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EXHIBIT 10.4
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (hereinafter referred to as this "AGREEMENT") is
entered into as of the ___ day of ___________, 199_, by and between Columbia
Federal Savings Bank, a savings bank chartered under the laws of the United
States (hereinafter referred to as the "EMPLOYER"), and __________________, an
individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as a Vice President of the
EMPLOYER;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the EMPLOYER desires to retain the services
of the EMPLOYEE as a Vice President of the EMPLOYER;
WHEREAS, the EMPLOYEE desires to continue to serve as a Vice President of
the EMPLOYER; and
WHEREAS, the EMPLOYEE and the EMPLOYER desire to enter into this AGREEMENT
to set forth their understanding as to their respective rights and obligations
in the event of the termination of EMPLOYEE's employment under the
circumstances set forth in this AGREEMENT.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYER and the EMPLOYEE hereby agree as follows:
1. Employment and Term.
(a) Term. This AGREEMENT shall commence on the effective date of the
EMPLOYER's conversion from mutual to stock form and shall end thirty-six
(36) months thereafter, subject to extension pursuant to subsection (b)
of this Section 1 (hereinafter, including any such extensions, referred
to as the "TERM"), and to earlier termination as provided herein.
(b) Extension. Prior to each anniversary of the date of this AGREEMENT,
the Board of Directors of the EMPLOYER shall review this AGREEMENT and
document its approval of this AGREEMENT in the minutes of the Board of
Directors. In connection with such annual review, the TERM shall be
extended for a one-year period beyond the then-effective expiration date,
provided the Board of Directors of the EMPLOYER determines in a duly
adopted resolution that this AGREEMENT should be extended. Any such
extension shall be subject to the written consent of the EMPLOYEE.
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2. Termination of Employment.
(a) Termination for JUST CAUSE. In the event that the EMPLOYER
terminates the employment of the EMPLOYEE before the expiration of the
TERM because of the EMPLOYEE's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit,
intentional failure or refusal to perform the duties and responsibilities
assigned in this AGREEMENT, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, conviction of a felony or for fraud or
embezzlement, or material breach of any provision of this AGREEMENT
(hereinafter collectively referred to as "JUST CAUSE"), the EMPLOYEE
shall not receive, and shall have no right to receive, any compensation
or other benefits for any period after such termination.
(b) Termination in Connection with a CHANGE OF CONTROL.
(i) In the event that in connection with a CHANGE OF CONTROL
(hereinafter defined), including, without limitation, a
termination other than for JUST CAUSE within six months prior to a
CHANGE OF CONTROL, or within one year after a CHANGE OF CONTROL
the employment of the EMPLOYEE is terminated by the EMPLOYER for
any reason other than JUST CAUSE before the expiration of the
TERM, then the following shall occur:
(A) The EMPLOYER shall promptly pay to the EMPLOYEE or to
his beneficiaries, dependents or estate an amount equal to
the product of three multiplied by the amount of his then
current annual salary;
(B) The EMPLOYEE, his dependents, beneficiaries and estate
shall continue to be covered under all BENEFIT PLANS in
which the EMPLOYEE is a participant immediately prior to
the CHANGE OF CONTROL of the EMPLOYER at the EMPLOYER's
expense as if the EMPLOYEE were still employed under this
AGREEMENT until the earliest of the expiration of the TERM
or the date on which the EMPLOYEE is included in another
employer's benefit plans as a full-time employee; and
(C) The EMPLOYEE shall not be required to mitigate the
amount of any payment provided for in this AGREEMENT by
seeking other employment or otherwise, nor shall any
amounts received from other employment or otherwise by the
EMPLOYEE offset in any manner the obligations of the
EMPLOYER hereunder, except as specifically stated in
subparagraph (B).
(ii) The EMPLOYEE may voluntarily terminate his employment
pursuant to this AGREEMENT within twelve months following a CHANGE
OF CONTROL and shall be entitled to compensation as set forth in
Section 2(b)(i) of this AGREEMENT in the event that:
(A) the present capacity or circumstances in which the
EMPLOYEE is employed are materially changed (including,
without limitation, a material reduction in
responsibilities or authority, or the assignment of duties
or
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responsibilities substantially inconsistent with those
normally associated with the position of Vice President);
(B) the EMPLOYEE is no longer a Vice President of the
EMPLOYER;
(C) the EMPLOYEE is required to move his personal
residence, or perform his principal executive functions,
more than thirty-five (35) miles from his primary office as
of the date of the commencement of the TERM of this
AGREEMENT; or
(D) the EMPLOYER otherwise breaches this AGREEMENT in any
material respect.
In the event that payments pursuant to this subsection (b) would result
in the imposition of a penalty tax pursuant to Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder (hereinafter collectively referred to as "SECTION
280G"), such payments shall be reduced to the maximum amount which may be
paid under SECTION 280G without exceeding such limits. Payments pursuant
to this subsection (b) also may not exceed applicable limits established
by the Office of Thrift Supervision (hereinafter referred to as the
"OTS"). In the event a reduction in payments is necessary in order to
comply with the requirements of this AGREEMENT relating to the
limitations of SECTION 280G or applicable OTS limits, the EMPLOYEE may
determine, in his sole discretion, which categories of payments are to be
reduced or eliminated.
(c) Death of the EMPLOYEE. The TERM shall automatically terminate upon
the death of the EMPLOYEE. In the event of such death, the EMPLOYEE's
estate shall be entitled to receive the compensation due the EMPLOYEE
through the last day of the calendar month in which the death occurred,
except as otherwise specified herein.
(d) "Golden Parachute" Provision. Any payments made to the EMPLOYEE
pursuant to this AGREEMENT or otherwise are subject to and conditioned
upon their compliance with 12 U.S.C. Section 1828(k) and any regulations
promulgated thereunder.
(e) Definition of "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events: (i) the acquisition of ownership or
power to vote more than 25% of the voting stock of the EMPLOYER or
Columbia Financial of Kentucky, Inc.; (ii) the acquisition of the ability
to control the election of a majority of the directors of the EMPLOYER or
Columbia Financial of Kentucky, Inc.; (iii) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the EMPLOYER or Columbia Financial
of Kentucky, Inc., cease for any reason to constitute at least two-thirds
thereof; provided, however, that any individual whose election or
nomination for election as a member of the Board of Directors was
approved by a vote of at least two-thirds of the directors then in office
shall be considered to have continued to be a member of the Board of
Directors; or (iv) the acquisition by any person or entity of "conclusive
control" of the EMPLOYER within the meaning of 12 C.F.R. Section
574.4(a), or the acquisition by any person or entity of "rebuttable
control" within the meaning of 12 C.F.R. Section 574.4(b) that has not
been rebutted in accordance with 12 C.F.R. Section 574.4(c). For
purposes of this paragraph, the term
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"person" refers to an individual or corporation, partnership, trust,
association, or other organization, but does not include the EMPLOYEE and
any person or persons with whom the EMPLOYEE is "acting in concert"
within the meaning of 12 C.F.R. Part 574.
(f) Legal Fees. EMPLOYER shall promptly pay all legal fees and expenses
which EMPLOYEE may incur as a result of EMPLOYEE or EMPLOYER contesting
the validity or enforceability of this AGREEMENT if a court of competent
jurisdiction renders a final decision in favor of EMPLOYEE with respect
to any such contest, or to the extent agreed to by EMPLOYER and EMPLOYEE
in an agreement of settlement with respect to any such contest.
3. Special Regulatory Events. Notwithstanding Section 2 of this
AGREEMENT, the obligations of the EMPLOYER to the EMPLOYEE shall be as follows
in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the EMPLOYER's affairs by a notice served
under Section 8(e) (3) or (g) (1) of the Federal Deposit Insurance Act
(hereinafter referred to as the "FDIA"), the EMPLOYER's obligations under
this AGREEMENT shall be suspended as of the date of service of such
notice, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the EMPLOYER shall (i) pay the EMPLOYEE all of the
compensation withheld while the obligations in this AGREEMENT were
suspended and (ii) reinstate any of the obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYER's affairs by an order issued
under Section 8(e) (4) or (g) (1) of the FDIA, all obligations of the
EMPLOYER under this AGREEMENT shall terminate as of the effective date of
such order; provided, however, that vested rights of the EMPLOYEE shall
not be affected by such termination.
(c) If the EMPLOYER is in default as defined in Section 3(x)(1) of the
FDIA, all obligations under this AGREEMENT shall terminate as of the date
of default; provided, however, that vested rights of the EMPLOYEE shall
not be affected.
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the EMPLOYER, (i) by the
Director of the OTS, or his or his designee at the time that the Federal
Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the EMPLOYER under the authority contained
in Section 13(c) of the FDIA or (ii) by the Director of the OTS, or his
or his designee, at any time the Director of the OTS, or his or his
designee, approves a supervisory merger to resolve problems related to
the operation of the EMPLOYER or when the EMPLOYER is determined by the
Director of the OTS to be in an unsafe or unsound condition. No vested
rights of the EMPLOYEE shall be affected by any such action.
4. Consolidation, Merger or Sale of Assets. Nothing in this AGREEMENT
shall preclude the EMPLOYER from consolidating with, merging into, or
transferring all, or substantially all, of its assets to another corporation
that assumes all of the EMPLOYER's obligations and undertakings
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hereunder. Upon such a consolidation, merger or transfer of assets, the term
"EMPLOYER," as used herein, shall mean such other corporation or entity, and
this AGREEMENT shall continue in full force and effect.
5. Confidential Information. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the EMPLOYER and its customers and businesses. The EMPLOYEE agrees and
covenants not to disclose or use for his own benefit, or the benefit of any
other person or entity, any confidential information, unless or until the
EMPLOYER consents to such disclosure or use or such information becomes common
knowledge in the industry or is otherwise legally in the public domain. The
EMPLOYEE shall not knowingly disclose or reveal to any unauthorized person any
confidential information relating to the EMPLOYER, its parent, subsidiaries or
affiliates, or to any of the businesses operated by them, and the EMPLOYEE
confirms that such information constitutes the exclusive property of the
EMPLOYER. The EMPLOYEE shall not otherwise knowingly act or conduct himself
(a) to the material detriment of the EMPLOYER, its subsidiaries, or affiliates,
or (b) in a manner which is inimical or contrary to the interests of the
EMPLOYER.
6. Nonassignability. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries or his legal
representatives without the EMPLOYER's prior written consent; provided,
however, that nothing in this Section 6 shall preclude (a) the EMPLOYEE from
designating a beneficiary to receive any benefits payable hereunder upon his
death, or (b) the executors, administrators, or other legal representatives of
the EMPLOYEE or his estate from assigning any rights hereunder to the person or
persons entitled thereto.
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7. No Attachment. Except as required by law, no right to receive payment
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 of assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null,
void and of no effect.
8. Binding Agreement. This AGREEMENT shall be binding upon, and inure to
the benefit of, the EMPLOYEE and the EMPLOYER and their respective permitted
successors and assigns.
9. Amendment of AGREEMENT. This AGREEMENT may not be modified or amended,
except by an instrument in writing signed by the parties hereto.
10. Waiver. No term or condition of this AGREEMENT shall be deemed to
have been waived, nor shall there be an 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 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 or as to any act
other than the act specifically waived.
11. Severability. If, for any reason, any provision of this AGREEMENT is
held invalid, such invalidity shall not affect the other provisions of this
AGREEMENT not held so invalid, and each such other provision shall, to the full
extent consistent with applicable law, continue in full force and effect.
12. Headings. The headings of the 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.
13. Governing Law; Regulatory Authority. This AGREEMENT has been executed
and delivered in the Commonwealth of Kentucky and its validity, interpretation,
performance and enforcement shall be governed by the laws of the Commonwealth
of Kentucky, except to the extent that federal law is governing. References to
the OTS included herein shall include any successor primary federal regulatory
authority of the EMPLOYER.
14. Effect of Prior Agreements. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the EMPLOYER or any predecessor of the EMPLOYER and the
EMPLOYEE.
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15. Notices. Any notice or other communication required or permitted
pursuant to this AGREEMENT shall be deemed delivered if such notice or
communication is in writing and is delivered personally or by facsimile
transmission or is deposited in the United States mail, postage prepaid,
addressed as follows:
If to the EMPLOYER:
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, Kentucky 41017-3085
Attention: President
If to the EMPLOYEE:
_____________________
_____________________
_____________________
IN WITNESS WHEREOF, the EMPLOYER has caused this AGREEMENT to be executed
by its duly authorized officer, and the EMPLOYEE has signed this AGREEMENT,
each as of the day and year first above written.
Attest: COLUMBIA FEDERAL SAVINGS BANK
________________________________ By_________________________________
Attest:
________________________________ ___________________________________