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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 ___________, 1998, 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.
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(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 the performance of
the EMPLOYEE and this AGREEMENT and document the results of its review
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.
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(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.
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(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
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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 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"), as set forth in OTS Regulatory Bulletin 27a.
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
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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 a majority thereof; provided, however, that any
individual whose election or nomination for election as a member of the
Board of Directors of the EMPLOYER or its holding company 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 of the EMPLOYER or its holding company; or (iv) the
acquisition by any person or entity of "conclusive control" of the
EMPLOYER within the meaning of 12 C.F.R. ss.574.4(a), or the
acquisition by any person or entity of "rebuttable control" within the
meaning of 12 C.F.R. ss.574.4(b) that has not been rebutted in
accordance with 12 C.F.R. ss.574.4(c). For purposes of this paragraph,
the term "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.
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(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 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.
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
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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. If
this AGREEMENT conflicts with any applicable federal law, including 12 C.F.R.
ss. 563.39, as now or hereafter in effect, then federal law shall govern.
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.
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:
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If to the EMPLOYER:
Columbia Federal Savings Bank
2497 Dixie Highway
Fort Mitchell, Kentucky 41017-3085
Attention: President
If to the EMPLOYEE:
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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:
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