor his or her Beneficiary will have any interest in
any specific asset of the Employer as a result of the Plan.
4.2 No Assignment
-------------
Benefits payable under the Plan will not be subject to assignment,
transfer, sale, pledge, encumbrance, alienation or charge by a Participant,
Surviving Spouse, contingent annuitant or Beneficiary.
4.3 Administrator of Plan
---------------------
The Committee shall be the "administrator" of the Plan within the meaning
of ERISA, and, as such, shall be vested with the general administration of the
Plan including the exclusive right to interpret the Plan. The decisions, actions
and records of the Committee shall be conclusive and binding upon the Employer
and all persons having or claiming to have any right or Interest in or under the
Plan.
8
<PAGE>
4.4 Expenses of Plan
----------------
All expenses of the Plan will be paid by the Employer.
4.5 Amendment or Termination
------------------------
The Plan may be amended or terminated at any time by the Board of
Directors. However, no amendment or termination of the Plan may have a material
adverse impact upon the accrued and future rights of anyone participating in the
Plan as of the amendment or termination date, unless he or she consents to such
amendment in writing.
4.6 Limitation on Benefits and Payments
-----------------------------------
Subject to the provisions of Section 4.7:
(a) A Person entitled to retirement benefits pursuant to Section 3.1 shall
have a claim upon the Employer only to the extent of the monthly
payments, if any, due up to and including the then current month and
shall not have a claim against the Employer for any subsequent monthly
payment unless and until such payment shall become due and payable.
(b) A person entitled to Matching Employer Contributions, Discretionary
Contributions, and/or Employers' Contributions pursuant to Sections
3.2 and/or 3.3 shall have a claim upon the Employer only to the extent
of the account maintained thereunder, and the amount of such account
shall be paid to the Participant or beneficiary in cash at the same
time as the distribution of the Participant's account under the 401(k)
Plan or ESOP, as is applicable.
9
<PAGE>
4.7 Immediately Payable Lump Sum
----------------------------
Notwithstanding any other provision hereof, there shall become immediately
due and payable to or with respect to a Participant a lump sum equal to the
account maintained pursuant to Sections 3.2 and 3.3 plus the present actuarial
value (determined as provided below) of the Participant's retirement benefits
pursuant to Section 3.1 if.
(a) the Employer makes a general assignment for the benefit of creditors;
(b) the Employer is deemed insolvent by the federal regulatory agency
responsible for its supervision
(c) a receiver or trustee in insolvency is appointed for the Employer.
In addition, in the event of any such proceeding by or against the Employer
under the Bankruptcy Act, or any such assignment, a Participant, a contingent
annuitant, a Surviving Spouse or Beneficiary shall be entitled to prove a claim
for any unpaid portion of the benefit provided under hereunder and, if the claim
is not discharged in full in any such proceeding, or assignment, it will survive
any discharge of the Employer under any such proceeding or assignment.
The present actuarial value of retirement benefits under the Plan shall be
calculated on the same basis as lump sums are determined under the Retirement
Plan.
4.8 Participation by Subsidiaries and Affiliates
--------------------------------------------
If any employer is now or hereafter becomes a subsidiary or affiliated
company of the Employer and its employees participate in the Retirement Plan,
the 401(k) Plan, or the ESOP, the Board of Directors may authorize such
subsidiary or affiliated company to participate in this Plan upon appropriate
action by such employer necessary to adopt the Plan.
10
<PAGE>
4.9 Claims Procedure
----------------
In the event that any Participant or other payee claims to be entitled to
a benefit under the Plan, and the Committee determines that such claim should be
denied in whole or in part, the Committee shall, in writing, notify such
claimant within 90 days of receipt of such claim that his or her claim has been
denied, setting forth the specific reasons for such denial. Such notification
shall be written in a manner reasonably expected to be understood by such
Participant or other payee and shall set forth the pertinent sections of the
Plan relied on, and where appropriate, an explanation of how the claimant can
obtain review of such denial. Within 60 days after receipt of such notice, such
claimant may request, by mailing or delivery of written notice to the Committee,
a review by the Committee of the decision denying the claim. If the claimant
fails to request such a review within such 60 day period, it shall be
conclusively determined for all purposes of this Plan that the denial of such
claim by the Committee is correct. If such claimant requests a review within
such 60 day period, the Participant or other payee shall have 30 days after
filing a request for review to submit additional written material in support of
the claim. Within 60 days after the later of its receipt of the request for
review or the request to submit additional written material, the Committee shall
determine whether such denial of the claim was correct and shall notify such
claimant in writing of its determination. If such determination is favorable to
the claimant, it shall be binding and conclusive. If such determination is
adverse to such claimant, it shall be binding and conclusive unless the claimant
notifies the Committee within 90 days after the mailing or delivery to him or
her by the Committee of its determination, that the claimant intends to
institute legal proceedings challenging the determination of the Committee, and
actually institutes such legal proceedings within 180 days after such mailing or
delivery.
4. 10 Limitation on Liability
-----------------------
The Committee shall not be liable for any act or omission on its part,
excepting only its own willful misconduct or gross negligence or except as
otherwise expressly provided by applicable law. To the extent permitted by
applicable law, and not otherwise covered by
11
<PAGE>
insurance, First Federal Savings and Loan Association of Westchester shall
indemnify and hold harmless the Committee members against any and all claims,
demands, suits or proceedings in connection with the Plan that may be brought by
Participants or their Beneficiaries, or by any other person, corporation,
entity, government or agency thereof, provided, however that such
indemnification shall not apply with respect to acts or omissions of willful
misconduct or gross negligence. The Board of Directors, at the expense of the
First Federal Savings and Loan Association of Westchester, may settle such claim
or demand asserted. or suit or proceedings brought, against the Committee when
such settlement appears to be in the best interest of the First Federal Savings
and Loan Association of Westchester.
4.11 Agent for Service of Process
----------------------------
The Committee or such other person as may from time to time be designated
by the Committee shall be the agent for service of process under the Plan.
4.12 Delivery of Elections to Committee
----------------------------------
All elections, designations, requests, notices, instructions and other
communications required or permitted under the Plan from the Employer, a
Participant, Beneficiary or other person to the Committee shall be on the
appropriate form, shall be mailed by first-class mail or delivered to such
address as shall be specified by such Committee, and shall be deemed to have
been given or delivered only upon actual receipt thereof by such Committee at
such location.
4.13 Delivery of Notice to Participants
----------------------------------
All notices, statements, reports and other communications required or
permitted under the Plan from the Employer or the Committee to any Officer,
Participant, Beneficiary or other person, shall be deemed to have been duly
given when delivered to, or when mailed by first-class mail, postage prepaid,
and addressed to such person at this address last appearing on the records of
the Committee.
12
<PAGE>
SECTION FIVE
CONSTRUCTION OF THE PLAN
5.1 Construction of the Plan
------------------------
The provisions of this Plan shall be construed, regulated, and
administered according to the laws of the State of Illinois.
5.2 Counterparts
------------
This Plan has been established by the Employers in accordance with the
resolutions adopted by the Board of Directors and may be executed in any number
of counterparts, each of which shall be deemed to be an original. All the
counterparts shall constitute one instrument, which may be sufficiently
evidenced by any one counterpart.
IN WITNESS WHEREOF, and as evidence of the restatement and amendment of
the Plan originally adopted by the Employer on February 14, 1995, it has caused
the same to be signed by its Officer duly authorized, and its corporate seal to
be affixed this __ day of ____________, 1998.
ATTEST: First Federal Savings and Loan Association
of Westchester
By:
- ------------------------- ---------------------------------------
David C. Burba, President
13
<PAGE>
EXHIBIT 11.0 - Computation of Earnings Per Share
Three Months
Ended
3/31/98
------------
Net income $ 1,176,706
==========
Common stock 2,462,254
==========
Basic earnings per share $ .48
====
Common stock 2,462,254
Common stock equivalents using
the treasury stock method 204,542
----------
Total common stock and common
stock equivalents 2,666,796
==========
Diluted earnings per share $ .44
=====
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,967,608
<INT-BEARING-DEPOSITS> 6,906,597
<FED-FUNDS-SOLD> 4,579,998
<TRADING-ASSETS> 1,618,172
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 55,863,131
<INVESTMENTS-MARKET> 55,864,244
<LOANS> 242,272,818
<ALLOWANCE> 902,800
<TOTAL-ASSETS> 319,130,372
<DEPOSITS> 261,692,362
<SHORT-TERM> 0
<LIABILITIES-OTHER> 8,161,788
<LONG-TERM> 0
0
0
<COMMON> 35,251
<OTHER-SE> 49,240,971
<TOTAL-LIABILITIES-AND-EQUITY> 319,130,372
<INTEREST-LOAN> 4,961,921
<INTEREST-INVEST> 912,023
<INTEREST-OTHER> 38,615
<INTEREST-TOTAL> 5,912,559
<INTEREST-DEPOSIT> 3,197,536
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 2,715,023
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 142,322
<EXPENSE-OTHER> 1,209,646
<INCOME-PRETAX> 1,836,975
<INCOME-PRE-EXTRAORDINARY> 1,836,975
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,176,706
<EPS-PRIMARY> 0.48
<EPS-DILUTED> 0.44
<YIELD-ACTUAL> 3.55
<LOANS-NON> 1,436,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 902,800
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 902,800
<ALLOWANCE-DOMESTIC> 175,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 727,800
</TABLE>
