Employment Agreement - Falbo

Employment Agreement – Lundstrom

Retirement and Transition Agreement - Lundstrom

3 Year Change in Control

2 Year Change in Control

Severance Agreement

 

EX-10.1 3 v172595_ex10-1.htm EX-10.1

Exhibit 10.1

 

TierOne CORPORATION AND TierOne BANK

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January 28, 2010 by and between TierOne Corporation, a business corporation organized and existing under the laws of the State of Wisconsin (the “Company”), TierOne Bank, a federally chartered stock savings bank, and Michael J. Falbo (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company and the Bank (collectively, the “Employers”) each desire to employ the Executive as Chief Executive Officer;

 

WHEREAS, the Company and the Bank desire to assure themselves of the continued availability of the Executive’s services as provided in this Agreement; and

 

WHEREAS, the Executive is willing to serve the Company and the Bank on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company, the Bank and the Executive hereby agree as follows:

 

SECTION 1.

EFFECTIVE DATE; EMPLOYMENT.

 

This Agreement shall be effective on the date first written above (the “Effective Date”).  The Company and the Bank agree to employ the Executive, and the Executive hereby agrees to such employment, during the period and upon the terms and conditions set forth in this Agreement.

 

SECTION 2.

EMPLOYMENT PERIOD.

 

(a)           The terms and conditions of this Agreement shall be and remain in effect for a period of one year beginning on the Effective Date, plus such extensions, if any, as are provided pursuant to Section 2(b) hereof (the “Employment Period”).

 

 

 


 

 

(b)           Except as provided in Sections 2(c) and 2(d), prior to the first annual anniversary of the Effective Date and each annual anniversary thereafter, the Boards of Directors of the Employers shall consider and review (after taking into account all relevant factors, including the Executive’s performance) a one-year extension of the term of this Agreement, and the term shall continue to extend each year (beginning with the first annual anniversary date) if the Boards of Directors so approve such extension, unless the Executive gives written notice to the Employers of the Executive’s election not to extend the term, with such notice to be given by the Executive not less than ninety (90) days prior to any such anniversary date.  If either Board of Directors elects not to extend the term, it shall give written notice of such decision to the Executive not less than ninety (90) days prior to any such anniversary date. If the Executive does not receive such notice, he may, by written notice given at any time during the ninety (90) days prior to the relevant anniversary date, request from the Board of Directors written confirmation that the term has been extended and, if such confirmation is not received by the Executive within thirty (30) days after the request therefor is made, the Executive may treat the term as having not been extended.  Upon termination of the Executive’s employment with either of the Employers for any reason whatsoever, any annual extensions provided pursuant to this Section 2(b), if not theretofore discontinued, shall automatically cease.  All actions to be taken by the Board of Directors under this Section 2(b) may be taken by the Compensation Committee of the Board of Directors.

 

(c)           Notwithstanding Section 2(b) above, if at the time the term of this Agreement would otherwise renew pursuant to Section 2(b) above either (i) the Bank’s Supervisory Agreement with the Office of Thrift Supervision (the “OTS”) dated as of January 15, 2009 (the “Supervisory Agreement”) requires the non-objection of the OTS to such renewal after notice is first provided to the OTS or (ii) either Employer is deemed to be in “troubled condition”) as defined in 12 C.F.R. §563.555 or is otherwise subject to 12 C.F.R. Part 359, then the term of this Agreement shall not renew unless and until all regulatory non-objections, approvals and consents required to be obtained pursuant to the Supervisory Agreement and 12 C.F.R. Part 359 are obtained by the Employers.

 

(d)           Nothing in this Agreement shall be deemed to prohibit the Employers at any time from terminating the Executive’s employment during the Employment Period with or without notice for any reason, provided that the relative rights and obligations of the Employers and the Executive in the event of any such termination shall be determined under this Agreement.

 

SECTION 3.

DUTIES.

 

(a)           Throughout the Employment Period, the Executive shall serve as the Chief Executive Officer of each of the Employers, having such power, authority and responsibility and performing such duties as are prescribed by or under the Bylaws of each of the Employers and as are customarily associated with such position.  The Executive shall devote his full business time, attention, skills and efforts (other than during weekends, holidays, vacation periods, and periods of illness or leaves of absence and other than as permitted or contemplated by Section 7 hereof) to the business and affairs of the Employers and shall use his best efforts to advance the interests of the Employers.

 

 

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(b)           The Executive shall be appointed to the Board of Directors of the Company (the “Company Board”) and the Board of Directors of the Bank (the “Bank Board”) as of the Effective Date.  Throughout the Employment Period, the Bank Board (or, if applicable, its nominating committee) shall nominate the Executive to be a director of the Bank when his term expires, subject to the fiduciary duties of the Bank Board, and the Company agrees to approve his election as a director of the Bank.  Throughout the Employment Period, the Company Board (or, if applicable, its nominating committee) shall nominate the Executive to be a director of the Company when his term expires and recommend his election to the shareholders of the Company, subject to the fiduciary duties of the Company Board.

 

SECTION 4.

CASH COMPENSATION.

 

(a)           In consideration for the services to be rendered by the Executive hereunder, the Employers shall pay to him a salary of five hundred thousand dollars ($500,000) annually (“Base Salary”).  The Executive’s Base Salary shall be payable in approximately equal installments in accordance with the Employers’ customary payroll practices for senior officers.  Base Salary shall include any amounts of compensation deferred by the Executive under any tax-qualified retirement or welfare benefit plan or any other deferred compensation arrangement.  The Company Board and the Bank Board shall review the Executive’s annual rate of salary at such times during the Employment Period as they deem appropriate, but not less frequently than once every twelve months, and may, in their respective discretion, approve an increase therein.  In addition to Base Salary, the Executive may receive other cash compensation from the Employers for services hereunder at such times, in such amounts and on such terms and conditions as the Company Board or the Bank Board may determine from time to time.  Any increase in the Executive’s annual salary shall become the Base Salary of the Executive for purposes hereof.  The Executive’s Base Salary as in effect from time to time cannot be decreased by the Company and/or the Bank without the Executive’s express prior written consent.

 

(b)           The Executive shall be entitled to participate in an equitable manner with all other executive officers of the Employers in discretionary bonuses as authorized by the Company Board or the Bank Board to executive officers.  No other compensation provided for in this Agreement shall be deemed a substitute for the Executive’s right to participate in such bonuses when and as declared by the Company Board or the Bank Board.

 

(c)           Within ten business days following the Effective Date, the Employers shall pay to the Executive in a single lump sum a signing bonus in the amount of $50,000.

 

 

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SECTION 5.

EMPLOYEE BENEFIT PLANS AND PROGRAMS.

 

(a)           During the Employment Period, the Executive shall be treated as an employee of the Company and the Bank and shall be entitled to participate in and receive benefits under any and all qualified or non-qualified retirement, pension, savings, profit-sharing or stock bonus plans, any and all group life, health (including hospitalization, medical and major medical), dental, accident and long-term disability insurance plans, and any other employee benefit and compensation plans (including, but not limited to, any incentive compensation plans or programs, stock option and appreciation rights plans and restricted stock plans) as may from time to time be maintained by, or cover employees of, the Company and the Bank, in accordance with the terms and conditions of such employee benefit plans and programs and compensation plans and programs and consistent with the Company’s and the Bank’s customary practices.  Nothing paid to the Executive under any such plan or program will be deemed to be in lieu of other compensation to which the Executive is entitled under this Agreement.

 

(b)           During the Employment Period, the Employers shall provide the Executive with the use of an automobile leased or purchased by the Employers.  The Employers shall pay for all costs of insurance of coverage, repairs, maintenance and other incidental expenses, including fuel and oil.

 

(c)           During the Employment Period, the Employers will reimburse and/or pay for the Executive’s costs of membership in a club located in Lincoln, Nebraska and in the Nebraska Club (or such other dining club as reasonably agreed to by the Employers and the Executive), including all membership bonds or surety, initiation or membership fees, annual dues and capital assessments (“Club Expenses”).  The Executive shall be reimbursed for the cost of Club Expenses expended by the Executive no later than March 15 of the year immediately following the year in which the Club Expenses were incurred.

 

SECTION 6.

INDEMNIFICATION AND INSURANCE.

 

(a)           During the Employment Period and for a period of six years thereafter, the Company shall cause the Executive to be covered by and named as an insured under any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Company or service in other capacities at the request of the Company.  The coverage provided to the Executive pursuant to this Section 6 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Company or any successor.

 

(b)           To the maximum extent permitted under applicable law, during the Employment Period and for a period of six years thereafter, the Company shall indemnify the Executive against and hold him harmless from any costs, liabilities, losses and exposures that may be incurred by the Executive in his capacity as a director or officer of the Company or any subsidiary or affiliate.

 

 

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SECTION 7.

OUTSIDE ACTIVITIES.

 

The Executive may serve as a member of the boards of directors of such business, community and charitable organizations as he may disclose to and as may be approved by the Company Board and the Bank Board (which approval shall not be unreasonably withheld), provided that in each case such service shall not materially interfere with the performance of his duties under this Agreement or present any conflict of interest.  The Executive may also engage in personal business and investment activities which do not materially interfere with the performance of his duties hereunder, provided that such activities are not prohibited under any code of conduct or investment or securities trading policy established by either Employer and generally applicable to all similarly situated executives. If the Executive is discharged or suspended, or is subject to any regulatory prohibition or restriction with respect to participation in the affairs of the Bank, he shall continue to perform services for the Company in accordance with this Agreement but shall not directly or indirectly provide services to or participate in the affairs of the Bank in a manner inconsistent with the terms of such discharge or suspension or any applicable regulatory order.

 

SECTION 8.

WORKING FACILITIES AND EXPENSES.

 

It is understood by the parties that the Executive’s principal place of employment shall be at the Employers’ principal executive office located in Lincoln, Nebraska, or at such other office within 25 miles of the address of such principal executive office, or at such other office as the Employers and the Executive may mutually agree upon.  The Employers shall provide the Executive at his principal place of employment with a private office, secretarial services and other support services and facilities suitable to his position with the Employers and necessary or appropriate in connection with the performance of his assigned duties under this Agreement.  The Executive shall perform his duties in person at such office, other than when he is required to travel for business purposes.  The Employers shall reimburse the Executive for (i) his ordinary and necessary business expenses attributable to the Employers’ business in accordance with the policies and practices of the Employers, including the Executive’s travel and entertainment expenses incurred in connection with the performance of his duties for the Employers under this Agreement, and (ii) his travel expenses to and from his home state of Wisconsin in such amounts and at such times during the term of this Agreement as shall be reasonably acceptable to the Employers, in each case upon presentation to the Employers of an itemized account of such expenses in such form as the Employers may reasonably require.  Such reimbursement shall be paid promptly by the Employers and in any event no later than March 15 of the year immediately following the year in which such expenses were incurred.

 

SECTION 9.

TERMINATION WITHOUT ADDITIONAL COMPANY LIABILITY.

 

(a)           In the event that the Executive’s employment with the Employers shall terminate during the Employment Period on account of:

 

 

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(i)           the discharge of the Executive for “cause,” which, for purposes of this Agreement, shall mean a discharge because the Company Board or the Bank Board determines that the Executive has: (A) committed an act of personal dishonesty or incompetence; (B) engaged in willful misconduct or fraud; (C) breached his fiduciary duties for personal profit; (D) intentionally failed to perform his assigned or stated duties under this Agreement, other than any failure resulting from the Executive’s incapacity due to physical or mental injury or illness; (E) willfully violated any law, rule or regulation (other than traffic violations or similar offenses), written agreement or final cease-and-desist order; (F) materially breached the terms of this Agreement; (G) committed an act involving moral turpitude in the course of his employment with the Company and its subsidiaries; (H) been convicted of a felony; or (I) become the subject of any proceeding initiated by a federal or state banking agency to remove him from office;

 

(ii)           the Executive’s voluntary resignation from employment (including voluntary retirement) with the Employers for reasons other than those specified in Section 10(b); or

 

(iii)            the death of the Executive while employed by the Employers, or the termination of the Executive’s employment because of “Disability” as defined in Section 9(b) below;

 

then in any of the foregoing events, the Employers shall have no further obligations under this Agreement, other than (A) the payment to the Executive of his earned but unpaid Base Salary as of the date of the termination of his employment, (B) the payment to the Executive of the benefits to which he is entitled under all applicable employee benefit plans and programs and compensation plans and programs, and (C) the provision of such other benefits, if any, to which he is entitled as a former employee under the Employers’ employee benefit plans and programs and compensation plans and programs.

 

(b)           “Disability” shall be deemed to have occurred if the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company and its subsidiaries.  The existence of such physical or mental impairment shall be determined by a physician selected by the Chief Medical Officer at the University of Nebraska Medical Center at Omaha, Nebraska, and the physician shall certify the existence or absence of such impairment to the Employers and the Executive.

 

 

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(c)           During any period in which the Executive is absent due to physical or mental impairment, the Employers may, without breaching this Agreement, appoint another person or persons to act as interim Chief Executive Officer pending the Executive’s return to his duties on a full-time basis hereunder or his termination as a result of such Disability.  Prior to the Executive’s employment being terminated due to Disability under Section 9(d) hereof, the Executive shall continue to receive his full Base Salary, bonuses and other benefits to which he is entitled under this Agreement, including continued participation in all employee benefit plans and programs.

 

(d)           The Employers may provide notice to the Executive in writing that it intends to terminate the Executive’s employment under this Agreement, with the termination date to be on or after the date that the Executive has been absent from his duties hereunder on a full-time basis for six consecutive months due to any physical or mental impairment.  At the time his employment hereunder is terminated due to Disability, (i) the Executive shall not be entitled to any payments or benefits pursuant to Sections 4 and 5 hereof for periods subsequent to such date of termination, and (ii) the Executive shall become entitled to receive the disability payments that may be available under any applicable long-term disability plan.

 

SECTION 10.

TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.

 

(a)           The term “Change in Control” shall mean a change in the ownership of the Company or the Bank or a change in the effective control of the Company or the Bank, in each case as provided under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder.  In no event, however, shall a Change in Control be deemed to have occurred as a result of any of the following events: (i) any acquisition of securities or assets of the Company, the Bank, or a subsidiary of either of them, by the Company, the Bank, or any subsidiary of either of them, or by any employee benefit plan maintained by any of them, (ii) any capital infusion into the Company or the Bank pursuant to which additional shares of common stock of the Company or the Bank are newly issued, provided that all shares of common stock of the Company and the Bank which are outstanding immediately prior to such capital infusion continue to remain outstanding immediately following such capital infusion, or (iii) any assisted transaction as described in 12 U.S.C. §1823 or the placement of the Bank into conservatorship or receivership.

 

(b)           The term “Good Reason” shall mean a termination by the Executive of his employment based on the following:

 

(i) any material breach of this Agreement by the Employers, including without limitation any of the following: (1) a material diminution in the Executive’s base compensation, (2) a material diminution in the Executive’s authority, duties, titles or responsibilities as prescribed in Section 3, or (3) any requirement that the Executive report to a corporate officer or employee of the Employers instead of reporting directly to the Boards of Directors of the Employers, or

 

(ii) any material change in the geographic location at which the Executive must perform his services under this Agreement;

 

 

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provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Employerswithin ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Employersshall thereafter have the right to remedy the condition within thirty (30) days of the date the Employersreceived the written notice from the Executive.  If the Employersremedythe condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Employersdo not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a notice of termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

 

(c)           Subject to Section 11 below, if the Executive’s employment by the Employers shall be terminated concurrently with or within one (1) year subsequent to a Change in Control and during the term of this Agreement by (i) the Employers for other than Cause, Disability, retirement or the Executive’s death or (ii) the Executive for Good Reason, then the Employers shall pay to the Executive a severance benefit in a lump sum payment, within 30 days following the date of termination of the Executive’s employment, equal to the Executive’s Base Salary for the period of 12 months based on the annual rate of Base Salary that was being paid as of the date the Executive’s employment was terminated.

 

SECTION 11.                         LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES.

 

If the payments pursuant to Section 10 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Employers or their subsidiaries or affiliates, would constitute a “parachute payment” under Section 280G of the Code, then the amount payable by the Employers pursuant to Section 10 hereof shall be reduced by the minimum amount necessary to result in no portion of the amount payable by the Employers under Section 10 being non-deductible to the Employers pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. In no event shall the amount payable under Section 10 exceed three times the Executive’s average taxable income from the Employers for the five calendar years (or, if less, the number of preceding years in which the Executive was employed by the Employers) preceding the year in which the date of termination occurs, with any amounts to be provided subsequent to the date of termination to be discounted to present value in accordance with Section 280G of the Code.  The determination of any reduction in the payments to be made pursuant to Section 10 shall be based upon the opinion of independent tax counsel selected by the Employers and paid by the Employers.  Such counsel shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the date of termination.  Nothing contained in this Section 11 shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment under any circumstances other than as specified in this Section 10, or a reduction in the payment specified in Section 10 below zero.

 

 

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SECTION 12.

SOURCE OF PAYMENTS; NO DUPLICATION OF PAYMENTS.

 

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Company or the Bank.  Payments pursuant to this Agreement shall be allocated between the Company and the Bank in proportion to the level of activity and the time expended on such activities by the Executive as determined by the Company and the Bank on a quarterly basis, unless the applicable provision of this Agreement specifies that the payment shall be made by either the Company or the Bank.  In no event shall the Executive receive duplicate payments or benefits from the Company and the Bank.

 

SECTION 13.

COVENANT NOT TO COMPETE.

 

The Executive hereby covenants and agrees that, in the event of his termination of employment with the Employers for any reason prior to the expiration of the Employment Period (other than a termination of employment in connection with or within 12 months following a Change in Control), for a period of two years following the date of his termination of employment with the Employers (or, if less, for the Remaining Employment Period), he shall not, without the written consent of the Employers, become an officer, employee, consultant, director or trustee of any savings bank, savings and loan association, savings and loan holding company, bank or bank holding company, or any direct or indirect subsidiary or affiliate of any such entity, that entails working within any county in which the Company or the Bank maintains an office.

 

SECTION 14.

CONFIDENTIALITY.

 

Unless he obtains the prior written consent of the Employers, the Executive shall at all times keep confidential and shall refrain from using for the benefit of himself, or any person or entity other than the Company or any entity which is a subsidiary of the Company or of which the Company is a subsidiary, any material document or information obtained from the Company, or from its parent or subsidiaries, in the course of his employment with any of them concerning their properties, operations or business (unless such document or information is readily ascertainable from public or published information or trade sources or has otherwise been made available to the public through no fault of his own) until the same ceases to be material (or becomes so ascertainable or available); provided, however, that nothing in this Section 14 shall prevent the Executive, with or without the Employers’ consent, from participating in or disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding or the Employers’ public reporting requirements to the extent that such participation or disclosure is required under applicable law.

 

SECTION 15.

SOLICITATION.

 

The Executive hereby covenants and agrees that, for a period of two years following his termination of employment with the Employers for any reason (other than a termination of employment in connection with or within 12 months following a Change in Control), he shall not, without the written consent of the Employers, either directly or indirectly:

 

 

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(a)           solicit, offer employment to, or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company or any of its subsidiaries or affiliates to terminate his employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any savings bank, savings and loan association, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits, making loans or doing business within the counties specified in Section 13;

 

(b)           provide any information, advice or recommendation with respect to any such officer or employee to any savings bank, savings and loan association, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits, making loans or doing business within the counties specified in Section 13, that is intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company or any of its subsidiaries or affiliates to terminate his employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any savings bank, savings and loan association, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits, making loans or doing business within the counties specified in Section 13; or

 

(c)           solicit, provide any information, advice or recommendation or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any customer of the Company or the Bank to terminate an existing business or commercial relationship with the Company or the Bank.

 

SECTION 16.

NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.

 

The termination of the Executive’s employment during the Employment Period or thereafter, whether by the Employers or by the Executive, shall have no effect on the vested rights of the Executive under the Company’s or the Bank’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans, ESOP Supplemental Executive Retirement Plan, 401(k) Supplemental Executive Retirement Plan or other employee benefit plans or programs, or compensation plans or programs in which the Executive was a participant.

 

 

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SECTION 17.

SUCCESSORS AND ASSIGNS.

 

(a)           This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other party; provided, however, that the Employers 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 Employers, by an assumption agreement in form and substance  satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Employers would be required to perform it if no such succession or assignment had taken place.  Failure of the Employers to obtain such an assumption agreement prior to the effectiveness of any such succession or assignment shall be a breach of this Agreement and shall entitle the Executive to compensation from the Employers in the same amount and on the same terms as the compensation pursuant to Section 10 hereof.  For purposes of implementing the provisions of this Section 17(a), the date which any such succession without an assumption agreement becomes effective shall be deemed the date of termination of the Executive’s employment.

 

(b)           This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devises and legatees.  If the Executive should die while any amounts would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s beneficiary.

 

SECTION 18.

NOTICES.

 

Any communication required or permitted to be given under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other parties:

 

If to the Executive:

 

Michael J. Falbo

At the address last appearing

on the personnel records of

the Employers

 

 

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If to the Employers:

 

TierOne Corporation

TierOne Bank

1235 N Street

Lincoln, Nebraska 68508

(or the address of the Employers’ principal executive office, if different)

Attention: Chairman of the Board

 

with a copy, in the case of a notice to the Employers, to:

 

Elias, Matz, Tiernan & Herrick L.L.P.

734 15th Street, N.W.

Washington, D.C.  20005

Attention:  Raymond A. Tiernan, Esq.

     Gerald F. Heupel, Jr., Esq.

 

SECTION 19.

INDEMNIFICATION FOR ATTORNEYS’ FEES.

 

(a) The Company shall indemnify, hold harmless and defend the Executive against reasonable costs, including legal fees and expenses, incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved, as a result of his efforts, in good faith, to defend or enforce the terms of this Agreement.  For purposes of this Agreement, any settlement agreement which provides for payment of any amounts in settlement of the Employers’ obligations hereunder shall be conclusive evidence of the Executive’s entitlement to indemnification hereunder, and any such indemnification payments shall be in addition to amounts payable pursuant to such settlement agreement, unless such settlement agreement expressly provides otherwise.

 

(b) The Employers’ obligation to make the payments provided for in this Agreement and otherwise to perform their obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Employers may have against the Executive or others.  Unless it is determined that a claim made by the Executive was either frivolous or made in bad faith, the Company agrees to pay as incurred (and in any event no later than March 15 of the year immediately following the year in which incurred), to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of or in connection with his consultation with legal counsel or arising out of any action, suit, proceeding or contest (regardless of the outcome thereof) by the Employers, the Executive or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.  This Section 19(b) shall apply whether such consultation, action, suit, proceeding or contest arises before, on, after or as a result of a Change in Control.

 

 

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SECTION 20.

SEVERABILITY.

 

A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

 

SECTION 21.

WAIVER.

 

Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition.  A waiver of any provision of this Agreement must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought.  Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

 

SECTION 22.

COUNTERPARTS.

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

 

SECTION 23.

GOVERNING LAW.

 

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nebraska  applicable to contracts entered into and to be performed entirely within the State of Nebraska, except to the extent that federal law controls.

 

SECTION 24.

HEADINGS AND CONSTRUCTION.

 

The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.  Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.  If any statutory or regulatory provision referenced herein is subsequently changed or re-numbered, or is replaced by a separate provision, then the references in this Agreement to such statutory or regulatory provision shall be deemed to be a reference to such section as amended, re-numbered or replaced.

 

SECTION 25.

ENTIRE AGREEMENT; MODIFICATIONS.

 

This instrument contains the entire agreement of the parties relating to the subject matter hereof, and supersedes in its entirety any and all prior agreements, understandings or representations relating to the subject matter hereof.  No modifications of this Agreement shall be valid unless made in writing and signed by the parties hereto; provided, however, that if the Employers determine, after a review of all applicable IRS guidance regarding Section 409A of the Code, that this Agreement should be amended to avoid triggering the tax and interest penalties imposed by Section 409A of the Code, then the Employers may amend this Agreement to the extent necessary to avoid triggering the tax and interest penalties imposed by Section 409A of the Code.

 

 

13


 

 

SECTION 26.

REQUIRED REGULATORY PROVISIONS.

 

Notwithstanding anything herein contained to the contrary, any payments to the Executive by the Employers, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

 

The following provisions shall be applicable to the parties to the extent that they are required to be included in employment agreements between a savings bank and its employees pursuant to Section 563.39(b) of the Office of Thrift Supervision (“OTS”) Rules and Regulations, 12 C.F.R. §563.39(b), or any successor thereto, and shall be controlling in the event of a conflict with any other provision of this Agreement, including without limitation Section 10 hereof.

 

(a)           If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs pursuant to notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act (“FDIA”)(12 U.S.C. §§1818(e)(3) and 1818(g)(1)), 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 Executive all or part of the compensation withheld while its obligations under this Agreement were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

 

(b)           If the Executive is removed from office and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. §§1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the Executive and the Bank as of the date of termination shall not be affected.

 

(c)           If the Bank is in default, as defined in Section 3(x)(1) of the FDIA (12 U.S.C. §1813(x)(1)), all obligations under this Agreement shall terminate as of the date of default, but vested rights of the Executive and the Bank as of the date of termination shall not be affected.

 

(d)           All obligations under this Agreement shall be terminated pursuant to 12 C.F.R. §563.39(b)(5), except to the extent that it is determined that continuation of the Agreement for the continued operation of the Bank is necessary: (i) by the Director of the OTS, or his/her designee, at the time the Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA (12 U.S.C. §1823(c)); or (ii) by the Director of the OTS, or his/her designee, at the time the Director or his/her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director of the OTS to be in an unsafe or unsound condition, but vested rights of the Executive and the Employers as of the date of termination shall not be affected.

 

 

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SECTION 27.         DISPUTE RESOLUTION.

 

(a)           In the event of any dispute, claim, question or disagreement arising out of or relating to this Agreement or the breach hereof, the parties hereto shall use their best efforts to settle such dispute, claim, question or disagreement.  To this effect, they shall consult and negotiate with each other, in good faith, and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties.

 

(b)           If they do not reach such a solution within a period of thirty (30) days, then the parties agree first to endeavor in good faith to amicably settle their dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association (the “AAA”), before resorting to arbitration.

 

(c)           Thereafter, any unresolved controversy or claim arising out of or relating to this Agreement or the breach thereof, upon notice by any party to the other, shall be submitted to and finally settled by arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the AAA in effect at the time demand for arbitration is made by any such party.  The parties shall mutually agree upon a single arbitrator within thirty (30) days of such demand.  In the event that the parties are unable to so agree within such thirty (30) day period, then within the following thirty (30) day period, one arbitrator shall be named by each party.  A third arbitrator shall be named by the two arbitrators so chosen within ten (10) days after the appointment of the first two arbitrators.  In the event that the third arbitrator is not agreed upon, he or she shall be named by the AAA.  Arbitration shall occur in Lincoln, Nebraska.

 

(d)           The award made by all or a majority of the panel of arbitrators shall be final and binding, and judgment may be entered based upon such award in any court of law having competent jurisdiction.  The award is subject to confirmation, modification, correction or vacation only as explicitly provided in Title 9 of the United States Code.  The prevailing party shall be entitled to receive any award of pre- and post-award interest as well as attorney’s fees incurred in connection with the arbitration and any judicial proceedings relate thereto.  The parties acknowledge that this Agreement evidences a transaction involving interstate commerce.  The United States Arbitration Act and the Rules shall govern the interpretation, enforcement, and proceedings pursuant to this Section.  Any provisional remedy which would be available from a court of law shall be available from the arbitrators to the parties to this Agreement pending arbitration.  Either party may make an application to the arbitrators seeking injunctive relief to maintain the status quo, or may seek from a court of competent jurisdiction any interim or provisional relief that may be necessary to protect the rights and property of that party, until such times as the arbitration award is rendered or the controversy otherwise resolved.

 

(signature page follows)

 

 

 

15


 

 

IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to be executed and the Executive has hereunto set his hand, all as of the day and year first written above.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

 

 

/s/ Michael J. Falbo                                                                

Michael J. Falbo, Executive

 

 

 

ATTEST:                                        TierOne CORPORATION

 

 

                                                                  

By:

/s/ Judith A. Klinkman

 

By: 

/s/ Charles W. Hoskins

Judith A. Klinkman

 

 

Charles W. Hoskins

 

Assistant Secretary

 

 

Lead Director

 

[Seal]

 

 

ATTEST:                                        TierOne BANK

 

 

By:

/s/ Judith A. Klinkman

 

By: 

/s/ Charles W. Hoskins

Judith A. Klinkman

 

 

Charles W. Hoskins

 

Assistant Secretary

 

 

Lead Director

 

[Seal]

 

 

16


 



 

EX-10.1 2 ex-101.htm AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Exhibit 10.1


 

TierOne bank

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of December 17, 2008, by and between TierOne Bank, a federally chartered savings bank with its principal office in Lincoln, Nebraska (the “Bank”), and Gilbert G. Lundstrom (the “Executive”).

 

RECITALS

 

WHEREAS, the Executive is currently employed as the Chairman of the Board and Chief Executive Officer of the Bank pursuant to an amended and restated employment agreement between the Bank and the Executive entered into as of February 23, 1995, as subsequently amended effective December 18, 1996 and November 17, 2004 or by subsequent resolutions of the Board of Directors and as previously amended and restated effective as of July 27, 2006 (the “Bank Employment Agreement”);

 

WHEREAS, the Executive is currently employed as the Chairman of the Board and Chief Executive Officer of TierOne Corporation, the parent company of the Bank (the “Company”) pursuant to an employment agreement between the Company and the Executive entered into as of October 1, 2002 and as previously amended and restated effective as of July 27, 2006 and as amended effective as of December 20, 2006, which is being further amended and restated as of the date hereof (the “Company Employment Agreement”);

 

WHEREAS, the Bank desires to amend and restate the Bank Employment Agreement in order to make changes to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), as well as certain other changes;

 

WHEREAS, the Bank desires to assure itself of the continued availability of the Executive’s services as provided in this Agreement; and

 

WHEREAS, the Executive is willing to serve the Bank on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties agree as follows:

 

1.           Employment.  The Executive is hereby employed as the Chairman of the Board and Chief Executive Officer of the Bank, and shall be accountable to the Board of Directors of the Bank, and, subject to the authority and direction of the Board of Directors, shall have the duties and responsibilities customary to the office, including those specifically set out below. As Chairman of the Board and Chief Executive Officer, the Executive shall render management services to the Bank and its subsidiaries of the type customarily performed by persons situated in a similar management position. These services shall include, but not be limited to:

 

 

 

 

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(a)           conducting day-to-day management of the Bank;

 

(b)           hiring, making job assignments, compensating and discharging of the Bank’s employees;

 

(c)           recommending to the Bank’s Board of Directors policies for pricing deposits of the Bank and then implementing such pricing policies as the Bank’s Board of Directors approves;

 

(d)           recommending loan policies to the Bank’s Board of Directors concerning compliance with all of the normal and necessary operating needs of an insured savings and loan association;

 

(e)           providing advice to the Bank’s Board of Directors concerning compliance with all of the normal and necessary operating needs of an insured savings and loan association; and

 

(f)           performing such other duties and making such other recommendations to the Bank’s Board of Directors as the Bank’s Board of Directors may request; provided, that such duties are consistent with his present duties and with the Executive’s position as a senior executive officer in charge of the general management of the Bank.

 

The Executive will be elected as a member of the Board of Directors. If at any time during the term of employment the Executive shall fail to be reelected to the Board or the Board shall fail to reelect the Executive to the office of Chief Executive Officer or shall remove him from such office for other  than “Cause” (as defined in Section 6(b) hereof), the Executive shall have “Good Reason” (as further defined in Section 6(d) hereof) to terminate his services hereunder and the Executive shall have no further obligation under this Agreement.  The Executive hereby accepts the employment described herein and agrees to perform such duties as are commensurate with the position and to abide by the terms and conditions of this Agreement.

 

2.           Compensation.

 

(a)           Base Salary.  The Executive shall receive an annual base salary (“Base Salary”) at the rate of $575,000 per annum as of the Commencement Date (as defined in Section 4 hereof), which Base Salary shall be reviewed and adjusted by the Board of Directors at least annually.  The Board of Directors shall consider the recommendations of Mercer or some other mutually acceptable consulting firm concerning changes in the salary grade structure, which recommendations will be based on compensation data developed from its financial industry peer group data base (“Data Base”) then in effect and other relevant sources of statistical information pertaining to compensation practices for positions comparable to the Executive’s.  The Bank agrees to continue to employ Mercer or some

 

 

 

 

2


 

 

 

other mutually acceptable consulting firm which can provide comparable compensation data for the entire term of this Agreement, including any extension thereof.

 

Any increase in Base Salary or other compensation shall in no way limit or reduce any other obligation of the Bank hereunder and, once established at an increased specified rate, the Executive’s Base Salary hereunder shall not thereafter be reduced. The Executive’s salary shall be payable not less frequently than monthly and not later than the tenth day following the expiration of the month in question.

 

(b)           Discretionary Bonuses.  The Executive shall be entitled to participate in an equitable manner with all other executive officers of the Bank in discretionary bonuses as authorized and declared by the Board of Directors of the Bank to its executive employees. No other compensation provided for in this Agreement shall be deemed a substitute for the Executive’s right to participate in such bonuses when and as declared by the Board of Directors.

 

(c)           Expenses.  During the term of employment hereunder, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred (in accordance with policies and procedures at least as favorable to the Executive as those presently applicable to the senior executive officers of the Bank) in performing services hereunder, provided that the Executive properly accounts therefor in accordance with Bank policy.  Such reimbursement shall be paid promptly by the Bank and in any event no later than March 15 of the year immediately following the year in which such expenses were incurred.

 

(d)           Supplemental Benefit.  In addition, the Executive shall receive certain deferred compensation and insurance benefits pursuant to the terms of his 1993 Supplemental Retirement Plan Agreement with the Bank, as amended and restated (the “SERP”), and his Split Dollar Agreement with the Bank dated January 2, 1994, as amended from time to time (the “Split Dollar Agreement”).

 

3.           Benefits.

 

(a)           Participation in Retirement and Executive Benefit Plans. The Executive shall be entitled while employed hereunder to participate in, and receive benefits under, all plans relating to stock options, stock purchases, pension, thrift, profit-sharing, group life insurance, medical coverage, education, cash or stock bonuses, and other retirement or employee benefits or combinations thereof, that are now or hereafter maintained for the benefit of the Bank’s executive employees or for its employees generally.

 

(b)           Fringe Benefits.  The Executive shall be eligible while employed hereunder to participate in, and receive benefits under, any other fringe benefits which are or may become applicable to the Bank’s executive employees or to its employees generally. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the Base Salary or other compensation to the Executive hereunder.

 

 

 

 

3


 

 

 

 

4.           Term.  The term of employment under this Agreement shall be for an initial period of three years commencing on January 1, 2008 (the “Commencement Date”).  Beginning on the first anniversary of the Commencement Date, and on each anniversary thereafter, the term of employment under this Agreement shall be extended for a period of one year in addition to the then-remaining term of employment under this Agreement, it being the intent of the parties hereto that the Executive be assured of a continuous three (3) year term of employment, unless either the Board of Directors or the Executive gives contrary written notice to the other not less than 90 days in advance of the date on which the term of employment under this Agreement would otherwise be extended. The Board of Directors of the Bank shall, at the regularly scheduled Board of Directors meeting immediately prior to the beginning of the 90-day notice period referred to above, explicitly review this Agreement and the Executive’s performance hereunder and take specific action with respect to the extension of this Agreement pursuant to the terms hereof. Reference herein to the term of employment under this Agreement shall refer to both such initial term and such extended terms.

 

5.           Vacations.  The Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment under this Agreement, all such voluntary absences to count as vacation time, as follows:

 

(a)           The Executive shall be entitled to an annual vacation in accordance with the most favorable plans, policies, programs or practices of the Bank and its affiliated companies as in effect generally at any time with respect to other senior executives of the Bank but in no event less than three weeks per year, one week of which may be carried over one (1) year.

 

(b)           The timing of vacations shall be scheduled in a reasonable manner by the Executive. The Executive shall not be entitled to receive any additional compensation on account of any failure to take a vacation; nor shall more than one (1) week of unused vacation time be allowed to accumulate for more than one calendar year.

 

6.           Termination.

 

(a)           Death.  The Executive’s employment hereunder shall terminate upon his death.

 

(b)           Action by Board of Directors.  The Bank’s Board of Directors may terminate the Executive’s employment at any time, but any termination by the Board of Directors, other than termination for Cause, shall not prejudice the Executive’s right to compensation or other benefits under this Agreement. The Executive shall have no right to receive compensation or other benefits, excepting only Vested Benefits described in Section 9(a) hereof, for any period after termination for Cause. For the purposes of this Agreement, “Cause” shall mean (i) the willful failure by the Executive to perform his duties hereunder, other than any such failure resulting from the Executive’s incapacity due to physical or mental impairment; (ii) the commission by the Executive of an act involving moral turpitude

 

 

 

 

4


 

 

 

in the course of his employment with the Bank; (iii) any act of personal dishonesty by the Executive; (iv) incompetence; (v) willful misconduct; (vi) breach of fiduciary duty involving personal profit; (vii) willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or (viii) any material breach of the provisions of this contract. For purposes of this paragraph, no act, or failure to act, on the Executive’s part shall be considered “willful” unless the Bank’s Board of Directors shall determine in good faith, based upon all available facts, that such was done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Bank.

 

(c)           Termination by Regulatory Action.

 

(i)           If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. §1818(e)(3) and (g)(1)) (the “FDIA”), 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 (A) pay the Executive all or part of the compensation withheld while its obligations under this Agreement were suspended and (B) reinstate in whole or in part any of its obligations which were suspended.

 

(ii)           If the Executive is removed from office and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA (12 U.S.C. §1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the parties hereto shall not be affected.

 

(iii)           If the Bank becomes in default (as defined in Section 3(x)(1) of the FDIA, 12 U.S.C. §1813(x)(i)), all obligations under this Agreement shall terminate as of the date of default, but this provision shall not affect any vested rights of the parties hereto.

 

(iv)           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 Director of the Office of Thrift Supervision (the “Director”) or his or her designee, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director or his or her designee, at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by any such action.

 

(d)           Termination by the Executive.  The Executive may terminate his employment hereunder (i) for Good Reason, or (ii) if his health should become impaired to an extent that makes the continued performance of his duties hereunder hazardous to his

 

 

 

 

5


 

 

 

physical or mental health or his life, but any vested rights of the parties hereto shall not be affected by such action. For purposes of this Agreement, a termination for “Good Reason” shall mean a termination based on the following:

 

(A) any material breach of this Agreement by the Bank, including without limitation any of the following: (1) a material diminution in the Executive’s base compensation, (2) a material diminution in the Executive’s authority, duties, titles or responsibilities as prescribed in Section 1, or (3) any requirement that the Executive report to a corporate officer or employee of the Bank instead of reporting directly to the Board of Directors of the Bank, or

 

(B) any material change in the geographic location at which the Executive must perform his services under this Agreement;

 

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Bank within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Bank received the written notice from the Executive.  If the Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Bank does not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

 

(e)           Notice.  Any termination by the Bank pursuant to Subsections (b) or (c) above or by the Executive pursuant to Subsection (d) above shall be communicated by a written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a 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 the Executive’s employment under the provision so indicated.

 

(f)           Date of Termination. “Date of Termination” shall mean (i) if the Executive’s employment is terminated by his death, the date of his death, or (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination.

 

7.           Disability.

 

(a)           If, as a result of the Executive’s Disability as defined below, the Executive shall have been absent from his duties hereunder on a full-time basis for six consecutive months, and within 30 days after the Bank notifies the Executive in writing that it intends to replace him, the Executive shall not have returned to the performance of his duties hereunder on a full-time basis, the Bank may replace the Executive without breaching this Agreement. Such Disability will not act to terminate the Executive’s employment under this Agreement. For purposes of this Agreement, “Disability” shall be deemed to have

 

 

 

 

6


 

 

 

occurred if the Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank and its subsidiaries and affiliates.  Any Disability of the Executive shall be certified to the Bank and the Executive by a physician selected by the Chief Medical Officer at the University of Nebraska Medical Center at Omaha, Nebraska. For purposes of this Agreement, the Executive shall be deemed to have been absent from his duties hereunder on a full-time basis for six consecutive months if he has not, within any six-month period, attended to his duties on a full-time basis for 15 consecutive business days within such six-month period. Prior to replacement of the Executive pursuant to this section, and during any period of physical disability or mental impairment, the Bank may, without breaching this Agreement, appoint another person or persons to act as interim Chairman of the Board and interim Chief Executive Officer pending the Executive’s return to his duties on a full-time basis hereunder or his termination as a result of such disability.

 

(b)           If disabled within the meaning of this Section 7, the Bank shall maintain in full force and effect, for the continued benefit of the Executive for the remaining term of this Agreement as part of his overall disability benefits, including any extension thereof, all employee benefit plans and programs in which the Executive was entitled to participate immediately prior to the replacement date, provided that the Executive’s continued participation is possible under the general terms and provisions of such plans and programs. In the event the Executive’s participation in any such plan or program is barred as a result of such Disability, the Executive shall be entitled to receive a lump sum cash amount within thirty (30) days of such bar equal to the annual contributions, payments, credits or allocations which would have been made by the Bank to his account or on his behalf under such plans and programs from which his continued participation is barred.

 

(c)           During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to Disability, the Executive shall continue to receive his full Base Salary and Bonuses until the Executive is replaced in accordance with Section 7(a) hereof, or until the Executive terminates his employment pursuant to Section 6(d)(ii) hereof, whichever first occurs.

 

8.           Beneficiary.  If the Executive dies before receiving all the payments to which he is entitled, the remainder thereof shall be paid to such person (“Beneficiary”) as may be designated by an instrument in writing, and in a form acceptable to the Board, executed by the Executive and delivered to the Board in care of the Secretary of the Bank during the Executive’s lifetime, which designation may be changed from time to time by similar action. If no such designation is delivered to the Board, or if no such designated Beneficiary is then living, then the remaining distributions shall be paid to the surviving spouse of the Executive, or in the event there is no such surviving spouse, to the estate of the Executive.

 

 

 

 

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9.           Termination Benefits.

 

(a)           General.  If the Executive’s employment is terminated by the Bank or by the Executive for any reason, the Executive shall be entitled to all Vested Benefits. For purposes of this Agreement, the Executive’s “Vested Benefits” shall include the following amounts, payable as described herein: (i) all Base Salary for the time period ending on the Date of Termination; (ii) reimbursement for any and all monies advanced in connection with the Executive’s employment for reasonable and necessary expenses incurred by the Executive on behalf of the Bank for the time period ending on the Date of Termination; (iii) any and all other cash earned through the Date of Termination and deferred at the election of the Executive or pursuant to any deferred compensation plan then in effect; (iv) a lump sum payment of the ratable bonus or ratable incentive compensation otherwise payable to the Executive with respect to the year in which termination occurs to the extent provided by all bonus or incentive compensation plans in which the Executive is a participant; and (v) all other payments and benefits to which the Executive (or in the event of the Executive’s death, the Executive’s surviving spouse or other beneficiary) may be entitled as compensatory fringe benefits or under the terms of any benefit plan of the Bank, including but not limited to his SERP and his Split Dollar Plan Agreement, which was in effect on the Date of Termination (in the event that any compensatory fringe benefits or other benefits were reduced or eliminated by the Bank during the 180-day period prior to the Date of Termination, the Executive will also be entitled to payment of benefits under such plans as they existed prior to termination or reduction to the extent such plans are reinstated in whole or in part during the period ending 180 days after the Date of Termination). Payment of Accrued Benefits shall be made promptly in accordance with the Bank’s prevailing practice with respect to Subsections (i) and (ii) or, with respect to Subsections (iii), (iv) and (v), pursuant to the terms of the benefit plan or practice establishing such benefits.

 

(b)           Termination by the Bank.  If the Executive’s employment is terminated by the Bank (other than for Cause pursuant to Section 6(b) or by regulatory action pursuant to Section 6(c)), whether before or after a Change in Control, then the Executive shall be entitled to the benefits provided below:

 

(i)           The Bank shall pay to the Executive in a lump sum in cash within 25 business days after the Date of Termination (as hereinbefore defined) of employment an amount equal to the Executive’s “base amount” of compensation, as defined in Section 280G(b)(3) of the Code, times the number of years or fractional portion thereof remaining in the term of this Agreement as of the Date of Termination; plus

 

(ii)           The Bank shall cause any split dollar life insurance policy on the life of the Executive to be funded to the point of “N pay” (as defined in the SERP, in the event such policy is not already funded to the point of “N pay”, and cause the ownership of the policy to be transferred if the policy is purchased in accordance with the terms of the Split Dollar Agreement, as amended.

 

 

 

 

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(c)           Termination by the Executive.  If the Executive shall terminate his employment for Good Reason pursuant to Section 6(d) hereof, whether before or after a Change in Control, then the Executive shall be entitled to receive the compensation described in Section 9(b) on the same basis as is set forth in Section 9(b).

 

(d)           Definitions.  For purposes of Sections 9 and 14 of this Agreement, “Date of Termination” means the earlier of (i) the date upon which the Bank gives notice to the Executive of the termination of his employment with the Bank or (ii) the date upon which the Executive ceases to serve as an Executive of the Bank, and “Change in Control” is defined as a change in the ownership of the Bank or the Company, a change in the effective control of the Bank or the Company or a change in the ownership of a substantial portion of the assets of the Bank or the Company, in each case as provided under Section 409A of the Code and the regulations thereunder.

 

(e)           Limitation.

 

(i)           Any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and the regulations promulgated thereunder in 12 C.F.R. Part 359.

 

(ii)           Notwithstanding any other provision of this Agreement, if any portion of the termination benefits or any other payment under this Agreement, or under any other agreement with or plan of the Bank (in the aggregate “Total Payments”), would constitute an “excess parachute payment,” then the Total Payments to be made to the Executive shall be reduced such that the value of the aggregate Total Payments that the Executive is entitled to receive shall be one dollar ($1) less than the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code (or any successor provision) or which the Bank may pay without loss of deduction under Section 280G(a) of the Code (or any successor provision). For purposes of this Agreement, the terms “excess parachute payment” and “parachute payments” shall have the meanings assigned to them in Section 280G of the Code (or any successor provision), and such “parachute payments” shall be valued as provided therein. Present value for purposes of this Agreement shall be calculated in accordance with Sections 280G and 1274(d) of the Code (or any successor provision). Within sixty days following delivery of the Notice of Termination or notice by the Bank to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code (or any successor provision), the Executive and the Bank, at the Bank’s expense, shall obtain the opinion (which need not be unqualified) of nationally recognized tax counsel selected by the Bank and acceptable to the Executive in his sole discretion, which sets forth (A) the amount of the Base Period Income, (B) the amount and present value of Total Payments and (C) the amount and present value of any excess parachute payments without regard to the limitations of this Subsection 9(e). As used in this Subsection 9(e), the term “Base Period Income” means an amount equal to the Executive’s “annualized includible compensation for the base period” as defined in Section 280G(d)(1) of the Code (or any successor provision). For purposes of such opinion, the value of any noncash benefits or any deferred payment or benefit shall be determined in accordance with

 

 

 

 

9


 

 

 

the principles of Sections 280G(d)(3) and (4) of the Code (or any successor provisions), which determination shall be provided to the Bank and the Executive. Such opinion shall be dated as of the Date of Termination and addressed to the Bank and the Executive and shall be binding upon the Bank and the Executive. If such opinion determines that there would be an excess parachute payment, then the lump sum cash payment pursuant to Section 9(b)(i) hereof shall be first reduced or eliminated, with any additional required reductions in the Total Payments to be determined by the Bank, so that under the bases of calculations set forth in such opinion there will be no excess parachute payment. The provisions of this Subsection 9(e), including the calculations, notices and opinions provided for herein, shall be based upon the conclusive presumption that the following are reasonable: (1) the compensation and benefits provided for in Sections 2 and 3 hereof and (2) any other compensation, including but not limited to the Accrued Benefits, earned prior to the Date of Termination by the Executive pursuant to the Bank’s compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change in Control or the Date of Termination.

 

10.           No Duplication of Payments.  Notwithstanding any provision herein to the contrary, to the extent that payments and benefits, as provided by this Agreement, are paid to or received by the Executive under the Company Employment Agreement, such compensation payments and benefits paid by the Company will be subtracted from any amount due simultaneously to the Executive under similar provisions of this Agreement.  Payments pursuant to this Agreement and the Company Employment Agreement (other than severance and change in control payments and benefits pursuant to Section 9 hereof) shall be allocated in proportion to the level of activity and the time expended on such activities by the Executive as determined by the Company and the Bank on a quarterly basis.

 

11.           Other Activities.  The Executive shall be entitled, with or without remuneration: (i) to serve on the Board of Directors of other profit and non-profit corporations; and (ii) to continue to perform duties as a trustee or personal representative, or any other fiduciary capacity, so long as all of such duties do not unreasonably detract from the performance of duties under this Agreement.

 

12.           Indemnification.  In accordance with the provisions of 12 C.F.R. 545.121, the Bank shall save harmless and indemnify the Executive, against any financial losses, claims, damages or liabilities arising out of any alleged negligence or other act of the Executive during the term of this Agreement, provided that at the time of such loss, claim, damage or liability was sustained, the Executive was acting in the discharge of duties hereunder and within the scope of his employment and such loss, claim, damage or liability did not result from any willful and wrongful act or gross negligence of the Executive.

 

13.           Mitigation.  The Executive shall not be required to mitigate the amount of any severance benefits provided for in Section 9(a), or described in Sections 9(b)(i) or 9(b)(ii), of this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 9(a) of this Agreement be reduced by any compensation earned by the Executive as a result of employment by another employer or by retirement benefits after the date of termination or otherwise.

 

 

 

 

10


 

 

 

 

14.           No Assignments.

 

(a)           This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other party; provided, however, that the Bank 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, by an assumption agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession or assignment had taken place. Failure of the Bank to obtain such an assumption agreement prior to the effectiveness of any such succession or assignment shall be a breach of this Agreement and shall entitle the Executive to compensation from the Bank in the same amount and on the same terms as the compensation pursuant to Section 9(a) hereof. For purposes of implementing the provisions of this Section 14(a), if any such succession or assignment occurs without an assumption agreement, then such event shall be deemed to constitute Good Reason for purposes of Section 6(d) of this Agreement.

 

(b)           This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to the Executive hereunder if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s Beneficiary.

 

15.           Notice.  For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the address of the Bank’s executive offices or to the Executive’s last address appearing on the Bank’s personnel records, as the case may be (provided that all notices to the Bank shall be directed to the attention of the Board of Directors of the Bank with a copy to the Secretary of the Bank), or to such other address as either party may have furnished to the other in writing in accordance herewith.

 

16.           Amendments,  No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties hereto; provided, however, that if the Bank determines, after a review of the final regulations issued under Section 409A of the Code and all applicable IRS guidance, that this Agreement should be further amended to avoid triggering the tax and interest penalties imposed by Section 409A of the Code, the Bank may amend this Agreement to the extent necessary to avoid triggering the tax and interest penalties imposed by Section 409A of the Code.

 

 

 

 

11


 

 

 

17.           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.

 

18.           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.

 

19.           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 Nebraska.

 

20.           Dispute Resolution.

 

(a)           In the event of any dispute, claim, question or disagreement arising out of or relating to this Agreement or the breach hereof, the parties hereto shall use their best efforts to settle such dispute, claim, question or disagreement. To this effect, they shall consult and negotiate with each other, in good faith, and, recognizing their mutual interests, attempt to reach a just and equitable solution satisfactory to both parties.

 

(b)           If they do not reach such a solution within a period of thirty (30) days, then the parties agree first to endeavor in good faith to amicably settle their dispute by mediation under the Commercial Mediation Rules of the American Arbitration Bank (the “AAA”), before resorting to arbitration.

 

(c)           Thereafter, any unresolved controversy or claim arising out of or relating to this Agreement or the breach thereof, upon notice by any party to the other, shall be submitted to and finally settled by arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the AAA in effect at the time demand for arbitration is made by any such party. The parties shall mutually agree upon a single arbitrator within thirty (30) days of such demand. In the event that the parties are unable to so agree within such thirty (30) day period, then within the following thirty (30) day period, one arbitrator shall be named by each party. A third arbitrator shall be named by the two arbitrators so chosen within ten (10) days after the appointment of the first two arbitrators. In the event that the third arbitrator is not agreed upon, he or she shall be named by the AAA. Arbitration shall occur in Lincoln, Nebraska.

 

(d)           The award made by all or a majority of the panel of arbitrators shall be final and binding, and judgment may be entered based upon such award in any court of law having competent jurisdiction. The award is subject to confirmation, modification, correction or vacation only as explicitly provided in Title 9 of the United States Code. The prevailing party shall be entitled to receive an award of pre- and post-award interest as well as attorney’s fees incurred in connection with the arbitration and any judicial proceedings relate thereto. The parties acknowledge that this Agreement evidences a transaction involving interstate commerce. The United States Arbitration Act and the Rules shall govern the interpretation, enforcement, and proceedings pursuant to this Section. Any provisional remedy which would be available from a court of law shall be available from the arbitrators

 

 

 

 

12


 

 

 

to the parties to this Agreement pending arbitration. Either party may make an application to the arbitrators seeking injunctive relief to maintain the status quo, or may seek from a court of competent jurisdiction any interim or provisional relief that may be necessary to protect the rights and property of that party, until such times as the arbitration award is rendered or the controversy otherwise resolved.

 

21.           Trade Secrets.  The Executive agrees not to disclose to any person or entity, other than an employee of the Bank or a person to whom disclosure is reasonably necessary or appropriate, any confidential information of a material nature obtained while in the employ of the Bank regarding the business of the Bank, including its customers, products, prices, manner of operation, without first obtaining the Bank’s written consent. In the event the Executive breaches this Section, the Bank shall be entitled, among other remedies, to injunctive relief prohibiting the Executive from disclosing such information. This Section shall survive termination of this Agreement.

 

22.           Other Agreements.  The parties hereto acknowledge that the terms and provisions of this Agreement shall not impact any of the rights and obligations of the parties pursuant to the Company Employment Agreement or the Executive’s Supplemental Retirement Plan Agreement and Split Dollar Agreement with the Bank, each as amended from time to time.

 

 

 

 

 

13


 

 

 

IN WITNESS WHEREOF, the Bank has caused this amended and restated Agreement to be signed and its corporate seal affixed hereto, and the Executive has executed this Agreement, in duplicate, as of the date first written above.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

ATTEST:                                                                           TIERONE BANK

 

 

/s/  Judith A. Klinkman                                                    /s/  James A. Laphen

Judith A. Klinkman                                                          James A. Laphen

Assistant Secretary                                                         President and Chief Operating Officer

 

 

                                                                                           /s/  Gilbert G. Lundstrom

                                                                                           Gilbert G. Lundstrom, Executive

 

 

EX-10.3 5 v172595_ex10-3.htm EX-10.3

Exhibit 10.3

 

RETIREMENT AND TRANSITION AGREEMENT

 

This Retirement and Transition Agreement (the “Agreement”) is made this 28th day of January 2010, by and among Gilbert G. Lundstrom (the “Vice Chairman”), TierOne Corporation, a Wisconsin corporation (the “Company”), and its wholly owned subsidiary, TierOne Bank, a federally chartered savings bank with its principal office in Lincoln, Nebraska (the “Bank”).

 

WITNESSETH:

 

WHEREAS, the Vice Chairman currently serves as Chairman of the Board and Chief Executive Officer of the Company and the Bank (collectively, “TierOne”);

 

WHEREAS, the Vice Chairman currently is a party to amended and restated employment agreements with both the Company and the Bank, each dated as of December 17, 2008 (the “Employment Agreements”), setting forth the terms and conditions of his employment; and

 

WHEREAS, the Vice Chairman desires to retire from his current positions, and the parties hereto desire to set forth the terms and conditions under which the Vice Chairman will provide certain transitional and other services to TierOne.

 

NOW, THEREFORE, in consideration of the mutual premises and covenants contained herein, and intending to be legally bound, the parties agree as follows:

 

Section 1.  New Position; Term.

 

As of January 28, 2010 (the “Effective Date”), Mr. Lundstrom is hereby appointed as the Vice Chairman of the Board of Directors of each of the Company and the Bank for a period of one year following the Effective Date; provided, however, that the Board of Directors of the Company, the Board of Directors of the Bank or the Vice Chairman may terminate this Agreement by giving at least 30 days’ prior written notice to the other parties.

 

Section 2.   Duties as Vice Chairman.

 

During the term of this Agreement, the Vice Chairman shall provide the following services: (a) assistance to the new Chairman of the Board and Chief Executive Officer of the Company and the Bank in order to ensure a smooth transition; (b) assistance with the pending branch sale by the Bank; (c) assistance with the raising of additional capital; and (d) such other duties as shall be mutually agreed to by the Chairman and Chief Executive Officer of Tier One and the Vice Chairman.  The Vice Chairman shall report directly to the Chairman and Chief Executive Officer of TierOne and shall provide him periodically and no less frequently than monthly a written report summarizing the status of the various projects and matters on which he is assisting the Chairman and Chief Executive Officer. Such report shall describe the work performed for the period covered by the report. The Company and the Bank reasonably anticipate that the level of services to be provided by the Vice Chairman to the Company and the Bank after the Effective Date will permanently decrease to no more than twenty percent (20%) of the average level of the Vice Chairman’s bona fide services to the Company and the Bank over the immediately preceding thirty-six (36) month period prior to the Effective Date.

 

 

 


 

 

Section 3.  Compensation as Vice Chairman.

 

(a)           In consideration of his performing the services required under Section 2 of this Agreement, the Vice Chairman shall receive a Vice Chairman fee of $12,500 per month, payable monthly starting in February 2010.  The Vice Chairman fee shall be in addition to and not in lieu of any Board fees or committee fees otherwise payable to the Vice Chairman in his capacity as a director of the Company and the Bank.  No Vice Chairman fee shall be payable by the Company or the Bank (i) in the event of the failure of the Vice Chairman to provide the services required to be provided under Section 2 hereof or (ii) following the expiration or termination of this Agreement in accordance with its terms.

 

(b)           The Vice Chairman shall be entitled to receive insurance coverage on the same terms as other non-employee directors of the Company and the Bank.

 

Section 4.  Working Facilities and Expenses.

 

The Company and the Bank shall provide the Vice Chairman with an office for his use at the principal executive offices of the Company and the Bank in Lincoln, Nebraska, or at such other location as the Chief Executive Officer and the Vice Chairman may mutually agree upon.  TierOne shall provide the Vice Chairman with a private office, secretarial services and other support services and facilities suitable to his position with TierOne and necessary or appropriate in connection with the performance of his assigned duties under this Agreement.  TierOne shall reimburse the Vice Chairman for his ordinary and necessary business expenses attributable to TierOne’s business in accordance with the policies and practices of TierOne and that are customarily incurred by persons with similar duties and positions, including the Vice Chairman's travel and entertainment expenses incurred in connection with the performance of his duties for TierOne under this Agreement, in each case upon presentation to TierOne of an itemized account of such expenses in such form as TierOne may reasonably require.  Such reimbursement shall be paid promptly by TierOne.

 

Section 5.  Continued Indemnification.

 

(a)           In accordance with its existing Employment Agreement with the Vice Chairman, and to the same extent and scope as provided therein, for a period of six years following the Effective Date, the Company agrees to cause the Vice Chairman to be covered by and named as an insured under any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Company (including his prior service as Chairman of the Board and Chief Executive Officer of TierOne) or service in such other capacities at the request of TierOne.  The coverage provided to the Vice Chairman pursuant to this Section 5(a) shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Company or any successor.  To the maximum extent permitted under applicable law, for a period of six years following the Effective Date, the Company shall indemnify the Vice Chairman against and hold him harmless from any costs, liabilities, losses and exposures that may be incurred by the Vice Chairman in his capacity as a director or officer of the Company or any subsidiary or affiliate (including his prior service as Chairman of the Board and Chief Executive Officer of TierOne).

 

 

2


 

 

 

(b)           In accordance with the provisions of 12 C.F.R. §545.121, the Bank shall save harmless and indemnify the Vice Chairman against any financial losses, claims, damages or liabilities arising out of any alleged negligence or other act of the Vice Chairman occurring while serving as Vice Chairman as well as continue to indemnify him for any acts or omissions in connection with his prior service as Chairman of the Board and Chief Executive Officer of the Bank, provided that at the time of such loss, claim, damage or liability was sustained, the Vice Chairman was acting in the discharge of his duties hereunder or his prior duties as Chairman of the Board and Chief Executive Officer of the Bank and such loss, claim, damage or liability did not result from any willful and wrongful act or gross negligence of the Vice Chairman in his current or prior capacities.

 

Section 6.  Termination of Existing Employment Agreements.

 

By the mutual agreement of the parties hereto, the existing Employment Agreements shall be terminated and be of no further force and effect as of the Effective Date, and the Vice Chairman shall be entitled to the rights and payments set forth herein in lieu of any rights and payments under the Employment Agreements, except that any compensation under the Employment Agreements which has been earned but remains unpaid as of the Effective Date shall be paid as soon as practicable following the Effective Date in accordance with TierOne’s regular payroll practices.  The Vice Chairman shall no longer be considered an officer or employee of the Company or the Bank or any of their respective subsidiaries as of the Effective Date.  This Agreement shall have no effect on the Vice Chairman’s service as a director of each of the Company and the Bank or on the Vice Chairman’s rights to receive his vested benefits under TierOne’s benefit plans.

 

Section 7.  Source of Payments; No Duplication of Payments.

 

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Company or the Bank.  Payments pursuant to this Agreement shall be allocated between the Company and the Bank in proportion to the level of activity and the time expended on such activities by the Vice Chairman as determined by the Company and the Bank on a monthly basis, unless the applicable provision of this Agreement specifies that the payment shall be made either by the Company or the Bank.  In no event shall the Vice Chairman receive duplicate payments or benefits from the Company and the Bank.

 

Section 8.  Tax Withholding.

 

The Company and the Bank may make such provisions as they deem appropriate for the withholding pursuant to federal or state income tax laws of such amounts as the Company and the Bank determine they are required to withhold in connection with the payments to be made pursuant to this Agreement.

 

 

3


 

 

 

Section 9.  No Effect on Employee Benefit Plans or Programs.

 

Neither the termination of the Employment Agreements nor the execution and expiration or termination of this Agreement shall have any effect on the vested rights of the Vice Chairman under the Company’s or the Bank’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, split dollar agreement, or any other employee benefit plans or programs in which the Vice Chairman was a participant in his prior capacity as Chairman of the Board and Chief Executive Officer of TierOne.

 

Section 10.  Confidentiality.

 

Unless he obtains the prior written consent of the Company and the Bank, the Vice Chairman shall at all times keep confidential and shall refrain from using for the benefit of himself, or any person or entity other than the Company or any entity which is a subsidiary of the Company or of which the Company is a subsidiary, any material document or information obtained from the Company, or from its subsidiaries, in the course of his service to any of them concerning their properties, operations or business (unless such document or information is readily ascertainable from public or published information or trade sources or has otherwise been made available to the public through no fault of his own) until the same ceases to be material (or becomes so ascertainable or available); provided, however, that nothing in this Section 10 shall prevent the Vice Chairman, with or without the consent of the Company and the Bank, from participating in or disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding or the Company’s public reporting requirements to the extent that such participation or disclosure is required under applicable law.

 

Section 11.  Successors and Assigns.

 

This Agreement is personal to each of the parties hereto, and none of the parties may assign or delegate any of its rights or obligations hereunder without first obtaining the written consent of the other parties; provided, however, that the Company and the Bank 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 Company or the Bank, by an assumption agreement in form and substance satisfactory to the Vice Chairman, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company and the Bank would be required to perform it if no such succession or assignment had taken place.

 

Section 12.  Notices.

 

Any communication required or permitted to be given under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party:

 

 

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If to the Vice Chairman:

 

Gilbert G. Lundstrom

At the address last appearing

on the personnel records of

the Company and the Bank

 

If to TierOne:

 

TierOne Corporation

TierOne Bank

1235 N Street

Lincoln, Nebraska 68508

(or the address of TierOne’s principal executive offices, if different)

Attention: Chief Executive Officer

 

with a copy, in the case of a notice to TierOne, to:

 

Elias, Matz, Tiernan & Herrick L.L.P.

734 15th Street, N.W.

Washington, D.C.  20005

Attention:   Raymond A. Tiernan, Esq.

     Gerald F. Heupel, Jr., Esq.

 

Section 13.  Severability.

 

A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

 

Section 14.  Waiver.

 

Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition.  A waiver of any provision of this Agreement must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought.  Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

 

Section 15.  Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

 

 

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Section 16.  Governing Law.

 

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nebraska applicable to contracts entered into and to be performed entirely within the State of Nebraska, except to the extent that federal law controls.

 

Section 17.   Headings and Construction.

 

The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.  Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

 

Section 18.  Entire Agreement; Modifications.

 

This instrument contains the entire agreement of the parties relating to the subject matter hereof, and supersedes in its entirety any and all prior agreements, understandings or representations relating to the subject matter hereof (including the Employment Agreements, except for the continued indemnification provisions set forth in Section 5 hereof), except that the parties acknowledge that this Agreement shall not impact any of the rights and obligations of the parties with respect to the vested rights of the Vice Chairman under any of TierOne’s benefit plans. No modifications of this Agreement shall be valid unless made in writing and signed by the parties hereto.

 

Section 19.  Required Regulatory Provisions.

 

Notwithstanding anything herein contained to the contrary, any payments to the Vice Chairman by the Company or the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

 

 

 

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IN WITNESS WHEREOF, the Company and the Bank have caused this Agreement to be executed and the Vice Chairman has hereunto set his hand, all as of the day and year first written above.

 

 

 

 

 

/s/ Gilbert G. Lundstrom

 

 

 

Gilbert G. Lundstrom, Vice Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATTEST:

 

TierOne CORPORATION

 

 

 

 

 

 

 

 

 

 

By:

/s/ Judith A. Klinkman

 

By:

/s/ Charles W. Hoskins

 

Judith A. Klinkman

 

 

Charles W. Hoskins

 

Assistant Secretary

 

 

Lead Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATTEST:

 

TierOne BANK

 

 

 

 

 

 

 

 

 

 

By:

By:/s/ Judith A. Klinkman

 

By:

/s/ Charles W. Hoskins

 

Judith A. Klinkman

 

 

Charles W. Hoskins

 

Assistant Secretary

 

 

Lead Director

 

 

 

 

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14

 

 

EX-10.6 7 ex-106.htm AMENDED AND RESTATED THREE-YEAR CHANGE IN CONTROL AGREEMENT

Exhibit 10.6


 

TierOne BANK

AMENDED AND RESTATED THREE-YEAR CHANGE IN CONTROL AGREEMENT

 

 

THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (this “Agreement”) is effective the 17th day of December 2008, among TierOne Bank, a federally-chartered savings bank (the “Bank”), TierOne Corporation, a Wisconsin corporation and the holding company of the Bank (the “Company”), and _______________(the “Executive”).  The Company and the Bank are collectively referred to as the “Employers”.

 

INTRODUCTION

 

The Bank and the Executive previously entered into a certain Three-Year Change in Control Agreement dated as of ________ __, 2002 and amended and restated as of July 27, 2006 (the “Prior Agreement”).  This Agreement amends and restates the Prior Agreement in its entirety as hereinafter set forth in order to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including the guidance issued to date by the Internal Revenue Service (the “IRS”) and the final regulations issued by the IRS in April 2007.

 

WITNESSETH

 

WHEREAS, the Executive is presently an officer of the Bank;

 

WHEREAS, the Employers desire to be ensured of the Executive’s continued active participation in the business of the Employers; and

 

WHEREAS, in order to induce the Executive to remain in the employ of the Employers and in consideration of the Executive’s agreeing to remain in the employ of the Employers, the parties desire to specify the severance benefits which shall be due the Executive in the event that his employment with the Employers is terminated under specified circumstances;

 

NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

 

1.           Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

 

(a)           Annual Compensation.  The Executive’s “Annual Compensation” for purposes of this Agreement shall be deemed to mean the highest level of aggregate base salary and cash incentive compensation paid to the Executive by the Employers or any subsidiary thereof during the calendar year in which the Date of Termination occurs (determined on an annualized basis) or either of the two calendar years immediately preceding the calendar year in which the Date of Termination occurs.

 

 

 

 

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(b)           Cause. Termination of the Executive’s employment for “Cause” shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.  For purposes of this paragraph, no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Employers.

 

(c)           Change in Control.  “Change in Control” shall mean a change in the ownership of the Bank or the Company, a change in the effective control of the Bank or the Company or a change in the ownership of a substantial portion of the assets of the Bank or the Company, in each case as provided under Section 409A of the Code and the regulations thereunder.

 

(d)           Code.  “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e)           Date of Termination.  “Date of Termination” shall mean (i) if the Executive’s employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination.

 

(f)           Disability.  “Disability” shall mean the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank.

 

(g)           Good Reason.  Termination by the Executive of the Executive’s employment for “Good Reason” shall mean termination by the Executive following a Change in Control based on the occurrence of any of the following events:

 

(i) (A) a material diminution in the Executive’s base compensation as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, (B) a material diminution in the Executive’s authority, duties or responsibilities as in effect immediately prior to the Change in Control, or (C) a material diminution in the authority, duties or responsibilities of the officer (as in effect immediately prior to the date of the Change in Control) to whom the Executive is required to report immediately prior to the Change in Control,

 

(ii) any material breach of this Agreement by the Employers, or

 

 

 

 

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(iii) any material change in the geographic location at which the Executive must perform his services under this Agreement immediately prior to the Change in Control;

 

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Employers within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Employers shall thereafter have the right to remedy the condition within thirty (30) days of the date the Employers received the written notice from the Executive.  If the Employers remedy the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Employers do not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

 

(h)           IRS.  “IRS” shall mean the Internal Revenue Service.

 

(i)           Notice of Termination.  Any purported termination of the Executive’s employment by the Employers for any reason, including without limitation for Cause, Disability or Retirement, or by the Executive for any reason, including without limitation for Good Reason, shall be communicated by a written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a dated notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Employers’ termination of the Executive’s employment for Cause, which shall be effective immediately, and (iv) is given in the manner specified in Section 11 hereof.

 

(j)           Retirement.  “Retirement” shall mean voluntary termination by the Executive in accordance with the Employers’ retirement policies, including early retirement, generally applicable to their salaried employees.

 

2.           Term of Agreement.   The term of this Agreement shall be for three years, commencing as of October 1, 2008 (the “Start Date”).  Commencing on the first anniversary of the Start Date, the term of this Agreement shall extend for an additional year on each annual anniversary of the Start Date of this Agreement until such time as the Boards of Directors of the Employers or the Executive give notice in accordance with the terms of Section 11 hereof of their or his election, respectively, not to extend the term of this Agreement.  Such written notice of the election not to extend must be given not less than thirty (30) days prior to any such anniversary date.  If any party gives timely notice that the term will not be extended as of any annual anniversary date, then this Agreement shall terminate at the conclusion of its remaining term.  The Boards of Directors of the Employers will review this Agreement and the Executive’s performance annually for purposes of determining whether to extend this Agreement.  References herein to the term of this Agreement shall refer both to the initial term and successive terms.

 

 

 

 

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3.           Benefits Upon Termination.   If the Executive’s employment by the Employers shall be terminated subsequent to a Change in Control and during the term of this Agreement by (i) the Employers for other than Cause, Disability, Retirement or the Executive’s death or (ii) the Executive for Good Reason, then the Employers shall:

 

(a)           pay to the Executive in a lump sum as of the Date of Termination a cash severance amount equal to three (3) times the Executive’s Annual Compensation;

 

(b)           maintain and provide for a period ending at the earlier of (i) the expiration of the remaining term of this Agreement as of the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (b)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance and disability insurance in which the Executive was participating immediately prior to the Date of Termination; provided that any insurance premiums payable by the Employers or any successors pursuant to this Section 3(b) shall be payable at such times and in such amounts (except that the Employers shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Employers, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Employers in any taxable year shall not affect the amount of insurance premiums required to be paid by the Employers in any other taxable year; and provided further that if the Executive’s participation in any group insurance plan is barred, the Employers shall either arrange to provide the Executive with insurance benefits substantially similar to those which the Executive was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following the Date of Termination based on the annualized rate of premiums being paid by the Employers as of the Date of Termination; and

 

(c)           pay to the Executive, in a lump sum as of the Date of Termination, a cash amount equal to the projected cost to the Employers of providing benefits to the Executive until the expiration of the remaining term of this Agreement as of the Date of Termination pursuant to any other employee benefit plans, programs or arrangements offered by the Employers in which the Executive was entitled to participate immediately prior to the Date of Termination (excluding (x) the Employers’ Employee Stock Ownership Plan, (y) stock option and restricted stock plans of the Employers, and (z) cash incentive compensation included in Annual Compensation), with the projected cost to the Employers to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs and with any automobile-related costs to exclude any depreciation on Bank-owned automobiles.

 

4.           Limitation of Benefits under Certain Circumstances.   If the payments and benefits pursuant to Section 3 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Employers, would constitute a “parachute payment” under Section 280G of the Code, then the payments and benefits payable by the Employers pursuant to Section 3 hereof shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Employers under Section 3 being non-deductible to the

 

 

 

 

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Employers pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.  If the payments and benefits under Section 3 are required to be reduced, the cash severance shall be reduced first, followed by a reduction in the fringe benefits. The determination of any reduction in the payments and benefits to be made pursuant to Section 3 shall be based upon the opinion of independent counsel selected by the Employers and paid by the Employers.  Such counsel shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the Date of Termination, and may use such actuaries as such counsel deems necessary or advisable for the purpose.  Nothing contained in this Section 4 shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of  employment under any circumstances other than as specified in this Section 4, or a reduction in the payments and benefits specified in Section 3 below zero.

 

5.           Mitigation; Exclusivity of Benefits.

 

(a)           The Executive shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise.  The amount of severance to be provided pursuant to Section 3(a) hereof shall not be reduced by any compensation earned by the Executive as a result of employment by another employer after the Date of Termination or otherwise, but the amount of benefits to be provided pursuant to Section 3(b) hereof is subject to reduction as set forth therein.

 

(b)           The specific arrangements referred to herein are not intended to exclude any other benefits which may be available to the Executive upon a termination of employment with the Employers pursuant to employee benefit plans of the Employers or otherwise.

 

6.           Withholding.  All payments required to be made by the Employers hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employers may reasonably determine should be withheld pursuant to any applicable law or regulation.

 

7.           Nature of Employment and Obligations.

 

(a)           Nothing contained herein shall be deemed to create other than a terminable at will employment relationship between the Employers and the Executive, and the Employers may terminate the Executive’s employment at any time, subject to providing any payments specified herein in accordance with the terms hereof.

 

(b)           Nothing contained herein shall create or require the Employers to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Employers hereunder, such right shall be no greater than the right of any unsecured general creditor of the Employers.

 

8.           Source of Payments.  It is intended by the parties hereto that all payments provided in this Agreement shall be paid in cash or check from the general funds of the Bank.  Further, the Company guarantees such payment and provision of all amounts and benefits due hereunder to the

 

 

 

 

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Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

 

9.           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 effect any such action shall be null, void, and of no effect.

 

(b)           This Agreement shall be binding upon, and inure to the benefit of, the Executive, the Bank, the Company and their respective successors and assigns.

 

10.           Assignability.  The Employers may assign this Agreement and their rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which either of the Employers may hereafter merge or consolidate or to which either of the Employers may transfer all or substantially all of its respective assets, if in any such case said corporation, bank or other entity shall by operation of law or expressly in writing assume all obligations of the Employers hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or their rights and obligations hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

 

11.           Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

 

 

To the Company:

Secretary

  TierOne Corporation

  1235 N Street

  Lincoln, Nebraska 68508

 

 

To the Bank:

Secretary

  TierOne Bank

  1235 N Street

  Lincoln, Nebraska 68508

 

To the Executive:                       ________________________

     At the address last appearing

     on the records of the Employers

 

12.           Amendment; Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the

 

 

 

 

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Executive and such officer or officers as may be specifically designated by the Boards of Directors of the Employers to sign on their behalf, except as set forth below.  No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  In addition, notwithstanding anything in this Agreement to the contrary, the Employers may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Code.

 

13.           Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the State of Nebraska.

 

14.           Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

15.           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

 

16.           Changes in Statutes or Regulations. If any statutory or regulatory provision referenced herein is subsequently changed or re-numbered, or is replaced by a separate provision, then the references in this Agreement to such statutory or regulatory provision shall be deemed to be a reference to such section as amended, re-numbered or replaced.

 

17.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

18.           Regulatory Provisions.

 

(a)           The Employers may terminate the Executive’s employment at any time, but any termination by the Employers, other than termination for Cause, shall not prejudice the Executive’s right to compensation or other benefits under this Agreement.  The Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause as defined in Section 1(b) hereof.

 

(b)           If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(3) or (g)(1)), the Employers’ 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 Employers may in their 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.

 

 

 

 

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(c)           If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(4) or (g)(1)), all obligations of the Employers under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

 

(d)           If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, all obligations of the Employers under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

 

(e)           All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the institution: (i) by the Director of the Office of Thrift Supervision (or his or her designee) at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director of the Office of Thrift Supervision (or his or her designee) at the time the Director (or his or her designee) approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director 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)           Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(k)) and the regulations promulgated thereunder, including 12 C.F.R. Part 359.

 

19.           Reinstatement of Benefits Under Section 18(b).  In the event the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice described in Section 18(b) hereof (the “Notice”) during the term of this Agreement and a Change in Control, as defined herein, occurs, the Employers will assume their obligation to pay and the Executive will be entitled to receive all of the termination benefits provided for under Section 2 of this Agreement upon the Bank’s receipt of a dismissal of charges in the Notice.

 

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 Bank within fifty (50) miles from the location of the Bank’s main office, 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 the 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, other than in the case of a termination for Cause.

 

 

 

 

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21.           Payment of Costs and Legal Fees.  All reasonable costs and legal fees paid or incurred by the Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank (which payments are guaranteed by the Company pursuant to Section 8 hereof) if the Executive is successful on the merits pursuant to a legal judgment, arbitration or settlement.

 

22.           Entire Agreement.  This Agreement embodies the entire agreement between the Employers and the Executive with respect to the matters agreed to herein.  All prior agreements between the Employers and the Executive with respect to the matters agreed to herein, including the Prior Agreement, are hereby superseded and shall have no force or effect, 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 the Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

 

 

 

 

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

 

Attest:                                                                   TierOne BANK

 

 

 

_____________________________           By:  ___________________________ 

                                                                                      Gilbert G. Lundstrom, Chairman and

                                                                                      Chief Executive Officer

 

 

Attest:                                                                   TierOne CORPORATION

                                                                                (as guarantor)

 

 

 

_____________________________           By:  ___________________________ 

                                                                                      Gilbert G. Lundstrom, Chairman and

                                                                                      Chief Executive Officer

 

 

 

Attest:                                                                   EXECUTIVE

 

 

 

_____________________________           By:  ___________________________ 

 

 

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EX-10.7 8 ex-107.htm AMENDED AND RESTATED TWO-YEAR CHANGE IN CONTROL AGREEMENT

Exhibit 10.7

 

 

TierOne BANK

AMENDED AND RESTATED TWO-YEAR CHANGE IN CONTROL AGREEMENT

 

 

THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (this “Agreement”) is effective the 17th day of December 2008, among TierOne Bank, a federally-chartered savings bank (the “Bank”), TierOne Corporation, a Wisconsin corporation and the holding company of the Bank (the ACompany@), and ________________ (the “Executive”).  The Company and the Bank are collectively referred to as the “Employers”.

 

INTRODUCTION

 

The Bank and the Executive previously entered into a certain Two-Year Change in Control Agreement dated as of ________ __, 2002 and amended and restated as of July 27, 2006 (the “Prior Agreement”).  This Agreement amends and restates the Prior Agreement in its entirety as hereinafter set forth in order to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), including the guidance issued to date by the Internal Revenue Service (the “IRS”) and the final regulations issued by the IRS in April 2007.

 

WITNESSETH

 

WHEREAS, the Executive is presently an officer of the Bank;

 

WHEREAS, the Employers desire to be ensured of the Executive’s continued active participation in the business of the Employers; and

 

WHEREAS, in order to induce the Executive to remain in the employ of the Employers and in consideration of the Executive’s agreeing to remain in the employ of the Employers, the parties desire to specify the severance benefits which shall be due the Executive in the event that his employment with the Employers is terminated under specified circumstances;

 

NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

 

1.           Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

 

(a)           Annual Compensation.  The Executive’s “Annual Compensation” for purposes of this Agreement shall be deemed to mean the highest level of aggregate base salary and cash incentive compensation paid to the Executive by the Employers or any subsidiary thereof during the calendar year in which the Date of Termination occurs (determined on an annualized basis) or either of the two calendar years immediately preceding the calendar year in which the Date of Termination occurs.

 

 

 

 

 

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(b)           Cause. Termination of the Executive’s employment for “Cause” shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.  For purposes of this paragraph, no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Employers.

 

(c)           Change in Control.  “Change in Control” shall mean a change in the ownership of the Bank or the Company, a change in the effective control of the Bank or the Company or a change in the ownership of a substantial portion of the assets of the Bank or the Company, in each case as provided under Section 409A of the Code and the regulations thereunder.

 

(d)           Code.  “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(e)           Date of Termination.  “Date of Termination” shall mean (i) if the Executive’s employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination.

 

(f)           Disability.  “Disability” shall mean the Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank.

 

(g)           Good Reason.  Termination by the Executive of the Executive’s employment for “Good Reason” shall mean termination by the Executive following a Change in Control based on the occurrence of any of the following events:

 

(i)           (A) a material diminution in the Executive’s base compensation as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, (B) a material diminution in the Executive’s authority, duties or responsibilities as in effect immediately prior to the Change in Control, or (C) a material diminution in the authority, duties or responsibilities of the officer (as in effect immediately prior to the date of the Change in Control) to whom the Executive is required to report immediately prior to the Change in Control,

 

(ii)           any material breach of this Agreement by the Employers, or

 

 

 

 

 

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(iii)           any material change in the geographic location at which the Executive must perform his services under this Agreement immediately prior to the Change in Control;

 

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Employers within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Employers shall thereafter have the right to remedy the condition within thirty (30) days of the date the Employers received the written notice from the Executive.  If the Employers remedy the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Employers do not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

 

(h)           IRS.  “IRS” shall mean the Internal Revenue Service.

 

(i)           Notice of Termination.  Any purported termination of the Executive’s employment by the Employers for any reason, including without limitation for Cause, Disability or Retirement, or by the Executive for any reason, including without limitation for Good Reason, shall be communicated by a written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a dated notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Employers’ termination of the Executive’s employment for Cause, which shall be effective immediately, and (iv) is given in the manner specified in Section 11 hereof.

 

(j)           Retirement.  “Retirement” shall mean voluntary termination by the Executive in accordance with the Employers’ retirement policies, including early retirement, generally applicable to their salaried employees.

 

2.           Term of Agreement.   The term of this Agreement shall be for two years, commencing as of October 1, 2008 (the “Start Date”).  Commencing on the first anniversary of the Start Date, the term of this Agreement shall extend for an additional year on each annual anniversary of the Start Date of this Agreement until such time as the Boards of Directors of the Employers or the Executive give notice in accordance with the terms of Section 11 hereof of their or his election, respectively, not to extend the term of this Agreement.  Such written notice of the election not to extend must be given not less than thirty (30) days prior to any such anniversary date.  If any party gives timely notice that the term will not be extended as of any annual anniversary date, then this Agreement shall terminate at the conclusion of its remaining term.  The Boards of Directors of the Employers will review this Agreement and the Executive’s performance annually for purposes of determining whether to extend this Agreement.  References herein to the term of this Agreement shall refer both to the initial term and successive terms.

 

 

 

 

 

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3.           Benefits Upon Termination.   If the Executive’s employment by the Employers shall be terminated subsequent to a Change in Control and during the term of this Agreement by (i) the Employers for other than Cause, Disability, Retirement or the Executive’s death or (ii) the Executive for Good Reason, then the Employers shall

 

(a)           pay to the Executive in a lump sum as of the Date of Termination a cash severance amount equal to two (2) times the Executive’s Annual Compensation;

 

(b)           maintain and provide for a period ending at the earlier of (i) the expiration of the remaining term of this Agreement as of the Date of Termination or (ii) the date of the Executive’s full-time employment by another employer (provided that the Executive is entitled under the terms of such employment to benefits substantially similar to those described in this subparagraph (b)), at no cost to the Executive, the Executive’s continued participation in all group insurance, life insurance, health and accident insurance and disability insurance in which the Executive was participating immediately prior to the Date of Termination; provided that any insurance premiums payable by the Employers or any successors pursuant to this Section 3(b) shall be payable at such times and in such amounts (except that the Employers shall also pay any employee portion of the premiums) as if the Executive was still an employee of the Employers, subject to any increases in such amounts imposed by the insurance company or COBRA, and the amount of insurance premiums required to be paid by the Employers in any taxable year shall not affect the amount of insurance premiums required to be paid by the Employers in any other taxable year; and provided further that if the Executive’s participation in any group insurance plan is barred, the Employers shall either arrange to provide the Executive with insurance benefits substantially similar to those which the Executive was entitled to receive under such group insurance plan or, if such coverage cannot be obtained, pay a lump sum cash equivalency amount within thirty (30) days following the Date of Termination based on the annualized rate of premiums being paid by the Employers as of the Date of Termination; and

 

(c)           pay to the Executive, in a lump sum as of the Date of Termination, a cash amount equal to the projected cost to the Employers of providing benefits to the Executive until the expiration of the remaining term of this Agreement as of the Date of Termination pursuant to any other employee benefit plans, programs or arrangements offered by the Employers in which the Executive was entitled to participate immediately prior to the Date of Termination (excluding (x) the Employers’ Employee Stock Ownership Plan, (y) stock option and restricted stock plans of the Employers, and (z) cash incentive compensation included in Annual Compensation), with the projected cost to the Employers to be based on the costs incurred for the calendar year immediately preceding the year in which the Date of Termination occurs and with any automobile-related costs to exclude any depreciation on Bank-owned automobiles.

 

4.           Limitation of Benefits under Certain Circumstances.   If the payments and benefits pursuant to Section 3 hereof, either alone or together with other payments and benefits which the Executive has the right to receive from the Employers, would constitute a “parachute payment” under Section 280G of the Code, then the payments and benefits payable by the Employers pursuant to Section 3 hereof shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits payable by the Employers under Section 3 being non-deductible to the

 

 

 

 

 

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Employers pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.  If the payments and benefits under Section 3 are required to be reduced, the cash severance shall be reduced first, followed by a reduction in the fringe benefits. The determination of any reduction in the payments and benefits to be made pursuant to Section 3 shall be based upon the opinion of independent counsel selected by the Employers and paid by the Employers.  Such counsel shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the Date of Termination, and may use such actuaries as such counsel deems necessary or advisable for the purpose.  Nothing contained in this Section 4 shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment under any circumstances other than as specified in this Section 4, or a reduction in the payments and benefits specified in Section 3 below zero.

 

5.           Mitigation; Exclusivity of Benefits.

 

(a)           The Executive shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise.  The amount of severance to be provided pursuant to Section 3(a) hereof shall not be reduced by any compensation earned by the Executive as a result of employment by another employer after the Date of Termination or otherwise, but the amount of benefits to be provided pursuant to Section 3(b) hereof is subject to reduction as set forth therein.

 

(b)           The specific arrangements referred to herein are not intended to exclude any other benefits which may be available to the Executive upon a termination of employment with the Employers pursuant to employee benefit plans of the Employers or otherwise.

 

6.           Withholding.  All payments required to be made by the Employers hereunder to the Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employers may reasonably determine should be withheld pursuant to any applicable law or regulation.

 

7.           Nature of Employment and Obligations.

 

(a)           Nothing contained herein shall be deemed to create other than a terminable at will employment relationship between the Employers and the Executive, and the Employers may terminate the Executive’s employment at any time, subject to providing any payments specified herein in accordance with the terms hereof.

 

(b)           Nothing contained herein shall create or require the Employers to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that the Executive acquires a right to receive benefits from the Employers hereunder, such right shall be no greater than the right of any unsecured general creditor of the Employers.

 

8.           Source of Payments.  It is intended by the parties hereto that all payments provided in this Agreement shall be paid in cash or check from the general funds of the Bank.  Further, the Company guarantees such payment and provision of all amounts and benefits due hereunder to the

 

 

 

 

 

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Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

 

9.           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 effect any such action shall be null, void, and of no effect.

 

(b)           This Agreement shall be binding upon, and inure to the benefit of, the Executive, the Bank, the Company and their respective successors and assigns.

 

10.           Assignability.  The Employers may assign this Agreement and their rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which either of the Employers may hereafter merge or consolidate or to which either of the Employers may transfer all or substantially all of its respective assets, if in any such case said corporation, bank or other entity shall by operation of law or expressly in writing assume all obligations of the Employers hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or their rights and obligations hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

 

11.           Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

 

 

To the Company:

Secretary

  TierOne Corporation

  1235 N Street

  Lincoln, Nebraska 68508

 

 

To the Bank:

Secretary

  TierOne Bank

  1235 N Street

  Lincoln, Nebraska 68508

 

To the Executive:                       ____________________________

                                                     At the address last appearing

 on the records of the Employers

 

12.           Amendment; Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the

 

 

 

 

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Executive and such officer or officers as may be specifically designated by the Boards of Directors of the Employers to sign on their behalf, except as set forth below.  No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  In addition, notwithstanding anything in this Agreement to the contrary, the Employers may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Code.

 

13.           Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the State of Nebraska.

 

14.           Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

15.           Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

 

16.           Changes in Statutes or Regulations.  If any statutory or regulatory provision referenced herein is subsequently changed or re-numbered, or is replaced by a separate provision, then the references in this Agreement to such statutory or regulatory provision shall be deemed to be a reference to such section as amended, re-numbered or replaced.

 

17.           Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

18.           Regulatory Provisions.

 

(a)           The Employers may terminate the Executive’s employment at any time, but any termination by the Employers, other than termination for Cause, shall not prejudice the Executive’s right to compensation or other benefits under this Agreement.  The Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause as defined in Section 1(b) hereof.

 

(b)           If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(3) or (g)(1)), the Employers’ 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 Employers may in their 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.

 

 

 

 

 

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(c)           If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(4) or (g)(1)), all obligations of the Employers under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

 

(d)           If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, all obligations of the Employers under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

 

(e)           All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the institution: (i) by the Director of the Office of Thrift Supervision (or his or her designee) at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director of the Office of Thrift Supervision (or his or her designee) at the time the Director (or his or her designee) approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Director 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)           Notwithstanding any other provision of this Agreement to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. § 1828(k)) and the regulations promulgated thereunder, including 12 C.F.R. Part 359.

 

19.           Reinstatement of Benefits Under Section 18(b).  In the event the Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice described in Section 18(b) hereof (the “Notice”) during the term of this Agreement and a Change in Control, as defined herein, occurs, the Employers will assume their obligation to pay and the Executive will be entitled to receive all of the termination benefits provided for under Section 2 of this Agreement upon the Bank’s receipt of a dismissal of charges in the Notice.

 

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 Bank within fifty (50) miles from the location of the Bank’s main office, 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 the 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, other than in the case of a termination for Cause.

 

 

 

 

 

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21.           Payment of Costs and Legal Fees.  All reasonable costs and legal fees paid or incurred by the Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank (which payments are guaranteed by the Company pursuant to Section 8 hereof) if the Executive is successful on the merits pursuant to a legal judgment, arbitration or settlement.

 

22.           Entire Agreement.  This Agreement embodies the entire agreement between the Employers and the Executive with respect to the matters agreed to herein.  All prior agreements between the Employers and the Executive with respect to the matters agreed to herein, including the Prior Agreement, are hereby superseded and shall have no force or effect, 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 the Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

 

 

 

 

 

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IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.

 

THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

 

 

Attest:                                                                   TierOne BANK

 

 

 

_____________________________           By:  ___________________________ 

Eugene B. Witkowicz, Secretary                                Gilbert G. Lundstrom, Chairman and

                                                                                        Chief Executive Officer

 

 

Attest:                                                                   TierOne CORPORATION

                                                                               (as guarantor)

 

 

_____________________________           By:  ___________________________ 

Eugene B. Witkowicz, Secretary                               Gilbert G. Lundstrom, Chairman and

                                                                                       Chief Executive Officer

 

 

 

Attest:                                                                   EXECUTIVE

 

 

 

_____________________________           By:  ___________________________ 

Eugene B. Witkowicz, Secretary

 

 

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EX-10.8 9 ex-108.htm AMENDED AND RESTATED EMPLOYEE SEVERANCE PLAN

Exhibit 10.8

 

 

TIERONE BANK

AMENDED AND RESTATED EMPLOYEE SEVERANCE PLAN

 

 

ARTICLE I

ESTABLISHMENT OF THE PLAN

 

TierOne Bank (the “Bank” or the “Employer”) hereby amends and restates its Employee Severance Plan, which was originally adopted in 2002 and previously amended and restated effective as of July 27, 2006, effective as of December 17, 2008 (as amended and restated, the “Plan”).

 

This Plan is being amended and restated in order to comply with the requirements of Section 409A of the Code (as defined below), including the guidance issued to date by the Internal Revenue Service (the “IRS”) and the final regulations issued by the IRS in April 2007.

 

ARTICLE II

PURPOSE OF THE PLAN

 

The purpose of this Plan is to provide certain specified benefits to eligible employees as provided herein whose employment is terminated in connection with or subsequent to a Change in Control of either the Bank or the Bank’s parent corporation, TierOne Corporation (the “Company”). The Bank and the Company are hereinafter collectively referred to as the “Employers”.

 

ARTICLE III

DEFINITIONS

 

3.01     Annual Compensation. An Employee’s “Annual Compensation” for purposes of this Plan shall be deemed to mean the aggregate base salary and cash incentive compensation earned by or paid to the Employee by the Employers or any subsidiary thereof during the calendar year immediately preceding the calendar year in which the Date of Termination occurs; provided, however, for purposes of this Plan the Employee’s Annual Compensation does not include deferred compensation earned by the Employee in a prior year but received in the calendar year immediately preceding the calendar year in which the Date of Termination occurs.

 

3.02     Cause. Termination of an Employee’s employment for “Cause” shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order. For purposes of this paragraph, no act or failure to act on the Employee’s part shall be considered “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that the Employee’s action or omission was in the best interests of the Employers.

 

3.03     Change in Control. “Change in Control” shall mean a change in the ownership of the Bank or the Company, a change in the effective control of the Bank or the Company or a

 

 

 

 

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change in the ownership of a substantial portion of the assets of the Bank or the Company, in each case as provided under Section 409A of the Code and the regulations thereunder.

 

3.04     Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

3.05     Committee. “Committee” means a committee of two or more directors appointed by the Board of Directors of the Bank pursuant to Article VII hereof.

 

3.06     Date of Termination. “Date of Termination” shall mean (i) if an Employee’s employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if an Employee’s employment is terminated for any other reason, the date specified in the Notice of Termination.

 

3.07     Disability. Disability” shall mean the Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank.

 

3.08     Employee. “Employee” shall mean any person who at the time has been employed by the Bank for at least 12 continuous months, excluding any Employee who has an employment or change in control agreement with either of the Employers.

 

3.09     Good Reason. Termination by an Employee of the Employee’s employment for “Good Reason” shall mean termination by the Employee following a Change in Control based on the occurrence of any of the following events:

 

(i) (A) a material diminution in the Employee’s base compensation as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, (B) a material diminution in the Employee’s authority, duties or responsibilities as in effect immediately prior to the Change in Control, or (C) a material diminution in the authority, duties or responsibilities of the officer (as in effect immediately prior to the date of the Change in Control) to whom the Employee is required to report immediately prior to the Change in Control,

 

(ii) any material breach of this Plan by the Employers, or

 

(iii) any material change in the geographic location at which the Employee must perform his services immediately prior to the Change in Control;

 

provided, however, that prior to any termination of employment for Good Reason, the Employee must first provide written notice to the Employers within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Employers shall thereafter have the right to remedy the condition within thirty (30) days of the date the Employers received the written notice from the Employee.  If the Employers remedy the condition within such thirty

 

 

 

 

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(30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Employers do not remedy the condition within such thirty (30) day cure period, then the Employee may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

 

3.10     IRS.  “IRS” shall mean the Internal Revenue Service.

 

3.11     Notice of Termination. Following a Change in Control, any purported termination of an Employee’s employment by the Employers for any reason or by an Employee for any reason, including without limitation for Good Reason, shall be communicated by a written “Notice of Termination” to the Employee (if from the Employers) or to the Employers (if from the Employee). For purposes of this Plan, a “Notice of Termination” shall mean a dated notice which (i) indicates the specific termination provision in this Plan relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Employee’s employment under the provision so indicated, (iii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Employers’ termination of the Employee’s employment for Cause, which shall be effective immediately, and (iv) is given in the manner specified in Article VIII hereof.

 

3.12     Retirement. “Retirement” shall mean voluntary termination by the Employee in accordance with the Employers’ retirement policies, including early retirement, generally applicable to their salaried Employees.

 

ARTICLE IV

BENEFITS

 

4.01     Payments and Benefits Upon Termination.

 

(a)        If an Employee’s employment is terminated within one year subsequent to a Change in Control by (i) the Employers for other than Cause, Disability, Retirement or the Employee’s death or (ii) the Employee for Good Reason, then the Employers shall pay to the Employee a lump sum cash severance amount equal to one twelfth (1/12th) of the Employee’s Annual Compensation for each year of service with the Employers, subject to a minimum of one twelfth (1/12th) of Annual Compensation and a maximum of 100% of Annual Compensation, plus any accrued but unused vacation leave.

 

(b)        If the payments pursuant to Section 4.01(a) hereof, either alone or together with other payments and benefits which the Employee has the right to receive from the Employers, would constitute a “parachute payment” under Section 280G of the Code, then the payments payable by the Employers pursuant to Section 4.01(a) hereof shall be reduced by the minimum amount necessary to result in no portion of the payments payable by the Employers under Section 4.01(a) being non-deductible to the Employers pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The determination of any reduction in the payments to be made pursuant to Section 4.01(a) shall be based upon the opinion of independent counsel selected by the Bank and paid by the Bank. Such counsel shall promptly prepare the foregoing opinion, but in no event later than thirty (30) days from the Date of

 

 

 

 

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c, and may use such actuaries as such counsel deems necessary or advisable for the purpose. 

 

(c)        Nothing contained in this Section 4.01 shall result in a reduction of any payments or benefits to which the Employee may be entitled upon termination of employment under any circumstances other than as specified in Section 4.01(b) set forth above, or a reduction in the payments and benefits specified in Section 4.01(a) below zero.

 

4.02     Mitigation; Exclusivity of Benefits.

 

(a)        An Employee shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise, nor shall the amount of any such benefits be reduced by any compensation earned by the Employee as a result of employment by another employer after the Date of Termination or otherwise.

 

(b)        The specific arrangements referred to herein are not intended to exclude any other benefits which may be available to an Employee upon a termination of employment with the Employers pursuant to employee benefit plans of the Employers or otherwise.

 

4.03     Withholding. All payments required to be made by the Employers hereunder to an Employee shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Employers may reasonably determine should be withheld pursuant to any applicable law or regulation.

 

4.04.    Source of Payments. It is intended by the parties hereto that all payments provided in this Plan shall be paid in cash or check from the general funds of the Bank. Further, the Company guarantees such payment and provision of all amounts and benefits due hereunder to the Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

 

4.05.    No Attachment. Except as required by law, no right to receive payments under this Plan 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 effect any such action shall be null, void, and of no effect.

 

ARTICLE V

ASSIGNMENT

 

The Employers may assign this Plan and their rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which the Bank or the Company may hereafter merge or consolidate or to which the Bank or the Company may transfer all or substantially all of its respective assets, if in any such case said corporation, bank or other entity shall by operation of law or expressly in writing assume all obligations of the Employers hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Plan or their rights and obligations hereunder. An Employee may not assign or transfer any rights or benefits due hereunder.

 

 

 

 

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ARTICLE VI

DURATION AND EFFECTIVE DATE OF PLAN

 

6.01     Duration. Except in the event of a Change in Control, this Plan is subject to change or termination, in whole or in part, at any time without notice, in the Board’s sole discretion. In the event of a Change in Control, this Plan may not be terminated or amended to reduce the benefits provided hereunder for a period of 13 months following the date of the Change in Control.  In addition, notwithstanding anything in this Plan to the contrary, the Employers may amend in good faith any terms of this Plan, including retroactively, in order to comply with Section 409A of the Code.

 

6.02     Effective Date. This Plan was originally effective as of October 1, 2002 and was previously amended and restated as of July 27, 2006.  This amendment and restatement of the Plan is effective as of December 17, 2008.

 

ARTICLE VII

ADMINISTRATION

 

7.01     Duties of the Committee. This Plan shall be administered and interpreted by the Committee, as appointed from time to time by the Board of Directors of the Bank pursuant to Section 7.02. The Committee shall have the authority to adopt, amend and rescind such rules, regulations and procedures as, in its opinion, may be advisable in the administration of this Plan, including, without limitation, rules, regulations and procedures with respect to the operation of this Plan. The interpretation and construction by the Committee of any provisions of this Plan or any rule, regulation or procedure adopted by it pursuant thereto shall be final and binding in the absence of action by the Board of Directors of the Bank.

 

7.02     Appointment and Operation of the Committee. The members of the Committee shall be appointed by, and will serve at the pleasure of, the Board of Directors of the Bank. The Board from time to time may remove members from, or add members to, the Committee, provided the Committee shall continue to consist of two or more members of the Board. The Committee shall act by vote or written consent of a majority of its members. Subject to the express provisions and limitations of this Plan, the Committee may adopt such rules, regulations and procedures as it deems appropriate for the conduct of its affairs. It may appoint one of its members to be chairman and any person, whether or not a member, to be its secretary or agent. The Committee shall report its actions and decisions to the Board at appropriate times but in no event less than one time per calendar year.

 

7.03     Limitation on Liability. Neither the members of the Board of Directors of the Bank nor any member of the Committee shall be liable for any action or determination made in good faith with respect to this Plan or any rule, regulation or procedure adopted by it pursuant thereto. If a member of the Board or the Committee is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of anything done or not done by him in such capacity under or with respect to this Plan, the Bank shall, subject to the requirements of applicable laws and regulations, indemnify such member against all liabilities and expenses (including attorneys’

 

 

 

 

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fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in the best interests of the Bank and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

 

 

ARTICLE VIII

MISCELLANEOUS

 

8.01     Notice. For the purposes of this Plan, notices and all other communications provided for in this Plan shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed, with respect to the Bank, Secretary, TierOne Bank, 1235 N Street, Lincoln, Nebraska 68508, and with respect to an Employee, to the home address thereof set forth in the records of the Bank at the date of any such notice.

 

8.02     Governing Law. The validity, interpretation, construction and performance of this Plan shall be governed by the laws of the United States where applicable and otherwise by the substantive laws of the State of Nebraska.

 

8.03     Nature of Employment and Obligations.

 

(a)        Nothing contained herein shall be deemed to create other than a terminable at will employment relationship between the Employers and an Employee, and the Employers may terminate an Employee’s employment at any time, subject to providing any payments specified herein in accordance with the terms hereof.

 

(b)        Nothing contained herein shall create or require the Employers to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that an Employee acquires a right to receive benefits from the Employers hereunder, such right shall be no greater than the right of any unsecured general creditor of the Employers.

 

8.04     Headings. The section headings contained in this Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of this Plan.

 

8.05     Validity. The invalidity or unenforceability of any provision of this Plan shall not affect the validity or enforceability of any other provisions of this Plan, which shall remain in full force and effect.

 

8.06     Regulatory Provisions. Notwithstanding any other provision of this Plan to the contrary, any payments made to an Employee pursuant to this Plan, or otherwise, are subject to and conditioned upon their compliance with (a) Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. §1828(k)) and the regulations promulgated thereunder, including 12 C.F.R. Part 359, and (b) 12 C.F.R. §563.39. 

 

 

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