EXHIBIT 10 (iv)
RESTATED
EMPLOYMENT AGREEMENT
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This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is dated
as of December 19, 1994, among ST. PAUL BANCORP, INC. (the "Company"), ST. PAUL
FEDERAL BANK FOR SAVINGS (the "Bank") and JOSEPH C. SCULLY (the "Employee").
WHEREAS, the Company, the Bank and the Employee have entered into an
employment agreement dated as of May 18, 1987, as amended from time to time (the
"Prior Agreement"), which the parties desire to be restated and superseded in
its entirety by the terms of this Agreement;
WHEREAS, the respective Boards of Directors of the Company and the Bank
have approved and authorized the entry into this Agreement with the Employee;
WHEREAS, the Employee is currently serving as Chairman of the Board and
Chief Executive Officer of both the Company and the Bank;
WHEREAS, the parties desire to enter into this Agreement setting forth the
terms and conditions for the employment relationships of the Employee with the
Company and the Bank.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Prior Agreement is hereby restated and replaced in
its entirety by this Agreement. The Employee is employed as Chairman of the
Board of Directors and Chief Executive Officer of both the Company and the Bank
from the date hereof through the term of this Agreement. As an officer of the
Company and of the Bank, the Employee shall render executive, policy and other
management services to the Company and the Bank of the type customarily
performed by persons serving in a similar chairman and chief executive officer
capacity. These services shall include, but shall not be limited to, reporting
to the respective Boards of Directors of the Company and the Bank and accepting
ultimate management responsibility for all aspects of the Company's and the
Bank's activities and those of their subsidiaries; providing approval for all
significant policies and procedures of the Company and the Bank (including, but
not limited to, credit, pricing, and investments) other than those as to which
Board of Directors approval is required; developing the Company's and the Bank's
strategic plans and annual operating budgets; serving as principal spokesman for
the Company and the Bank; developing and maintaining the Company's and the
Bank's organizational structure; and having all executive officers of the
Company and the Bank report to the Employee through the officer elected as
President and Chief Operating Officer of the Company and the Bank. The Employee
shall also perform such duties as the Board of Directors of the Company and of
the Bank may from time to time reasonably direct. During the term of this
Agreement, there shall be no material increase or
decrease in the duties and responsibilities of the Employee otherwise than as
provided herein, unless the parties otherwise agree in writing. During the term
of this Agreement, the Employee shall not be required to relocate to an area
more than 50 miles from the Bank's home office in order to perform the services
hereunder.
2. Salary. The Bank agrees to pay the Employee during the term of this
Agreement a salary as follows: from the date hereof through June 30, 1995, a
salary at an annual rate equal to $372,036.00, with the salary to be increased
as of July 1 of each year during the term of this Agreement as determined by the
Boards of Directors of the Company and the Bank. In determining salary
increases, the Boards of Directors shall compensate the Employee for increases
in the cost of living and may also provide for performance or merit increases.
The salary of the Employee shall not be decreased at any time during the term of
this Agreement from the amount then in effect, unless the Employee otherwise
agrees in writing. The salary under this Section 2 shall be payable by the Bank
to the Employee not less frequently than monthly. The Company shall reimburse
the Bank for a portion of the salary paid to the Employee hereunder, which
portion shall represent an appropriate allocation for the services rendered to
the Company hereunder. The Employee shall not be entitled to receive fees for
serving as a director of the Company or of the Bank or for serving as a member
of any committee of the Board of Directors of the Company or of the Bank.
3. Discretionary Bonuses. In addition to his salary under Section 2
hereof, the Employee shall be entitled to participate, in an equitable manner
with all other executive officers of the Company or of the Bank, in such
discretionary bonuses as may be authorized, declared, and paid by the Board of
Directors of the Company or of the Bank to its executive officers during the
term of this Agreement. No other compensation provided for in this Agreement
shall be deemed a substitute for the Employee's right to participate in such
bonuses when and as declared by the Board of Directors of the Company or the
Bank.
4. Participation in Retirement and Employee Benefit Plans; Insurance;
Other Fringe Benefits.
(a) The Employee shall be entitled to participate in any plan of the
Company or of the Bank relating to stock options, employee stock ownership,
pension, profit-sharing, group life insurance, medical coverage, education, or
other retirement or employee benefits that the Bank or the Company has adopted
or may adopt for the benefit of its executive officers.
(b) The Bank shall also provide the Employee with whole life insurance
protection in the amount of $250,000, the beneficiary to be selected by the
Employee, and with partial or permanent disability non-cancelable insurance
protection in an amount per month which is $1,000 in excess of the maximum
amount for which the Employee is eligible under any disability insurance
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coverage maintained by the Bank or the Company for its executive officers from
time to time, as determined by his salary then in effect under Section 2 hereof;
provided, however, that in the event that the Employee is not deemed insurable
as a standard risk by any insurance company to which application is made
hereunder for disability insurance or a policy of insurance on Employee's life,
the Bank shall pay the equivalent of the premiums that would be required to
obtain such life and disability insurance if the Employee were insurable as a
standard risk to provide such amount of life and disability insurance as can be
procured for such amount of premium expended.
(c) The Employee shall also be entitled to participate in any other
fringe benefits which are now or may be or become applicable to the Company's or
the Bank's executive officers, including the payment of reasonable expenses for
attending annual and periodic meetings of trade associations, the provision of
an automobile for business use, and any other benefits which are commensurate
with the duties and responsibilities to be performed by the Employee under this
Agreement.
(d) Participation in the retirement and employee benefit plans,
insurance and other fringe benefits referred to herein shall not reduce the
salary, discretionary bonuses or deferred compensation payable to the Employee
under Sections 2, 3 and 10 hereof, respectively.
5. Term. The initial term of employment under this Agreement was for a
period commencing on December 19, 1994 and ending on December 19, 1997. The
Company and the Bank may further renew this Agreement beyond December 19, 1997
by written notice to the Employee adding an additional year to the term of this
Agreement on each subsequent anniversary date, commencing with the December 19,
1995 anniversary date, so that such term after each such renewal would be for
three years, unless the Employee gives contrary written notice to the other
parties prior to each such anniversary date. Each initial term and all such
renewed terms are collectively referred to herein as the term of this Agreement.
Notwithstanding any other provision of this Agreement, the term of
this Agreement shall be automatically terminated as of the date upon which the
Employee attains the age of sixty-five (65).
6. Standards. The Employee shall perform the Employee's duties and
responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Board of Directors of
the Company or the Bank. The reasonableness of such standards shall be measured
against standards for executive performance generally prevailing in the savings
institutions industry.
7. Voluntary Absences; Vacations. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and
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responsibilities under this Agreement. All such voluntary absences shall count
as paid vacation time, unless the Boards of Directors of the Company and the
Bank otherwise approve. The Employee shall be entitled to an annual paid
vacation of at least four weeks per year or such longer period as the Boards of
Directors of the Company and the Bank may approve. The timing of paid vacations
shall be scheduled in a reasonable manner by the Employee. The Employee shall
not be entitled (i) to receive any additional compensation on account of failure
to take a paid vacation or (ii) to accumulate more than two weeks of unused paid
vacation time from one fiscal year to the next.
8. Termination of Employment.
(a) (i) The Board of Directors of the Company or the Bank may
terminate the Employee's employment at any time, but any termination by such
Board of Directors other than termination for cause shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for cause. The term "termination for cause" shall mean
termination because of the Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform material stated duties, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses) or final cease-
and-desist order, or material breach of any provision of this Agreement. In
determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institutions industry; provided,
that it shall be the Company's or the Bank's burden to prove by clear and
convincing evidence the alleged acts and omissions and the prevailing nature of
the standards the Company or the Bank shall have alleged are violated by such
acts and/or omissions.
(ii) The parties acknowledge and agree that damages which will result
to Employee for termination without cause shall be extremely difficult or
impossible to establish or prove, and agree that, unless the termination is for
cause, the Bank and the Company shall be obligated, concurrently with such
termination, to make a lump sum cash payment to the Employee as liquidated
damages of an amount equal to the Employee's then "current compensation" under
this Agreement calculated for a period equal to the remaining term of this
Agreement; provided, however, that the amount payable under this Section
8(a)(ii) shall not exceed the maximum amount payable under Section 9(e) hereof.
"Current compensation" shall be based on the Employee's (i) current salary
payable to the Employee under Section 2 hereof at the time of his termination,
(ii) the bonuses paid to the Employee under Section 3 hereof during the 12-month
period preceding his termination, and (iii) deferred compensation credited to
the Employee Account (as defined in Section 10(a) hereof) as of December 31 of
the year preceding his termination; provided, however, that if the termination
of employment occurs in connection with or as a result of a "change in control,"
as defined in Section 9(b) hereof, the amount payable to
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the Employee under this Section 8(a)(ii) shall not exceed the amount that would
be payable to the Employee in the event of an involuntary termination of his
employment under Section 9(a)(i), as limited by Section 9(c) and Section 9(e)
hereof. The Employee agrees that, except for such other payments and benefits
to which the Employee may be entitled as expressly provided by the terms of this
Agreement, such liquidated damages shall be in lieu of all other claims which
the Employee may make by reason of the loss of employment. Such payment to the
Employee shall be made on or before the Employee's last day of employment with
the Company or the Bank. The liquidated damages amount shall not be reduced by
any compensation which the Employee may receive for other employment with
another employer after termination of his employment with the Company or the
Bank.
(iii) In addition to the liquidated damages above described that are
payable to the Employee for termination without cause, the following shall apply
in the event of any termination without cause or in the event of any termination
subject to Section 9 hereof: (a) the Employee shall continue to participate in,
and accrue benefits under, all retirement, pension, profit-sharing, employee
stock ownership, and other deferred compensation plans of the Company or the
Bank for the remaining term of this Agreement as if the termination of
employment of the Employee had not occurred (with the Employee being deemed to
receive annually for the purposes of such plans the Employee's then current
salary under Section 2 hereof at the time of his termination plus bonuses paid
under Section 3 hereof during the 12-month period preceding his termination plus
deferred compensation credited under Section 10 hereof as of the December 31
preceding his termination), except to the extent that such continued
participation and accrual is expressly prohibited by law, or to the extent such
plan constitutes a "qualified plan" (a "Qualified Plan") under Section 401 of
the Internal Revenue Code of 1986, as amended (the "Code"), by the terms of the
plan; (b) the Employee shall be entitled to continue to receive all other
employee benefits and then existing fringe benefits referred to in Section 4
hereof for the remaining term of this Agreement as if the termination of
employment had not occurred; (c) the Bank or the Company shall, on the date of
the Employee's termination of employment, establish an irrevocable trust that
meets the guidelines set forth in GCM 39230 (May 7, 1984) published by the
Internal Revenue Service (as the same may be modified or supplemented from time
to time) (the "Trust"), the assets of which will be held, subject to the claims
of judgment creditors of the Company and the Bank, solely to fund the benefits
that the Employee is entitled to under this Section 8(a)(iii), and the Bank or
the Company shall transfer to the Trust an amount sufficient (y) to fund any
benefit accrued by the Employee under any defined benefit pension plan
maintained by the Company or the Bank to the extent that such defined benefit
pension plan is not fully funded on a termination basis, as determined under the
rules and regulations published by the Pension Benefit Guaranty Corporation, at
the time of termination of the Employee's employment; and (z) to fund fully all
benefits accrued by the Employee under any defined contribution plan maintained
by the
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Company or the Bank to the extent that such benefits are not fully funded at the
time of termination of the Employee's employment; and (d) all insurance or other
provisions for indemnification, defense or hold-harmless of officers or
directors of the Company or the Bank which are in effect on the date the notice
of termination is sent to the Employee shall continue for the benefit of the
Employee with respect to all of his acts and omissions while an officer or
director as fully and completely as if such termination had not occurred, and
until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e) or 8(g) of the Federal Deposit Insurance Act, as amended, or under
Section 407(g)(3) or Section 407(h) of the National Housing Act, the Company's
and the Bank's obligations under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Bank may in its discretion (i) pay the Employee
all or part of the compensation withheld while such contractual obligations were
suspended, and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e) or 8(g) of the Federal Deposit Insurance Act, as amended, all
obligations of the Company and the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights of the parties shall not
be affected.
(d) If the Bank is in default (as defined in Section 3(x)(l) of the
Federal Deposit Insurance Act, as amended), all obligations under this Agreement
shall terminate as of the date of default, but this paragraph shall not affect
any vested rights of the parties.
(e) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Federal Deposit Insurance
Corporation (the "FDIC") (or, during the existence of the Resolution Trust
Corporation (the "RTC"), the RTC) at any time the FDIC (or the RTC) enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in Section 13 of the Federal Deposit Insurance Act, as
amended, or (ii) by the FDIC (or during the existence of the RTC, the RTC) or
the Director of the Office of Thrift Supervision (the "Director") at any time
the FDIC (or the RTC), the Director or any of their respective designees
approves a supervisory merger to resolve problems related to the operation of
the Bank or when the Bank is determined by the FDIC (or the RTC) or the Director
to be in an unsafe or unsound condition. Any rights
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of the parties that have already vested, however, shall not be affected by any
termination hereunder.
(f) The Employee shall have no right to terminate employment under
this Agreement prior to the end of the term of this Agreement, unless such
termination is approved by the Board of Directors of the Company or the Bank or
is in connection with or within two years after a change in control (as defined
in Section 9(b) hereof) of the Company or of the Bank. In the event that the
Employee violates this provision, the Company and the Bank shall be entitled, in
addition to their other legal remedies, to enjoin the employment of the Employee
with any significant competitor of the Bank or the Company for a period of one
year or the remaining term of this Agreement plus six months, whichever is less.
The term "significant competitor" shall mean any commercial bank, savings bank,
savings and loan association, or mortgage banking company, or a holding company
affiliate of any of the foregoing, which at the date of its employment of the
Employee has an office in Illinois out of which the Employee would be primarily
based within 50 miles of the Bank's home office.
(g) In the event the employment of the Employee is terminated by the
Company or the Bank without cause under Section 8(a) hereof or the Employee's
employment is terminated voluntarily or involuntarily in accordance with Section
9 hereof and the Bank or the Company fails to make timely payment of the amounts
then owed to the Employee under this Agreement, the Employee shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees, incurred
by the Employee in taking action to collect such amounts or otherwise to enforce
this Agreement, plus interest on such amounts at the rate of one percent above
the prime rate (defined as the base rate on corporate loans at large U.S. money
center commercial banks as published by the Wall Street Journal), compounded
monthly, for the period from the date the payment is due to be paid to the
Employee until payment is made. Such reimbursement and interest shall be in
addition to all rights which the Employee is otherwise entitled to under this
Agreement.
9. Change in Control.
(a) (i) If during the term of this Agreement there is a change in
control of the Company or of the Bank, the Employee shall be entitled to
receive, and the Company or the Bank shall pay to the Employee, as liquidated
damages for services previously rendered to the Company and the Bank, a lump sum
cash payment as provided for herein (subject to Sections 9(c) and 9(e) below) in
the event the Employee terminates his employment or this Agreement voluntarily
for "Good Reason" (as defined in Section 9(d) hereof), or such employment is
terminated involuntarily by the Company or the Bank, in connection with or
within two years after the change in control of the Company or of the Bank,
unless such termination occurs by virtue of normal retirement, permanent and
total disability (as defined in Section 22(e) of the Code) or death, or
termination for cause (as defined in Section 8(a)(i)). Subject to Sections 9(c)
and 9(e) below, the amount of the payment shall
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equal: (X) a lump sum cash payment equal to the amount of the Employee's then
current compensation (as defined in Section 8(a)(ii) hereof), which, but for
such termination, would be payable for the remaining term of this Agreement,
plus (Y) a lump sum cash severance payment equal to one year's current
compensation (as defined in Section 8(a)(ii) hereof). For purpose of both (X)
and (Y) in the preceding sentence, the Employee's current compensation shall not
be less than such compensation calculated as of the end of the fiscal year
preceding such change in control. Payment under this Section 9(a) shall be in
lieu of any amount owed to the Employee as liquidated damages for termination
without cause under Sections 8(a)(i) and (ii) hereof. Section 8(a)(iii) shall
apply in the case of any termination of employment within the scope of this
Section 9(a).
The Employee shall not be obligated to seek other employment, nor shall
payment under this Section 9(a) be reduced by any compensation which the
Employee may receive from other employment with another employer after
termination of the Employee's employment with the Company and the Bank. No
payment hereunder shall affect the Employee's entitlement to any vested
retirement benefits or other compensation payments.
(ii) If during the term of this Agreement there is a change in
control of the Company or of the Bank and the Employee without Good Reason
voluntarily terminates his employment or this Agreement in connection with or
within two years after such change in control, the Employee shall be entitled to
receive as a severance payment, or in lieu of a severance payment, for services
previously rendered the Company and the Bank, a lump sum cash payment equal to
one year's current compensation (as defined in Section 8(a)(ii) hereof), but not
less than such compensation calculated as of the end of the fiscal year
preceding such change in control.
(b) A "change in control of the Company", for purposes of this
Agreement, shall be deemed to have taken place if: (i) any person becomes the
beneficial owner of 25 percent or more of the total number of voting shares of
the Company; (ii) any person has received the approval of the Office of Thrift
Supervision ("OTS") under Section 10 of the Home Owners' Loan Act, as amended,
or regulations issued thereunder, to acquire control of the Company; (iii) any
person has received approval of the OTS under Section 7(j) of the Federal
Deposit Insurance Act, as amended, or regulations issued thereunder, to acquire
control of the Company; (iv) any person has entered into a binding agreement to
acquire (by means of stock purchase, cash tender or exchange offer, merger or
other business combination) beneficial ownership of 25% or more of the total
number of voting shares of the Company, whether or not the requisite approval
for such acquisition has been received under the Home Owners' Loan Act, as
amended, the Federal Deposit Insurance Act, as amended, or the respective
regulations issued thereunder, provided that a change in control will not be
deemed to have occurred under this clause (iv) unless the Board of Directors of
the Company has made a determination that such action
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constitutes or will constitute a change in control, and further provided that a
change in control shall no longer be deemed to have occurred upon the
termination of such agreement for any reason whatsoever; (v) any person becomes
the beneficial owner of 10 percent or more, but less than 25 percent, of the
total number of voting shares of the Company, provided that the OTS has made a
determination that such beneficial ownership constitutes a change of control of
the Company under the Home Owners' Loan Act, as amended, or the regulations
promulgated thereunder; (vi) any person (other than persons named as proxies
solicited on behalf of the Board of Directors of the Company) holds irrevocable
proxies for 25 percent or more of the total number of voting shares of the
Company, provided that a change in control will not be deemed to have occurred
under this clause (vi) unless the Board of Directors of the Company has made a
determination that such action constitutes or will constitute a change in
control; or (vii) as the result of, or in connection with, any cash tender or
exchange offer, merger, or other business combination, sale of assets or
contested proxy solicitation or election, or any combination of the foregoing
transactions, the persons who were directors of the Company before such
transaction shall cease to constitute at least two-thirds of the Board of
Directors of the Company or any successor institution. For purposes of this
Section 9(b), a "person" includes an individual, corporation, partnership, trust
or group acting in concert. A person for these purposes shall be deemed to be a
beneficial owner as that term is used in Rule 13d-3 under the Securities
Exchange Act of 1934. A "change in control of the Bank," for purposes of this
Agreement, shall be deemed to have taken place if the Company's beneficial
ownership of the total number of voting shares of the Bank is reduced to less
than 50 percent.
Notwithstanding anything to the contrary contained herein, a change in
control shall no longer be deemed (as of the time of the determination of the
Board referred to below) to have occurred for the purposes of this Agreement by
virtue of any transaction or event which terminates or ceases to exist, with
respect to which the Board of Directors of the Company by resolution adopted by
the affirmative vote of at least two-thirds (2/3) of the members of the Board
of Directors in office immediately prior to such transaction or event, shall
specify that such transaction or event shall no longer be deemed to constitute a
change in control of the Company for purposes of this Agreement; provided that
at the time of making a determination under this subsection the Board of
Directors may attach such terms and conditions to its determination as it shall,
in its discretion, deem appropriate; and provided further that the provisions of
this paragraph shall not be applicable to any transaction or event pursuant to
which any person becomes the beneficial owner of 50% or more of the total number
of voting shares of the Company.
(c) Notwithstanding any other provisions of this Agreement or of any
other agreement, contract, or understanding heretofore or hereafter entered into
by the Employee with the Company or the Bank, except an agreement, contract, or
9
understanding hereafter entered into that expressly modifies or excludes
application of this Section 9(c) (the "Other Agreements"), and notwithstanding
any formal or informal plan or other arrangement heretofore or hereafter adopted
by the Company or the Bank for the direct or indirect provision of compensation
to the Employee (including groups or classes of participants or beneficiaries of
which the Employee is a member), whether or not such compensation is deferred,
is in cash, or is in the form of a benefit to or for the Employee (a "Benefit
Plan"), the Employee shall not have any right to receive any payment or other
benefit under this Agreement, any Other Agreement, or any Benefit Plan if such
payment or benefit, taking into account all other payments or benefits to or for
the Employee under this Agreement, all Other Agreements, and all Benefit Plans,
would cause any payment to the Employee under this Agreement to be considered a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code as then
in effect (a "Parachute Payment"). In the event that the receipt of any such
payment or benefit under this Agreement, any Other Agreement, or any Benefit
Plan would cause the Employee to be considered to have received a Parachute
Payment under this Agreement, then the Employee shall have the right, in the
Employee's sole discretion, to designate those payments or benefits under this
Agreement, any Other Agreements, and/or any Benefit Plans, which should be
reduced or eliminated so as to avoid having the payment to the Employee under
this Agreement be deemed to be a Parachute Payment.
(d) For purposes of this Agreement, "Good Reason" shall include (i)
any material reduction of the Employee's salary payable under Section 2 hereof
or deferred compensation credited under Section 10 hereof; (ii) any material
reduction in the percentage of the pre-tax net income of the Company or of the
Bank, as the case may be, paid as an annual bonus to the Employee below the
percentage of pre-tax net income paid to the Employee by the Company or the
Bank, as the case may be, as an annual bonus for the most recent fiscal year
ending prior to the change in control; (iii) the Employee's relocation to any
location more than 50 miles from the location at which the Employee performed
his duties immediately prior to the time of a change in control, except for
required travel to an extent substantially consistent with the Employee's
business travel obligations immediately prior to the time of the change in
control and (iv) a material reduction in the position, authority, duties or
responsibilities of the Employee from those which existed prior to the change in
control or the reduction in the Employee's job stature as reflected in his
title. For example, Good Reason would exist if the Employee's duties and
responsibilities were changed so that he was no longer the Chairman and Chief
Executive Officer of both the Company and the Bank. This would be the case in
the event that the Company or the Bank were to become a subsidiary or a division
of the resulting entity or the resulting insured institution in a merger if the
Employee was designated as Chairman and Chief Executive Officer of the
subsidiary or division but not of the resulting entity or insured institution.
If the Employee notifies the Board of Directors of the Company and the Bank that
he intends to resign voluntarily for
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Good Reason, he shall state in his notice the reasons why he believes the Good
Reason exists for his resignation. Unless the Company and the Bank, within 30
days of the date of the Employee's notice of resignation, reject the Employee's
statement that Good Reason exists, the Employee's entitlement to payment under
Section 9(a)(i) hereof shall be conclusive. If both Boards of Directors reject
the Employee's statement of Good Reason within such 30 day period, the dispute
shall be resolved by the American Arbitration Association, under the rules
thereof, but the Company and the Bank shall have burden of proving that their
rejection of the Employee's statement was proper.
(e) Notwithstanding any other provision of this Agreement, any
payment to the Employee pursuant to Section 8(a)(ii) or Section 9(a)(i) hereof
shall not exceed (i) three times the Employee's then current compensation (as
such term is defined in Section 8(a)(ii) hereof) at the time of the Employee's
termination, or (ii) the Employee's then current compensation (as so defined)
for a period equal to the remaining term of this Agreement plus one year.
10. Deferred Compensation Account.
(a) Under the Prior Agreement, as well as a previous employment
agreement between the Bank and the Employee dated July 1, 1981 (as continued by
the Agreement dated March 26, 1986, as amended on March 16, 1987), the Bank has
entered into on its books and records an account for the benefit of the Employee
which is the Employee's Deferred Compensation Account, hereinafter called the
"Employee Account." In addition to the sums previously deposited in the
Employee Account, the Bank, as of each December 31st while the Employee remains
in the employ of the Company or the Bank, beginning with December 31, 1994,
shall credit such Employee Account for the benefit of the Employee with an
amount equal in the aggregate to 20 percent of the earnings of Employee based on
his Form W-2 withholding statement for the year ending on such date, plus 20
percent of that amount contributed by the Company and the Bank to the Employee's
actuarial pension accrual, paid or payable to Employee as if it were earned
salary. In addition, on December 31st of each year that a balance exists in the
Employee Account, the Bank also shall credit to the Employee Account an amount
equal to interest at the rate of the weighted average of contractual interest of
mortgages in force for the Bank as of the prior December 31st, computed on the
balance in the Employee Account as of the prior December 31st, adjusted for
investment directions made pursuant to Section 10(b) hereof or withdrawals since
that date.
(b) The Employee may direct that all or part of the Employee Account
shall be deemed to be invested in (i) the common stock of the Company and/or
(ii) U.S. government securities of such type and maturities as directed by the
Employee and/or (iii) such other types of investments as directed by the
Employee. Such direction shall be made pursuant to procedures promulgated by
the Bank. To the extent the Employee directs the investment of the Employee
Account, that portion shall not be eligible to be credited
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with interest as provided in Section 10(a) hereof, but that portion shall be
credited with income or dividends earned on the amounts under investment
direction as though the Employee actually owned such investments personally.
(c) At any time, the balance of the Employee Account shall be deemed
to equal the sum of (i) the fair market value of deemed investments under the
Employee's investment direction, together with income or dividends earned on
such deemed investments, and (ii) the amount in the Employee Account which is
not deemed to be under the Employee's investment direction, together with
interest as provided in Section 10(a) hereof.
(d) If the Employee shall remain in the employ of the Company and the
Bank until he retires due to age or early retirement, or is earlier retired for
disability, or if the Employee's employment with the Company or the Bank is
involuntarily terminated, the Employee shall be entitled to receive the balance
in the Employee Account, together with interest as provided in Section 10(a)
hereof, in such a manner that the Employee will receive ten annual payments,
such payments to begin on the second day of January after his retirement for
age, early retirement or disability or his involuntary termination of
employment, as the case may be, except that at the option of the Bank it may be
paid over a lesser period. For purposes of this Section 10, the Employee's
voluntary termination of employment with Good Reason in connection with or
within two years after a change in control of the Company or of the Bank (as
defined in Section 9(b) hereof) shall be deemed to be an involuntary termination
of employment.
If the Employee voluntarily terminates his employment with the Company or
the Bank, the Employee will be entitled to receive 75 percent of the balance in
the Employee Account together with interest as provided in Section 10(a) hereof,
in such a manner that the Employee will receive five annual payments, such
payments to begin on the second day of January after his voluntary termination
of employment, except that at the option of the Bank it may be paid over a
lesser period.
If the Employee should retire due to age, disability, voluntary termination
or early retirement, the payments due under this Section 10(d) may, at the
option of the Bank, begin at Employee's age 70 and said payments may, at the
option of the Bank, be made in such a manner that the Employee will receive 15
annual payments (or over such lesser period determined by the Bank).
(e) Should the Employee die while in the employ of the Company or the
Bank or before receiving the required balance in the Employee Account, the Bank
will pay, at the option of the Bank either in a lump sum or in ten annual
installments (or over such lesser period determined by the Bank), to any
beneficiary or beneficiaries designated by Employee, and filed with the
corporate secretary of the Bank, the unpaid balance of the Employee Account with
interest as provided in Section 10(a) hereof, provided, however, in the absence
of such beneficiary designation, or if all
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the beneficiaries designated shall have predeceased him, such payment or
payments shall be paid to the Employee's estate. Any lump sum payment shall be
made within a reasonable period of time after the Employee's death, but such
period shall not exceed 12 months.
(f) One year prior to the Employee's retirement for age, disability,
voluntary termination of employment or early retirement, the Employee may elect
to extend the period within which he or his beneficiaries or estate may receive
distributions from the Employee Account to a period not in excess of 15 years,
except that at the option of the Bank it may be paid over a lesser period. Such
extended installments shall be made in the same manner as provided in Section
10(d) hereof. Such election must be filed in writing with the corporate
secretary of the Bank.
(g) All expenses and costs in connection with the administration of
the deferred compensation provided for in this Agreement shall be borne by the
Bank.
(h) It is expressly understood and agreed that the Bank shall have
only a contractual obligation to make payments to the Employee and his
beneficiary as provided for herein, and that the Employee shall not have any
right, title or interest in the Employee Account. The Employee shall have a
contractual right to receive the amounts provided for hereunder only when he
shall comply with the conditions set forth herein.
11. Disability. If the Employee shall become disabled or incapacitated to
the extent that the Employee is unable to perform the Employee's duties and
responsibilities hereunder, the Employee shall be entitled to receive (in
addition to insurance benefits provided for in Section 4 hereof) disability
benefits of the type provided for other executive officers of the Company and
the Bank.
12. No Assignments. This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto. However,
in the event of the death of the Employee, all rights to receive payments
hereunder shall become rights of the Employee's estate.
The Bank and the Company will require any successor or assign (whether
direct or indirect), by purchase, merger, consolidation or otherwise, to all or
substantially all of the business and/or assets of the Bank or the Company, by
agreement expressly, absolutely and unconditionally to assume and agree to
perform this Agreement in the same manner and to the same extent that the Bank
and Company would be required to perform if no such succession or assignment has
taken place.
13. Other Contracts. The Employee shall not, during the term of this
Agreement, have any other paid employment other than with a subsidiary of the
Company, except with the prior approval of the Boards of Directors of the
Company and the Bank.
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14. Amendments or Additions; Action by Board of Directors. No amendments
or additions to this Agreement shall be binding unless in writing and signed by
all parties hereto. The prior approval by a two-thirds affirmative vote of the
full Boards of Directors of the Company and the Bank shall be required in order
for the Company and the Bank to authorize any amendments or additions to this
Agreement, to give any consents or waivers of provisions of this Agreement, or
to take any other action under this Agreement including any termination of
employment with or without cause under Section 8(a) hereof, except that a
majority affirmative vote of the full Boards shall be sufficient for the Boards
to approve an annual renewal of this Agreement under Section 5 hereof.
15. Section Headings. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
17. Governing Law. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
Delaware.
18. Allocation of Payments. Notwithstanding any other provisions of this
Agreement, the obligations of the Bank to make payments hereunder shall be
limited to the amount of such payments permitted by Regulatory Bulletin 27a
issued by the OTS or any other applicable law or regulation in effect from time
to time during the term of this Agreement. All additional payments contemplated
under the terms of this Agreement in excess of the amount indicated in the
preceding sentence shall be an obligation of the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: ST. PAUL BANCORP, INC.
______________________________ By _______________________________
(Secretary)
ATTEST: ST. PAUL FEDERAL BANK FOR SAVINGS
______________________________ By _______________________________
(Secretary)
EMPLOYEE
__________________________________
Joseph C. Scully
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