EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
(15 Year Period Certain)
LIBERTY FEDERAL BANK
Hinsdale, Illinois
April 16, 1998
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
(PAYMENT OPTION - 15 YEAR PERIOD CERTAIN)
This Executive Supplemental Retirement Income Agreement (the "Agreement"),
effective as of the 16th day of April, 1998, formalizes the agreements by and
between LIBERTY FEDERAL BANK (the "Bank"), a stock savings bank, and certain key
employees, hereinafter referred to as "Executive(s)", who shall be selected and
approved by the Bank to participate in this Agreement by execution of an
Executive Supplemental Retirement Income Joinder Agreement ("Joinder Agreement")
in a form provided by the Bank. ALLIANCE BANCORP (the "Holding Company") is a
party to this Agreement for the sole purpose of guaranteeing the Bank's
performance hereunder.
W I T N E S S E T H :
WHEREAS, the Executives are employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by such Executives and wishes to encourage their continued employment and to
provide them with additional incentive to achieve corporate objectives; and
WHEREAS, the Bank wishes to provide the terms and conditions upon which the
Bank shall pay additional retirement benefits to the Executives; and
WHEREAS, the Bank intends this Agreement to be considered an unfunded
arrangement, maintained primarily to provide supplemental retirement income for
its Executives, members of a select group of management or highly compensated
employees of the Bank, for tax purposes and for purposes of the Employee
Retirement Income Security Act of 1974, as amended; and
WHEREAS, the Bank has adopted this Executive Supplemental Retirement Income
Agreement which controls all issues relating to Supplemental Retirement Income
Benefits as described herein.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the Bank and the Executive agree as follows:
SECTION I
DEFINITIONS
-----------
When used herein, the following words and phrases shall have the meanings
below unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Supplemental Retirement Income
Benefit which is required to be expensed and accrued under generally
accepted accounting principles (GAAP).
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
1
1.3 "Administrator" means the Bank and/or its Board.
1.4 "Bank" means Liberty Federal Bank and any successor thereto or the Board.
1.5 "Beneficiary" means the person or persons (and their heirs) designated as
Beneficiary by the Executive to whom the deceased Executive's benefits are
payable. If no Beneficiary is so designated, then the Executive's Spouse,
if living, will be deemed the Beneficiary. If the Executive's Spouse is
not living, then the Children of the Executive will be deemed the
Beneficiaries and will take on a per stirpes basis. If there are no living
Children, then the Estate of the Executive will be deemed the Beneficiary.
1.6 "Benefit Age" shall be the birthday on which the Executive attains age 65.
1.7 "Benefit Eligibility Date" shall be the later of (i) the 1st day of the
month following the month in which the Executive attains the Benefit Age,
or (ii) the 1st day of the month following the month in which the Executive
actually retires.
1.8 "Board" shall mean the Board of Directors of the Bank, unless specifically
noted otherwise.
1.9 "Cause" shall mean willful misconduct, breach of fiduciary duty involving
personal benefit to the Executive, conviction of a felony, wilful breach or
willful neglect by the Executive of his duties as an Executive of the
Holding Company or the Bank, or persistent negligence or misconduct in the
performance of such duties. For purposes of this definition, no act or
failure to act on the part of the Executive shall be considered "willful"
unless done or omitted not in good faith and without reasonable belief that
the action or omission was in the best interest of the Holding Company or
the Bank.
1.10 A "Change in Control" shall mean and include the following with respect to
the Bank or the Holding Company:
(1) a change in control of a nature that is reported by the Holding Company
in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (hereinafter the "Exchange Act"); or
(2) an acquisition of "control" as defined in the Home Owners' Loan Act and
applicable regulations thereunder ("HOLA"); or
(3) the occurrence of the following:
(i) any "person" (as the term is used in Sections 13(d) and 14(d) of
the Exchange Act) or "group acting in concert" is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Holding
Company representing Twenty Percent (20%) or more of the combined
voting power of the Holding Company's outstanding securities
ordinarily having the right to vote at the elections of
directors, except for any stock purchased by the Bank's Employee
Stock Ownership Plan and/or the trust under such plan; or
(ii) a reorganization, merger, merger conversion, consolidation or
sale of all or substantially all of the assets of the Bank or the
Holding Company or a similar transaction, in which the
stockholders of the Holding Company immediately prior
2
to such transaction do not own at least 50.1% of the voting stock
of the resulting entity; or
(iii) individuals who constitute the board of directors of the Bank or
the Holding Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board,
or whose nomination for election was approved by the Holding
Company's or Bank's nominating committee which is comprised of
members of the Incumbent Board, shall be, for purposes of this
clause (iii) considered as though he were a member of the
Incumbent Board.
(iv) a proxy statement is issued soliciting proxies from the
stockholders of the Holding Company by someone other than the
current management of the Holding Company, seeking stockholder
approval of a plan of reorganization, merger, or consolidation of
the Holding Company with one or more corporations as a result of
which the outstanding shares of the class of the Holding
Company's securities are exchanged for or converted into cash or
property or securities not issued by the Holding Company.
(v) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities. The term "acquire" means obtaining
ownership, control, power to vote or sole power of disposition of
stock, directly or indirectly or through one or more transactions
or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase,
reverse stock split or a similar transaction involving other
securities of the same class; and (2) the acquisition of stock by
a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided
that an investment advisor shall not be deemed to acquire the
voting stock of its advisee if the advisor (a) votes the stock
only upon instruction from the beneficial owner and (b) does not
provide the beneficial owner with advice concerning the voting of
such stock. The term "security" includes nontransferable
subscription rights issued pursuant to a plan of conversion, as
well as a "security," as defined in 15 U.S.C. (S) 78c(2)(1); and
the term "acting in concert" means (1) knowing participation in a
joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express
agreement, or (2) a combination or pooling of voting or other
interests in the securities of an issuer for a common purpose
pursuant to any contract, understanding, relationship, agreement
or other arrangement, whether written or otherwise. Further,
acting in concert with any person or company shall also be deemed
to be acting in concert with any person or company that is acting
in concert with such other person or company.
(4) Notwithstanding the above definitions, the boards of directors of the
Bank or the Holding Company, in their absolute discretion, may make a
finding that a Change in Control of the Bank or the Holding Company
has taken place without the occurrence of any or all of the events
enumerated above.
3
1.11 "Children" means the Executive's children, or the issue of any deceased
Children, then living at the time payments are due the Children under this
Agreement. The term "Children" shall include both natural and adopted
Children.
1.12 "Code" means the Internal Revenue Code of 1986, as amended.
1.13 "Disability Benefit" means the monthly benefit payable to the Executive
following a determination, in accordance with Subsection 3.6, that he is no
longer able, properly and satisfactorily, to perform his duties at the
Bank. The Disability Benefit shall be equivalent to the Supplemental Early
Retirement Income Benefit, reduced by any corporate long term disability
insurance in force and payable at or during the time of disability.
1.14 "Effective Date" of this Agreement shall be April 16, 1998.
1.15 "Estate" means the estate of the Executive.
1.16 "Holding Company" means Alliance Bancorp.
1.17 "Interest Factor" unless specifically designated otherwise in this
Subsection or in another place in this Agreement, means annual compounding
or discounting, as applicable, at seven percent (7%). For purposes of
determining the value of an Executive's lump sum benefit upon disability or
for purposes of determining the present value of the amount necessary to
contribute to a rabbi trust to fund the Executive's benefit in the event of
a Change in Control, the Interest Factor shall mean 120% of the semi-annual
applicable federal rate (AFR) as determined under Code section 1274(d).
1.18 "Payout Period" means the time frame during which benefits payable
hereunder shall be distributed. Payments generally shall be made in monthly
installments commencing within thirty (30) days following the occurrence of
the event which triggers distribution and continuing for One Hundred Eighty
(180) months. In certain cases set forth herein, an Executive's (or
Beneficiary's) benefit shall be paid in a single lump payment.
1.19 "Plan Year" shall mean the calendar year.
1.20 "Spouse" means the individual to whom the Executive is legally married at
the time of the Executive's death, provided, however, that the term
"Spouse" shall not refer to an individual to whom the Executive is legally
married at the time of death if the Executive and such individual have
entered into a formal separation agreement (provided that such separation
agreement does not provide otherwise or state that such individual is
entitled to a portion of the benefit hereunder) or initiated divorce
proceedings.
1.21 "Supplemental Retirement Income Benefit" means an annual amount (before
------
taking into account federal and state income taxes), actuarially calculated
to provide the Executive with Seventy Percent (70%) of the average of his
highest annual salary plus cash bonus (combined) in any five (5)
consecutive years of the last ten (10) calendar years ending before the
Executive's Benefit Eligibility Date, reduced by the employer-provided
benefits available to the Executive for the twelve (12) month period
immediately following attainment of his Benefit Age from any tax-qualified
plans maintained or terminated and paid out by the Bank, assuming for
purposes of this calculation that
4
the amounts available to the Executive under such tax-qualified plans are
annuitized and distributed over the Executive' life expectancy. The
Supplemental Retirement Income Benefit shall be payable in monthly
installments throughout the Payout Period. For purposes of determining the
annuitized value of the Executive's employer-provided tax-qualified plan
benefits, the value of tax-qualified plan benefits (including those
benefits which have been rolled into or directly transferred to an
individual retirement account or another tax-qualified plan) will be
determined as of April 1, 1998, and shall be set forth on Exhibit B to this
Agreement. The value so determined shall be increased by the Interest
Factor from April 1, 1998, until the Executive's Benefit Age and then shall
be annuitized (using the Interest Factor) over the Payout Period commencing
on the Executive's Benefit Eligibility Date.
1.22 "Supplemental Early Retirement Income Benefit" means an annual amount
(before taking into account federal and state income taxes) payable under
Subsection 3.4 or Subsection 3.6 of the Plan in the event of the
Executive's termination of employment following a Change in Control or due
to disability. The Supplemental Early Retirement Income Benefit shall be
calculated to provide the Executive with Seventy Percent (70%) of the
average of his highest annual salary plus highest annual cash bonus
(combined) in any five (5) consecutive years of the last ten (10) calendar
years ending before the Executive's termination of employment reduced by
the annuitized value of the employer-provided tax-qualified plan benefits
set forth on Exhibit B ("Exhibit B Amount").
In the case of the payment of the Supplemental Early Retirement Income
Benefit following a Change in Control, until the Executive attains his
Benefit Age, the Supplemental Early Retirement Income Benefit shall not be
reduced by the Exhibit B Amount. Following attainment of Benefit Age, the
Supplemental Early Retirement Income Benefit paid to the Executive shall be
reduced by the Exhibit B Amount.
1.23 "Survivor's Benefit" means an annual amount payable to the Beneficiary in
monthly installments throughout the Payout Period, equal to the greater of
(i) the amount designated in the Executive's Joinder Agreement or (ii) the
benefit available to the Executive if the Executive had terminated
employment or retired (if eligible) on the day of his death.
SECTION II
ESTABLISHMENT OF RABBI TRUST
----------------------------
The Bank intends to establish a rabbi trust into which the Bank intends to
contribute assets which shall be held therein, subject to the claims of the
Bank's creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed assets are
paid to the Executives and their Beneficiaries in such manner and at such times
as specified in this Agreement. It is the intention of the Bank to make
contributions to the rabbi trust to provide the Bank with a source of funds to
assist it in meeting the liabilities of this Agreement. The rabbi trust and any
assets held therein shall conform to the terms of the rabbi trust agreement
which has been established in conjunction with this Agreement. To the extent
the language in this Agreement is modified by the language in the rabbi trust
agreement, the rabbi trust agreement shall supersede this Agreement. Any
contributions to the rabbi trust shall be made during each Plan Year in
accordance with the rabbi trust agreement. The amount of such contribution(s)
shall be equal to the full present value of all benefit accruals under this
Plan, if any, less: (i) previous contributions made on behalf of the Executive
to the rabbi trust, and (ii) earnings to date on all such previous
contributions. In the event of a Change in Control, the Bank shall transfer to
the rabbi
5
trust within thirty (30) days prior to such Change in Control, the
present value of an amount sufficient to fully fund the Supplemental Early
Retirement Income Benefit for each Executive covered by this Agreement.
SECTION III
BENEFITS
--------
3.1 Retirement Benefit. If the Executive is in service with the Bank until
------------------
reaching his Benefit Age, the Executive shall be entitled to the
Supplemental Retirement Income Benefit. Such benefit shall commence on the
Executive's Benefit Eligibility Date and shall be payable in monthly
installments throughout the Payout Period. In the event the Executive dies
at any time after attaining his Benefit Age, but prior to completion of all
such payments due and owing hereunder, the Bank shall pay to the
Executive's Beneficiary a continuation of the monthly installments for the
remainder of the Payout Period.
3.2 Death Prior to Benefit Age. If the Executive dies prior to attaining his
--------------------------
Benefit Age but while employed at the Bank, the Executive's Beneficiary
shall be entitled to the Survivor's Benefit. The Survivor's Benefit shall
commence within thirty (30) days of the Executive's death and shall be
payable in monthly installments throughout the Payout Period.
3.3 Involuntary or Voluntary Termination of Employment Other Than for Cause.
-----------------------------------------------------------------------
If the Executive's employment with the Bank is involuntarily or voluntarily
terminated prior to the attainment of his Benefit Age, for any reason other
than for Cause, the Executive's death, disability, or following a Change in
Control (as defined), the Executive (or his Beneficiary) shall be entitled
to the Accrued Benefit relating to Executive at the time of the Executive's
termination of employment. Such benefit shall commence at the Executive's
Benefit Age, shall be annuitized (using the Interest Factor) and be
payable in monthly installments throughout the Payout Period. In the event
the Executive dies prior to commencement or completion of all such payments
due and owing hereunder, the Bank shall pay to the Executive's Beneficiary
a continuation of the monthly installments for the remainder of the Payout
Period. Notwithstanding anything to the contrary herein, the Administrator
may determine to pay the Executive's Accrued Benefit to the Executive in a
lump sum within sixty (60) days of his voluntary or involuntary
termination.
3.4 Termination of Service Related to a Change in Control.
-----------------------------------------------------
If a Change in Control occurs, and thereafter the Executive's employment is
terminated (either voluntarily or involuntarily), the Executive shall be
entitled to the Supplemental Early Retirement Income Benefit. Such benefit
shall commence within thirty (30) days of such termination and shall be
payable in monthly installments throughout the Payout Period, in the manner
set forth in Subsection 1.22. In the event that the Executive dies at any
time after termination of employment, but prior to commencement or
completion of all such payments due and owing hereunder, the Bank, or its
successor, shall pay to the Executive's Beneficiary a continuation of the
monthly installments for the remainder of the Payout Period.
3.5 Termination for Cause. If the Executive is terminated for Cause, all
---------------------
benefits under this Agreement shall be forfeited and this Agreement shall
become null and void.
6
3.6 Disability Benefit.
------------------
Notwithstanding any other provision hereof, if requested by the Executive
and approved by the Board (which approval shall not be unreasonably
withheld), the Executive shall be entitled to receive the Disability
Benefit hereunder, in any case in which it is determined by a duly licensed
physician selected by the Bank, that the Executive is no longer able,
properly and satisfactorily, to perform his regular duties as an Executive,
because of ill health, accident, disability or general inability due to
age. If the Executive's service is terminated pursuant to this paragraph
and Board approval is obtained, the Executive may elect to receive the
Disability Benefit in lieu of any other benefit available under Section III
(other than Subsection 3.7), which is not available prior to the
Executive's Benefit Eligibility Date. The Disability Benefit shall be paid
within thirty (30) days following the above-mentioned disability
determination. At the Executive's request, and upon Board approval, the
Disability Benefit may be paid in a lump sum. In the event the Executive
dies at any time after termination of employment due to disability but
prior to payment of the Disability Benefits, the Bank shall pay the
Survivor's Benefit to the Executive's Beneficiary. The determination
regarding payment of a Disability Benefit or payment of payment of the
Disability Benefit in a lump sum is within the sole discretion of the
Board. Any disability benefit received hereunder will be reduced by any
corporate long term disability insurance in force and payable at or during
the time of disability.
3.7 Additional Death Benefit - Burial Expense. In addition to the above-
-----------------------------------------
described death benefits, upon the Executive's death, the Executive's
Beneficiary shall be entitled to receive a one-time lump sum death benefit
in the amount of Ten Thousand ($10,000.00) Dollars. This benefit shall be
provided specifically for the purpose of providing payment for burial
and/or funeral expenses of the Executive. Such death benefit shall be
payable within thirty (30) days of the Executive's death. The Executive's
Beneficiary shall not be entitled to such benefit if the Executive is
terminated for Cause prior to death.
SECTION IV
BENEFICIARY DESIGNATION
-----------------------
The Executive shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Joinder Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Joinder
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Joinder Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION V
EXECUTIVE'S RIGHT TO ASSETS:
---------------------------
ALIENABILITY AND ASSIGNMENT PROHIBITION
---------------------------------------
At no time shall the Executive be deemed to have any lien, right, title or
interest in or to any specific investment or asset of the Bank. The rights of
the Executive, any Beneficiary, or any other person claiming through the
Executive under this Agreement, shall be solely those of an unsecured general
creditor of the Bank. The Executive, the Beneficiary, or any other person
claiming through the Executive,
7
shall only have the right to receive from the Bank those payments so specified
under this Agreement. Neither the Executive nor any Beneficiary under this
Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify or otherwise encumber in advance any of
the benefits payable hereunder, nor shall any of said benefits be subject to
seizure for the payment of any debts, judgments, alimony or separate maintenance
owed by the Executive or his Beneficiary, nor be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise.
SECTION VI
ACT PROVISIONS
--------------
6.1 Named Fiduciary and Administrator. The Bank shall be the Named Fiduciary
---------------------------------
and Administrator (the "Administrator") of this Agreement. As
Administrator, the Bank shall be responsible for the management, control
and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management and
operational responsibilities of the Agreement, including the employment of
advisors and the delegation of ministerial duties to qualified individuals.
6.2 Claims Procedure and Arbitration. In the event that benefits under this
--------------------------------
Agreement are not paid to the Executive (or to his Beneficiary in the case
of the Executive's death) and such claimants feel they are entitled to
receive such benefits, then a written claim must be made to the
Administrator within sixty (60) days from the date payments are refused.
The Administrator shall review the written claim and, if the claim is
denied, in whole or in part, they shall provide in writing, within thirty
(30) days of receipt of such claim, their specific reasons for such denial,
reference to the provisions of this Agreement or the Joinder Agreement upon
which the denial is based, and any additional material or information
necessary to perfect the claim. Such writing by the Bank and its Board of
Directors shall further indicate the additional steps which must be
undertaken by claimants if an additional review of the claim denial is
desired.
If claimants desire a second review, they shall notify the Administrator in
writing within thirty (30) days of the first claim denial. Claimants may
review this Agreement, the Joinder Agreement or any documents relating
thereto and submit any issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then review
the second claim and provide a written decision within thirty (30) days of
receipt of such claim. This decision shall state the specific reasons for
the decision and shall include reference to specific provisions of this
Agreement or the Joinder Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed
performance of this Agreement and the Joinder Agreement or the meaning and
effect of the terms and conditions thereof, it shall be settled by
arbitration administered by the AAA under its Commercial Arbitration Rules,
and judgment on the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
8
SECTION VII
MISCELLANEOUS
-------------
7.1 No Effect on Employment Rights. Nothing contained herein will confer upon
------------------------------
the Executive the right to be retained in the service of the Bank nor limit
the right of the Bank to discharge or otherwise deal with the Executive
without regard to the existence of the Agreement.
7.2 State Law. The Agreement is established under, and will be construed
---------
according to, the laws of the State of Illinois, to the extent such laws
are not preempted by the Act and valid regulations published thereunder.
7.3 Severability. In the event that any of the provisions of this Agreement or
------------
portion thereof, are held to be inoperative or invalid by any court of
competent jurisdiction, then: (1) insofar as is reasonable, effect will be
given to the intent manifested in the provisions held invalid or
inoperative, and (2) the validity and enforceability of the remaining
provisions will not be affected thereby.
7.4 Incapacity of Recipient. In the event the Executive is declared
-----------------------
incompetent and a conservator or other person legally charged with the care
of his person or Estate is appointed, any benefits under the Agreement to
which such Executive is entitled shall be paid to such conservator or other
person legally charged with the care of his person or Estate.
7.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
-----------------
current address and the current address of his Beneficiaries. If the
location of the Executive is not made known to the Bank within three years
after the date upon which any payment of any benefits may first be made,
the Bank shall delay payment of the Executive's benefit payment(s) until
the location of the Executive is made known to the Bank; however, the Bank
shall only be obligated to hold such benefit payment(s) for the Executive
until the expiration of three (3) years. Upon expiration of the three (3)
year period, the Bank may discharge its obligation by payment to the
Executive's Beneficiary. If the location of the Executive's Beneficiary is
not made known to the Bank by the end of an additional two (2) month
period following expiration of the three (3) year period, the Bank may
discharge its obligation by payment to the Executive's Estate. If there is
no Estate in existence at such time or if such fact cannot be determined by
the Bank, the Executive and his Beneficiary(ies) shall thereupon forfeit
any rights to the balance, if any, of any benefits provided for such
Executive and/or Beneficiary under this Agreement.
7.6 Limitations on Liability. Notwithstanding any of the preceding provisions
------------------------
of the Agreement, no individual acting as an employee or agent of the Bank
or the Holding Company, or as a member of the Board of the Bank or Holding
Company shall be personally liable to the Executive or any other person for
any claim, loss, liability or expense incurred in connection with the
Agreement.
7.7 Gender. Whenever in this Agreement words are used in the masculine or
------
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
9
7.8 Effect on Other Corporate Benefit Agreements. Nothing contained in this
--------------------------------------------
Agreement shall affect the right of the Executive to participate in or be
covered by any qualified or non-qualified pension, profit sharing, group,
bonus or other supplemental compensation or fringe benefit agreement
constituting a part of the Bank's existing or future compensation
structure.
7.9 Suicide. Notwithstanding anything to the contrary in this Agreement, the
-------
benefits otherwise provided herein shall not be payable and this Agreement
shall become null and void if the Executive's death results from suicide,
whether sane or insane, within twenty-four (24) months after the execution
of his Joinder Agreement.
7.10 Inurement. This Agreement shall be binding upon and shall inure to the
---------
benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
7.11 Tax Withholding. The Bank may withhold from any benefits payable under
---------------
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
7.12 Headings. Headings and sub-headings in this Agreement are inserted for
--------
reference and convenience only and shall not be deemed a part of this
Agreement.
SECTION VIII
AMENDMENT/REVOCATION
--------------------
This Agreement shall not be amended, modified or revoked at any time, in
whole or part, without the mutual written consent of the Executive and the Bank,
and such mutual consent shall be required even if the Executive is no longer
employed by the Bank.
SECTION IX
EXECUTION
---------
9.1 This Agreement sets forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the
subject matter hereof are merged into and superseded by this Agreement.
9.2 This Agreement shall be executed in triplicate, each copy of which, when so
executed and delivered, shall be an original, but all three copies shall
together constitute one and the same instrument.
DIRECTOR DEFERRED
COMPENSATION PLAN
LIBERTY FEDERAL BANK
Hinsdale, Illinois
April 16, 1998
DIRECTOR DEFERRED
COMPENSATION PLAN
This Director Deferred Compensation Plan (the "Plan"), effective as of the
16th day of April, 1998, formalizes the understanding by and between LIBERTY
FEDERAL BANK (the "Bank"), a stock savings bank with its principal business
address in the State of Illinois, and certain eligible Directors, hereinafter
referred to as "Director", who shall be approved by the Bank to participate and
who shall elect to become a party to this Director Deferred Compensation Plan by
execution of a Director Deferred Compensation Joinder Agreement ("Joinder
Agreement") in a form provided by the Bank. ALLIANCE BANCORP (the "Holding
Company") is a party to this Plan for the sole purpose of guaranteeing the
Bank's performance hereunder.
W I T N E S S E T H :
WHEREAS, the Directors serve the Bank as members of the Board; and
WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by such Directors and wishes to encourage continued service of each; and
WHEREAS, the Bank values the efforts, abilities and accomplishments of such
Directors and recognizes that the Directors' services substantially contribute
to its continued growth and profits in the future; and
WHEREAS, the Directors wish to defer a portion of their fees to be earned
in the future; and
WHEREAS, the Bank desires to adopt this Plan in order to set forth the
terms and conditions upon which the Bank shall pay such deferred compensation to
the Directors or their designated beneficiaries; and
WHEREAS, the Bank intends this Plan to be considered an unfunded
arrangement, maintained primarily to provide retirement income for such
Directors, for tax purposes and for purposes of the Employee Retirement Income
Security Act of 1974, as amended; and
WHEREAS, the Bank has adopted this Director Deferred Compensation Plan
which controls all issues relating to the Deferred Compensation Benefits as
described herein;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree to the following terms and conditions:
SECTION I
DEFINITIONS
-----------
When used herein, the following words and phrases shall have the meanings
below unless the context clearly indicates otherwise:
1.1 "Administrator" means the Bank and/or its Board.
1.2 "Bank" means LIBERTY FEDERAL BANK and any successor thereto or the Board.
1.3 "Beneficiary" means the person or persons (and their heirs) designated as
Beneficiary in the Director's Joinder Agreement to whom the deceased
Director's benefits are payable. If no Beneficiary is so designated, then
the Director's Spouse, if living, will be deemed the Beneficiary. If the
Director's Spouse is not living, then the Children of the Director will be
deemed the Beneficiaries and will take on a per stirpes basis. If there
are no Children, then the Estate of the Director will be deemed the
Beneficiary.
1.4 "Benefit Age" shall be the birthday on which the Director becomes eligible
to receive benefits under the plan. Such birthday shall be designated in
the Director's Joinder Agreement.
1.5 "Benefit Eligibility Date" shall be the date on which a Director is
entitled to receive his Deferred Compensation Benefit. It shall be the
first day of the month following the month in which the Director either
attains the Benefit Age designated in his Joinder Agreement or terminates
service with the Bank other than due to death or disability.
1.6 "Board" shall mean the Board of Directors of the Bank unless specifically
noted otherwise.
1.7 A "Change in Control" shall mean and include the following with respect to
the Bank or the Holding Company:
(1) a change in control of a nature that is reported by the Holding Company
in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (hereinafter the "Exchange Act"); or
(2) an acquisition of "control" as defined in the Home Owners' Loan Act and
applicable regulations thereunder ("HOLA"); or
(3) the occurrence of the following:
(i) any "person" (as the term is used in Sections 13(d) and 14(d) of
the Exchange Act) or "group acting in concert" is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Holding
Company representing Twenty Percent (20%) or more of the combined
voting power of the Holding Company's outstanding securities
ordinarily having the right to vote at the elections of
directors, except for any stock purchased by the Bank's Employee
Stock Ownership Plan and/or the trust under such plan; or
(ii) a reorganization, merger, merger conversion, consolidation or
sale of all or substantially all of the assets of the Bank or the
Holding Company or a similar
2
transaction, in which the stockholders of the Holding Company
immediately prior to such transaction do not own at least 50.1%
of the voting stock of the resulting entity; or
(iii) individuals who constitute the board of directors of the Bank or
the Holding Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board,
or whose nomination for election was approved by the Holding
Company's or Bank's nominating committee which is comprised of
members of the Incumbent Board, shall be, for purposes of this
clause (iii) considered as though he were a member of the
Incumbent Board.
(iv) a proxy statement is issued soliciting proxies from the
stockholders of the Holding Company by someone other than the
current management of the Holding Company, seeking stockholder
approval of a plan of reorganization, merger, or consolidation of
the Holding Company with one or more corporations as a result of
which the outstanding shares of the class of the Holding
Company's securities are exchanged for or converted into cash or
property or securities not issued by the Holding Company.
(v) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities. The term "acquire" means obtaining
ownership, control, power to vote or sole power of disposition of
stock, directly or indirectly or through one or more transactions
or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase,
reverse stock split or a similar transaction involving other
securities of the same class; and (2) the acquisition of stock by
a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided
that an investment advisor shall not be deemed to acquire the
voting stock of its advisee if the advisor (a) votes the stock
only upon instruction from the beneficial owner and (b) does not
provide the beneficial owner with advice concerning the voting of
such stock. The term "security" includes nontransferable
subscription rights issued pursuant to a plan of conversion, as
well as a "security," as defined in 15 U.S.C. (S) 78c(2)(1); and
the term "acting in concert" means (1) knowing participation in a
joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express
agreement, or (2) a combination or pooling of voting or other
interests in the securities of an issuer for a common purpose
pursuant to any contract, understanding, relationship, agreement
or other arrangement, whether written or otherwise. Further,
acting in concert with any person or company shall also be deemed
to be acting in concert with any person or company that is acting
in concert with such other person or company.
(4) Notwithstanding the above definitions, the boards of directors of the
Bank or the Holding Company, in their absolute discretion, may make a
finding that a Change in Control of the
3
Bank or the Holding Company has taken place without the occurrence of
any or all of the events enumerated above.
1.8 "Children" means the Director's children, both natural and adopted,
determined at the time payments are due the Children under this Plan.
1.9 "Deferral Period" means the period of months over which the Director
chooses to defer current Board fees and/or retainer. The Deferral Period
shall commence on the date designated in the Director's Joinder Agreement.
1.10 "Deferred Compensation Benefit" means the benefit payable from the
Director's Elective Contribution Account, commencing on his Benefit
Eligibility Date and payable over the Payout Period.
1.11 "Disability Benefit" means the benefit payable to the Director following a
determination, in accordance with Subsection 5.2, that he is no longer
able, properly and satisfactorily, to perform his duties as a Director.
1.12 "Effective Date" of this Plan is April 16, 1998.
1.13 "Elective Contribution" shall refer to any bookkeeping entry required to
record a Director's pre-tax deferral of Board fees and/or retainer which
shall be made in accordance with the Director's Joinder Agreement.
1.14 "Elective Contribution Account" shall be represented by the bookkeeping
entries required to record a Director's Elective Contributions plus accrued
interest earned on such amounts.
1.15 "Estate" means the estate of the Director.
1.16 "Financial Hardship" means an unforeseeable emergency resulting from a
sudden and unexpected illness or accident of the Director or of a dependent
of the Director, loss of the Director's property due to casualty, or other
similar extraordinary and unforeseeable circumstances which arise as a
result of an event not within the control of the Director. The
circumstances that shall constitute an unforeseeable emergency will depend
upon the facts of each case, but, in any instance, payment may not be made
to the extent that such hardship is or may be relieved (i) through
reimbursement or compensation by insurance or otherwise, (ii) by
liquidation of the Director's assets to the extent such liquidation would
not itself cause severe financial hardship, or (iii) by cessation of
deferrals under the Plan. Examples of what are not considered to be
unforeseeable emergencies include the need to send the Director's child to
college or the decision to purchase a home.
1.17 "Financial Hardship Benefit" means a withdrawal or withdrawals of an amount
or amounts attributable to a Financial Hardship and limited to the extent
reasonably needed to satisfy the emergency need.
1.18 "Interest Factor" means annual compounding or discounting, as applicable,
at a rate equal to the greater of the Bank's return on equity (▇▇▇) or the
prime rate as published in the Wall Street
4
Journal from time to time (as either may be adjusted by the Board to
reflect unusual and non-recurring events).
1.19 "Payout Period" means the time frame during which certain benefits payable
hereunder shall be distributed, as elected by the Director in his Joinder
Agreement.
1.20 "Plan Year" shall mean the calender year.
1.21 "Spouse" means the individual to whom the Director is legally married at
the time of the Director's death provide, however, that the term "Spouse"
shall not refer to an individual to whom the Director is legally married to
at the time of death if the Director and such individual have entered into
a formal separation agreement (provided that such separation agreement does
not provide otherwise or state that such individual is entitled to a
portion of the benefit hereunder) or initiated divorce proceedings.
1.22 "Valuation Date" means the last day of each calendar month.
SECTION II
ESTABLISHMENT OF RABBI TRUST
The Bank shall establish a rabbi trust into which the Bank shall contribute
assets which shall be held therein, pursuant to the agreement which establishes
such rabbi trust. The contributed assets shall be subject to the claims of the
Bank's creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed assets are
paid to the Director and his Beneficiary(ies) in such manner and at such times
as specified in this Plan. It is the intention of the Bank to make a
contribution or contributions to the rabbi trust to provide the Bank with a
source of funds to assist it in meeting the liabilities of this Plan. The rabbi
trust and any assets held therein shall conform to the terms of the rabbi trust
agreement which has been established in conjunction with this Plan. Any
contribution(s) to the rabbi trust shall be made in accordance with the rabbi
trust agreement. The amount and timing of such contribution(s) shall be
specified in the agreement which establishes such rabbi trust.
SECTION III
DEFERRED FEES
-------------
Commencing on the Effective Date and continuing through the end of the
Deferral Period, the Director and the Bank agree that the Director may defer
into his Elective Contribution Account up to One Hundred Percent (100%) of the
monthly Board and Committee fees and/or retainer which the Director would
otherwise be entitled to receive from the Bank, the Holding Company and any
other affiliated corporations. The specific amount of the Director's monthly
deferred compensation shall be designated in the Director's Joinder Agreement
and shall apply only to compensation attributable to services not yet performed.
5
SECTION IV
ADJUSTMENT OF DEFERRAL AMOUNT
-----------------------------
Deferral of the specific amount of fees and/or retainer designated in the
Director's Joinder Agreement shall continue in effect pursuant to the terms of
this Plan unless and until the Director amends his Joinder Agreement by filing
with the Administrator a Notice of Adjustment of Deferral Amount (Exhibit B of
the Joinder Agreement). If the Bank, the Holding Company or any affiliated
corporation increases the amount of fees and/or retainer earned by the Director,
the Director can include such additional amounts in his monthly deferral,
provided approval from the Board of Directors is obtained, by filing a Notice of
Adjustment of Deferral Amount. A Notice of Adjustment of Deferral Amount shall
be effective if filed with the Administrator at least fifteen (15) days prior to
any January 1st during the Director's Deferral Period. Such Notice of Adjustment
of Deferral Amount shall be effective commencing with the January 1st following
its filing and shall be applicable only to compensation attributable to services
not yet performed.
SECTION V
BENEFITS GENERALLY
------------------
5.1 Retirement Benefit. The Bank agrees to pay the Director the Deferred
------------------
Compensation Benefit commencing on the Director's Benefit Eligibility Date.
Such payments will be made over the term of the Payout Period. In the
event of the Director's death after commencement of the Deferred
Compensation Benefit, but prior to completion of all such payments due and
owing hereunder, the Bank shall pay to the Director's Beneficiary a
continuation of the Deferred Compensation Benefit for the number of years
remaining in the Payout Period.
5.2 Disability Benefit. If requested by the Director and approved by the
-------------------
Board of Directors, the Director shall be entitled to receive the
Disability Benefit hereunder, in any case in which it is determined by a
duly licensed independent physician selected by the Bank, that the Director
is no longer able, properly and satisfactorily, to perform his regular
duties as a Director because of ill health, accident, disability or general
inability due to age. If Board of Director approval is obtained, the
Disability Benefit shall begin within thirty (30) days of Board of Director
approval. The amount of the Disability Benefit shall be the value of the
Director's Elective Contribution Account, payable in accordance with the
Director's Joinder Agreement. In the event the Director dies while
receiving Disability Benefit payments pursuant to this Subsection, his
Beneficiary shall be entitled to receive the remaining payments over the
remaining Payout Period.
5.3 Voluntary or Involuntary Termination. If the Director's service with the
------------------------------------
Bank is voluntarily or involuntarily terminated prior to the Benefit Age
designated in his Joinder Agreement, for any reason including Change in
Control but excluding death or disability, the Director shall be entitled
to the value of his Elective Contribution Account commencing within thirty
(30) days of such termination and payable over the Payout Period. In the
event of the Director's voluntary or involuntary termination hereunder, the
Interest Factor to be applied to the Director's Elective Contribution
Account shall be seven percent (7%) (or such other rate as determined by
the Board) from the date of termination to the end of the payout period.
Notwithstanding anything herein to the contrary, the Administrator may
determine to pay the balance of the Director's Elective
6
Contribution Account to the Director in a lump sum within sixty (60) days
of his voluntary or involuntary termination.
5.4 Financial Hardship Benefit. In the event the Director incurs a Financial
--------------------------
Hardship, the Director may request a Financial Hardship Benefit. Such
request shall be either approved or rejected by the Bank in the exercise of
its sole discretion. The Director will be required to demonstrate to the
satisfaction of the Bank that a Financial Hardship has occurred and that
the Director is otherwise entitled to a Financial Hardship Benefit in
accordance with Sections 1.15 and 1.16. If a Financial Hardship Benefit is
approved, it shall be paid in a lump sum within thirty (30) days of the
event which triggers payment and only to the extent of the Director's
account balances when paid. Any Deferred Compensation Benefit or
Disability Benefit shall be actuarially adjusted to reflect such
distribution.
5.5 Accelerated Distribution. Notwithstanding any other provision of the Plan,
------------------------
at termination of service, a Director who has elected to receive his
Deferred Compensation Benefit in installments over five (5) years shall be
entitled to file a request, in writing, with the Board, for a lump sum
distribution of his Elective Contribution Account, the value of which is
determined on the last Valuation Date immediately preceding the date on
which the Board receives the written request. Within thirty (30) days of
receipt of such request, the Board, other than the Director filing the
request, shall make a determination whether to approve such request. If
such request is approved by the Board, the lump sum payment shall be
payable within thirty (30) days following Board approval. The
determination whether to approve or deny such request shall be within the
sole discretion of the Board, and the Director who has made such request
shall not be entitled to participate in such decision.
5.6 Determination of Annual Installments. Benefits payable in annual
-------------------------------------
installments hereunder shall be determined as follows. The first annual
installment shall equal one-fifth of the Director's Elective Contribution
Account. The second annual installment shall equal one-fourth of the
Director's Elective Contribution Account, as increased during the year by
the Interest Factor. The third annual installment shall equal one-third of
the Director's Elective Contribution Account, the fourth annual installment
shall equal one-half of the Director's Elective Contribution Account and
the final installment shall equal the balance of the Director's Elective
Contribution Account. Each succeeding installment shall be paid on the
anniversary date of the immediate preceding installment and shall be
calculated as of the last Valuation Date immediately preceding payment of
such installment. Each year during the Payout Period the Director's
Elective Contribution Account shall earn interest at the rate established
by the Interest Factor.
5.7 Election of Quarterly Payments. A Director, upon written request, may be
------------------------------
entitled to elect to receive his benefit payable under Subsections 5.1, 5.2
or 5.3 in four equal quarterly payments, rather than annual installments.
In such case the amount payable each year shall be determined in accordance
with Subsection 5.6 and the quarterly payments shall be the amount
determined under Subsection 5.6, increased by the Interest Factor, and
payable in four equal quarterly payments within ten (10) days of the
beginning of each quarter.
7
SECTION VI
DEATH BENEFITS
--------------
6.1 Death Benefit Prior to Commencement of Deferred Compensation Benefit or
-----------------------------------------------------------------------
Disability Benefit. In the event of the Director's death prior to
------------------
commencement of the Deferred Compensation Benefit or Disability Benefit,
the Bank shall pay the balance of the Directors Elective Contribution
Account to the Director's Beneficiary, commencing within thirty (30) days
of the Director's death and payable over the Payout Period.
6.2 Election of Quarterly Payments. In the event the Director has elected a
------------------------------
five year Payout Period, the Director's Beneficiary may be entitled upon
written request to elect to receive the benefit payable under Subsection
6.1 in four quarterly, rather than annual installments.
SECTION VII
BENEFICIARY DESIGNATION
-----------------------
The Director shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Joinder Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Joinder
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Joinder Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION VIII
DIRECTOR'S RIGHT TO ASSETS:
---------------------------
ALIENABILITY AND ASSIGNMENT PROHIBITION
---------------------------------------
At no time shall the Director be deemed to have any lien, right, title or
interest in or to any specific investment or to any assets of the Bank. The
rights of the Director, any Beneficiary, or any other person claiming through
the Director under this Plan, shall be solely those of an unsecured general
creditor of the Bank. The Director, the Beneficiary, or any other person
claiming through the Director, shall only have the right to receive from the
Bank those payments so specified under this Plan. Neither the Director nor any
Beneficiary under this Plan shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in
advance any of the benefits payable hereunder, nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments, alimony or separate
maintenance owed by the Director or his Beneficiary, nor be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
SECTION IX
ACT PROVISIONS
--------------
9.1 Named Fiduciary. The Administrator shall be the Named Fiduciary of this
---------------
Plan. The Administrator shall be responsible for the management, control
and administration of the Plan as established herein. The Administrator may
delegate to others certain aspects of the management
8
and operational responsibilities of the Plan, including the employment of
advisors and the delegation of ministerial duties to qualified individuals.
9.2 Claims Procedure and Arbitration. In the event that benefits under this
--------------------------------
Plan are not paid to the Director (or to his Beneficiary in the case of the
Director's death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Administrator within
sixty (60) days from the date payments are refused. The Administrator
shall review the written claim and, if the claim is denied, in whole or in
part, they shall provide in writing, within thirty (30) days of receipt of
such claim, their specific reasons for such denial, reference to the
provisions of this Plan or the Joinder Agreement upon which the denial is
based, and any additional material or information necessary to perfect the
claim. Such writing by the Administrator shall further indicate the
additional steps which must be undertaken by claimants if an additional
review of the claim denial is desired.
If claimants desire a second review, they shall notify the Administrator in
writing within thirty (30) days of the first claim denial. Claimants may
review this Plan, the Joinder Agreement or any documents relating thereto
and submit any issues and comments, in writing, they may feel appropriate.
In its sole discretion, the Administrator shall then review the second
claim and provide a written decision within thirty (30) days of receipt of
such claim. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of this Plan or
the Joinder Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed
performance of this Plan and the Joinder Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may submit the
dispute to mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered by
the AAA under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION X
MISCELLANEOUS
-------------
10.1 No Effect on Directorship Rights. Nothing contained herein will confer
--------------------------------
upon the Director the right to be retained in the service of the Bank nor
limit the right of the Bank to discharge or otherwise deal with the
Director without regard to the existence of the Plan.
10.2 State Law. The Plan is established under, and will be construed according
---------
to, the laws of the State of Illinois, to the extent such laws are not
preempted by the Act and valid regulations published thereunder.
9
10.3 Severability. In the event that any of the provisions of this Plan or
------------
portion thereof, are held to be inoperative or invalid by any court of
competent jurisdiction, then: (1) insofar as is reasonable, effect will be
given to the intent manifested in the provisions held invalid or
inoperative, and (2) the validity and enforceability of the remaining
provisions will not be affected thereby.
10.4 Incapacity of Recipient. In the event the Director is declared incompetent
-----------------------
and a conservator or other person legally charged with the care of his
person or Estate is appointed, any benefits under the Plan to which such
Director is entitled shall be paid to such conservator or other person
legally charged with the care of his person or Estate.
10.5 Unclaimed Benefit. The Director shall keep the Bank informed of his
-----------------
current address and the current address of his Beneficiaries. If the
location of the Director is not made known to the Bank within three years
after the date upon which any payment of any benefits may first be made,
the Bank shall delay payment of the Director's benefit payment(s) until
the location of the Director is made known to the Bank; however, the Bank
shall only be obligated to hold such benefit payment(s) for the Director
until the expiration of three (3) years. Upon expiration of the three (3)
year period, the Bank may discharge its obligation by payment to the
Director's Beneficiary. If the location of the Director's Beneficiary is
not made known to the Bank by the end of an additional two (2) month
period following expiration of the three (3) year period, the Bank may
discharge its obligation by payment to the Director's Estate. If there is
no Estate in existence at such time or if such fact cannot be determined
by the Bank, the Director and his Beneficiary(ies) shall thereupon forfeit
any rights to the balance, if any, of any benefits provided for such
Director and/or Beneficiary under this Plan.
10.6 Limitations on Liability. Notwithstanding any of the preceding
------------------------
provisions of the Plan, no individual acting as an employee or agent of
the Bank, or as a member of the Board of Directors shall be personally
liable to the Director or any other person for any claim, loss, liability
or expense incurred in connection with this Plan.
10.7 Gender. Whenever in this Plan words are used in the masculine or neuter
------
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
10.8 Effect on Other Corporate Benefit Plans. Nothing contained in this Plan
---------------------------------------
shall affect the right of the Director to participate in or be covered by
any qualified or non-qualified pension, profit sharing, group, bonus or
other supplemental compensation or fringe benefit agreement constituting a
part of the Bank's existing or future compensation structure.
10.9 Inurement. This Plan shall be binding upon and shall inure to the benefit
---------
of the Bank, its successors and assigns, and the Director, his successors,
heirs, executors, administrators, and Beneficiaries.
10.10 Source of Payments. All payments provided in this Plan shall be timely
------------------
paid in cash or check from the general funds of the Bank or the assets of
the rabbi trust. The Holding Company guarantees payment and provision of
all amounts and benefits due to the Directors and, if such amounts and
benefits are not timely paid or provided by the Bank, or a rabbi trust,
such amounts and benefits shall be paid or provided by the Holding
Company.
10
10.11 Modification of Benefit Eligibility Date. In the event that a Director
----------------------------------------
desires to modify his Benefit Eligibility Date or Payout Period with
respect to future Elective Contributions, the Director may do so at the
time and in the manner that the Director is entitled to adjust his
Elective Contribution, pursuant to Section IV of the Plan. In the event
that a Director desires to modify his Benefit Eligibility Date or Payout
Period with respect to amounts accrued in his Elective Contribution
Account the Director may do so, provided, however, that any such
modification is made no later than twenty-four (24) months prior to the
date of both (i) the Director's existing Benefit Eligibility Date (at the
time of such modification) and (ii) the Director's Benefit Eligibility
Date, as modified.
10.12 Headings. Headings and sub-headings in this Plan are inserted for
--------
reference and convenience only and shall not be deemed a part of this
Plan.
SECTION XI
AMENDMENT/REVOCATION
--------------------
This Plan shall not be amended, modified or revoked at any time, in whole
or part, without the mutual written consent of the Director and the Bank, and
such mutual consent shall be required even if the Director is no longer serving
the Bank as a member of the Board.
SECTION XII
EXECUTION
---------
12.1 This Plan sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the
subject matter hereof are merged into and superseded by this Plan.
12.2 This Plan shall be executed in triplicate, each copy of which, when so
executed and delivered, shall be an original, but all three copies shall
together constitute one and the same instrument.
11
EXECUTIVE DEFERRED
COMPENSATION PLAN
LIBERTY FEDERAL BANK
Hinsdale, Illinois
April 16, 1998
EXECUTIVE DEFERRED
COMPENSATION PLAN
This Executive Deferred Compensation Plan (the "Plan"), effective as of the
16th day of April, 1998, formalizes the understanding by and between LIBERTY
FEDERAL BANK (the "Bank"), a stock savings bank having its principal place of
business in Illinois, and certain eligible Executives, hereinafter referred to
as "Executive", who shall be approved by the Bank to participate and who shall
elect to become a party to this Executive Deferred Compensation Plan by
execution of an Executive Deferred Compensation Joinder Agreement ("Joinder
Agreement") in a form provided by the Bank. ALLIANCE BANCORP (the "Holding
Company") is a party to this Plan for the sole purpose of guaranteeing the
Bank's performance hereunder.
W I T N E S S E T H :
WHEREAS, the Executives are employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed for
it by such Executives and wishes to encourage continued employment of each; and
WHEREAS, the Executives wish to defer a portion of their compensation to be
earned in the future to the period after retirement or other termination from
active employment with the Bank; and
WHEREAS, the Bank wishes to provide the terms and conditions upon which the
Bank shall pay such additional compensation to the Executives after retirement
or other termination of employment; and
WHEREAS, the Bank intends this Plan to be considered an unfunded
arrangement, maintained primarily to provide retirement income for such
Executives, members of a select group of management or highly compensated
employees of the Bank, for tax purposes and for purposes of the Employee
Retirement Income Security Act of 1974, as amended; and
WHEREAS, the Bank has adopted this Executive Deferred Compensation Plan
which controls all issues relating to the Deferred Compensation Benefits as
described herein;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree to the following terms and conditions:
SECTION I
DEFINITIONS
-----------
When used herein, the following words and phrases shall have the meanings
below unless the context clearly indicates otherwise:
1.1 "Administrator" means the Bank and/or its Board.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
1.3 "Bank" means LIBERTY FEDERAL BANK and any successor thereto or the Board.
1.4 "Base Compensation" means regular salary compensation and cash bonus
received from the Bank during any calendar year, and before any salary
deferral contributions to any tax-qualified or non-qualified plan.
1.5 "Beneficiary" means the person or persons (and their heirs) designated as
Beneficiary in the Executive's Joinder Agreement to whom the deceased
Executive's benefits are payable. If no Beneficiary is so designated, then
the Executive's Spouse, if living, will be deemed the Beneficiary. If the
Executive's Spouse is not living, then the Children of the Executive will
be deemed the Beneficiaries and will take on a per stirpes basis. If there
are no Children, then the Estate of the Executive will be deemed the
Beneficiary.
1.6 "Benefit Age" shall be the birthday on which the Executive becomes eligible
to receive benefits under the plan. Such birthday shall be designated in
the Executive's Joinder Agreement.
1.7 "Benefit Eligibility Date" shall be the date on which a Executive is
entitled to receive his Deferred Compensation Benefit. It shall be the
first day of the month following the month in which the Executive either
attains the Benefit Age designated in his Joinder Agreement or terminates
employment for any reason other then termination for cause, death or
disability.
1.8 "Board" shall mean the Board of Directors of the Bank, unless specifically
noted otherwise.
1.9 "Cause" shall mean willful misconduct, breach of fiduciary duty involving
personal benefit to the Executive, conviction of a felony, wilful breach or
willful neglect by the Executive of his duties as an Executive of the
Holding Company or the Bank, or persistent negligence or misconduct in the
performance of such duties. For purposes of this definition, no act or
failure to act on the part of the Executive shall be considered "willful"
unless done or omitted not in good faith and without reasonable belief that
the action or omission was in the best interest of the Holding Company or
the Bank.
1.10 A "Change in Control" shall mean and include the following with respect to
the Bank or the Holding Company:
2
(1) a change in control of a nature that is reported by the Holding
Company in response to Item 1(a) of the current report on Form 8-K, as
in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (hereinafter the "Exchange Act"); or
(2) an acquisition of "control" as defined in the Home Owners' Loan Act
and applicable regulations thereunder ("HOLA"); or
(3) the occurrence of the following:
(i) any "person" (as the term is used in Sections 13(d) and 14(d) of
the Exchange Act) or "group acting in concert" is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Holding
Company representing Twenty Percent (20%) or more of the
combined voting power of the Holding Company's outstanding
securities ordinarily having the right to vote at the elections
of directors, except for any stock purchased by the Bank's
Employee Stock Ownership Plan and/or the trust under such plan;
or
(ii) a reorganization, merger, merger conversion, consolidation or
sale of all or substantially all of the assets of the Bank or
the Holding Company or a similar transaction, in which the
stockholders of the Holding Company immediately prior to such
transaction do not own at least 50.1% of the voting stock of the
resulting entity; or
(iii) individuals who constitute the board of directors of the Bank or
the Holding Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board,
or whose nomination for election was approved by the Holding
Company's or Bank's nominating committee which is comprised of
members of the Incumbent Board, shall be, for purposes of this
clause (iii) considered as though he were a member of the
Incumbent Board.
(iv) a proxy statement is issued soliciting proxies from the
stockholders of the Holding Company by someone other than the
current management of the Holding Company, seeking stockholder
approval of a plan of reorganization, merger, or consolidation
of the Holding Company with one or more corporations as a result
of which the outstanding shares of the class of the Holding
Company's securities are exchanged for or converted into cash or
property or securities not issued by the Holding Company.
(v) The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities. The term "acquire" means obtaining
ownership, control, power to vote or sole power of disposition
of stock, directly or indirectly or through one or more
transactions or subsidiaries, through purchase, assignment,
transfer, exchange, succession or other means, including (1) an
increase in percentage ownership resulting from a redemption,
repurchase, reverse stock split or a similar transaction
involving other securities of the same class; and (2) the
acquisition of stock by a group of persons and/or companies
acting in concert which shall be deemed to occur upon the
formation of such group, provided that an investment advisor
shall not be deemed to acquire the voting stock of its advisee
if the advisor (a) votes the stock only upon instruction from
the beneficial owner and (b) does not provide the beneficial
owner with advice concerning the voting of such stock. The term
"security" includes
3
nontransferable subscription rights issued pursuant to a plan of
conversion, as well as a "security," as defined in 15 U.S.C. (S)
78c(2)(1); and the term "acting in concert" means (1) knowing
participation in a joint activity or interdependent conscious
parallel action towards a common goal whether or not pursuant to
an express agreement, or (2) a combination or pooling of voting
or other interests in the securities of an issuer for a common
purpose pursuant to any contract, understanding, relationship,
agreement or other arrangement, whether written or otherwise.
Further, acting in concert with any person or company shall also
be deemed to be acting in concert with any person or company
that is acting in concert with such other person or company.
(4) Notwithstanding the above definitions, the boards of directors of the
Bank or the Holding Company, in their absolute discretion, may make a
finding that a Change in Control of the Bank or the Holding Company
has taken place without the occurrence of any or all of the events
enumerated above.
1.11 "Children" means the Executive's children, or any issue of any deceased
children, both natural and adopted, determined at the time payments are due
the Children under this Plan.
1.12 "Deferral Period" means the period of months over which the Executive
chooses to defer Base Compensation. The Deferral Period shall commence on
the date designated in the Executive's Joinder Agreement.
1.13 "Deferred Compensation Benefit" means the benefit payable from the
Executive's Elective Contribution Account commencing on his Benefit
Eligibility Date and payable over the Payout Period.
1.14 "Disability Benefit" means the benefit payable to the Executive following a
determination, in accordance with Subsection 5.2, that he is no longer
able, properly and satisfactorily, to perform his duties as Executive.
1.15 "Effective Date" of this Plan is April 16, 1998.
1.16 "Elective Contribution" shall refer to any bookkeeping entry required to
record an Executive's pre-tax deferral of Base Compensation which shall be
made in accordance with the Executive's Joinder Agreement.
1.17 "Elective Contribution Account" shall be represented by the bookkeeping
entries required to record the Executive's Elective Contributions plus
accrued interest, equal to the Interest Factor, earned on such amounts.
1.18 "Estate" means the estate of the Executive.
1.19 "Financial Hardship" means an unforeseeable emergency resulting from a
sudden and unexpected illness or accident of the Executive or of a
dependent of the Executive, loss of the Executive's property due to
casualty, or other similar extraordinary and unforeseeable circumstances
which arise as a result of an event not within the control of the
Executive. The circumstances that shall constitute an unforeseeable
emergency will depend upon the facts of each case, but, in any instance,
4
payment may not be made to the extent that such hardship is or may be
relieved (i) through reimbursement or compensation by insurance or
otherwise, (ii) by liquidation of the Executive's assets to the extent such
liquidation would not itself cause severe financial hardship, or (iii) by
cessation of deferrals under the Plan. Examples of what are not considered
to be unforeseeable emergencies include the need to send the Executive's
child to college or the decision to purchase a home.
1.20 "Financial Hardship Benefit" means a withdrawal or withdrawals of an amount
or amounts attributable to a Financial Hardship and limited to the extent
reasonably needed to satisfy the emergency need.
1.21 "Interest Factor" means annual compounding or discounting, as applicable,
at a rate equal to the greater of the Bank's return on equity (▇▇▇) for the
current year or the prime rate as published in the Wall Street Journal from
time to time (as either may be adjusted by the Board to reflect unusual
and non recurring events).
1.22 "Payout Period" means the time frame during which benefits payable
hereunder shall be distributed, as elected by the Executive in his Joinder
Agreement.
1.23 "Plan Year" shall mean the calendar year.
1.24 "Spouse" means the individual to whom the Executive is legally married at
the time of the Executive's death provided, however, that the term "Spouse"
shall not refer to an individual to whom the Executive is legally married
to at the time of death if the Executive and such individual have entered
into a formal separation agreement (provided that such separation agreement
does not provide otherwise or state that such individual is entitled to a
portion of the benefit hereunder) or initiated divorce proceedings.
1.25 "Valuation Date" means the last day of each calendar month.
SECTION II
ESTABLISHMENT OF RABBI TRUST
----------------------------
The Bank shall establish a rabbi trust into which the Bank shall contribute
assets which shall be held therein, pursuant to the agreement which establishes
such rabbi trust. The contributed assets shall be subject to the claims of the
Bank's creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed assets are
paid to the Executive and his Beneficiary(ies) in such manner and at such times
as specified in this Plan. It is the intention of the Bank to make a
contribution or contributions to the rabbi trust to provide the Bank with a
source of funds to assist it in meeting the liabilities of this Plan. The rabbi
trust and any assets held therein shall conform to the terms of the rabbi trust
agreement which has been established in conjunction with this Plan. Any
contribution(s) to the rabbi trust shall be made in accordance with the rabbi
trust agreement. The amount of such contribution(s) shall be at least equal to
the Executive's Elective Contribution Account.
SECTION III
DEFERRED COMPENSATION
---------------------
5
Commencing on the execution date of the Executive's Joinder Agreement and
continuing through the end of the Deferral Period, the Executive and the Bank
agree that the Executive shall be entitled to defer into his Elective
Contribution Account Base Compensation which the Executive would otherwise be
entitled to receive from the Bank. The Executive's election shall apply only to
compensation attributable to services not yet performed.
SECTION IV
ADJUSTMENT OF DEFERRAL AMOUNT
-----------------------------
Deferral of the specific amount of Base Compensation designated in the
Executive's Joinder Agreement shall continue in effect pursuant to the terms of
this Plan unless and until the Executive amends his Joinder Agreement by filing
with the Administrator a Notice of Adjustment of Deferral Amount (Exhibit B of
the Joinder Agreement). A Notice of Adjustment of Deferral Amount shall be
effective if filed with the Administrator at least fifteen (15) days prior to
any January 1st during the Executive's Deferral Period. Such Notice of
Adjustment of Deferral Amount shall be effective commencing with the January 1st
following its filing and shall be applicable only to compensation attributable
to services not yet performed.
SECTION V
BENEFITS GENERALLY
------------------
5.1 Retirement Benefit. The Bank agrees to pay the Executive the Deferred
------------------
Compensation Benefit commencing on the Executive's Benefit Eligibility
Date. Such payments will be made over the term of the Payout Period. In
the event of the Executive's death after commencement of the Deferred
Compensation Benefit, but prior to completion of all such payments due and
owing hereunder, the Bank shall pay to the Executive's Beneficiary a
continuation of the Deferred Compensation Benefit for the number of years
remaining in the Payout Period.
5.2 Disability Benefit. If requested by the Executive and approved by the
------------------
Board, the Executive shall be entitled to receive the Disability Benefit
hereunder, in any case in which it is determined by a duly licensed
independent physician selected by the Bank, that the Executive is no longer
able, properly and satisfactorily, to perform his regular duties because of
ill health, accident, disability or general inability due to age. If Board
of Director approval is obtained, the Disability Benefit shall begin within
thirty (30) days of Board of Director approval. The amount of the
Disability Benefit shall be the value of the Executive's Elective
Contribution Account, payable in accordance with the Executive's Joinder
Agreement. In the event the Executive dies while receiving Disability
Benefit payments pursuant to this Subsection, his Beneficiary shall be
entitled to receive the remaining payments to which the Executive has
become entitled.
5.3 Termination For Cause. In the event the Executive is terminated for Cause
---------------------
at any time prior to reaching his Benefit Age, he shall be entitled to
receive the balance of his Elective Contribution Account, measured as of
the date of termination. Such amount shall be paid in a lump sum within
thirty (30) days of the Executive's date of termination.
5.4 Voluntary or Involuntary Termination Other Than for Cause. If the
---------------------------------------------------------
Executive's employment with the Bank is voluntarily or involuntarily
terminated prior to the Benefit Age designated in his
6
Joinder Agreement, for any reason including a Change in Control but
excluding termination for Cause, or due to the Executive's death or
disability, the Executive shall be entitled to the value of his Elective
Contribution Account commencing within thirty (30) days of such termination
and payable over the Payout Period. In the event of the Executive's
voluntary or involuntary termination hereunder, the Interest Factor to be
applied to Executive's Elective Contribution Account shall be seven percent
(7%) (or such other rate as determined by the Board) from the date of
termination to the end of the Payout Period. Notwithstanding anything
herein to the contrary, the Administrator may determine to pay the balance
of the Executive's Elective Contribution Account to the Executive in a lump
sum within sixty (60) days of his voluntary or involuntary termination.
5.5 Financial Hardship Benefit. In the event the Executive incurs a Financial
--------------------------
Hardship, the Executive may request a Financial Hardship Benefit. Such
request shall be either approved or rejected by the Bank in the exercise of
its sole discretion. The Executive will be required to demonstrate to the
satisfaction of the Bank that a Financial Hardship has occurred and that
the Executive is otherwise entitled to a Financial Hardship Benefit in
accordance with Sections 1.18 and 1.19. If a Financial Hardship Benefit is
approved, it shall be paid in a lump sum within thirty (30) days of the
event which triggers payment and only to the extent of the Executive's
account balances when paid.
5.6 Accelerated Distribution. Notwithstanding any other provision of the
------------------------
Plan, at termination of employment, an Executive who has elected to receive
his Deferred Compensation Benefit in installments over five (5) years shall
be entitled to file a request, in writing, with the Bank's Board, for a
lump sum distribution of his Elective Contribution Account the value of
which is determined on the last Valuation Date immediately preceding the
date on which the Bank receives the written request. Within thirty (30)
days of receipt of such request, the Board shall make a determination
whether to approve such request. If such request is approved by the Board,
the lump sum payment shall be payable within thirty (30) days following
Board approval. The determination whether to approve of deny such request
shall be within the sole discretion of the Board.
5.7 Determination of Annual Installments. Benefits payable in annual
-------------------------------------
installments hereunder shall be determined as follows. The first annual
installment shall equal one-fifth of the Executive's Elective Contribution
Account. The second annual installment shall equal one-fourth of the
Executive's Elective Contribution Account. The third annual installment
shall equal one-third of the Executive's Elective Contribution Account, the
fourth annual installment shall equal one-half and the final installment
shall equal the balance of the Executive's Elective Contribution Account.
Each succeeding installment shall be paid on the anniversary date of the
prior installment and shall be calculated as of the last Valuation Date
immediately preceding the payment of such installment. Each year during the
Payout Period the Executive's Elective Contribution Account shall earn
interest at the rate established by the Interest Factor.
5.8 Election of Quarterly Payments. An Executive, upon written request, may be
------------------------------
entitled to elect to receive his benefit payable under Subsections 5.1, 5.2
or 5.4 in four equal quarterly payments, rather than annual installments.
In such case the amount payable each year shall be determined in accordance
with Subsection 5.7 and the quarterly payments shall be the amount
determined under Subsection 5.7, increased by the Interest Factor, and
payable in four equal quarterly payments within ten (10) days of the
beginning of each quarter.
7
SECTION VI
DEATH BENEFITS
--------------
6.1 Death Benefit Prior to Commencement of Deferred Compensation Benefit or
-----------------------------------------------------------------------
Disability Benefit. In the event of the Executive's death prior to
------------------
commencement of the Deferred Compensation Benefit or Disability Benefit,
the Bank shall pay the balance of the Executive's Elective Contribution
Account to the Executive's Beneficiary, commencing within thirty (30) days
of the Executive's death and payable over the Payout Period.
6.2 Election of Quarterly Payments. In the event the Executive has elected a
------------------------------
five year Payout Period, the Executive's Beneficiary may be entitled upon
written request to elect to receive the benefit payable under Subsection
6.1 in four equal quarterly, rather than annual installments.
SECTION VII
BENEFICIARY DESIGNATION
-----------------------
The Executive shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Joinder Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Joinder
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Joinder Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION VIII
EXECUTIVE'S RIGHT TO ASSETS:
ALIENABILITY AND ASSIGNMENT PROHIBITION
---------------------------------------
At no time shall the Executive be deemed to have any lien, right, title or
interest in or to any specific investment or asset of the Bank. The rights of
the Executive, any Beneficiary, or any other person claiming through the
Executive under this Plan, shall be solely those of an unsecured general
creditor of the Bank. The Executive, the Beneficiary, or any other person
claiming through the Executive, shall only have the right to receive from the
Bank those payments so specified under this Plan. Neither the Executive nor any
Beneficiary under this Plan shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in
advance any of the benefits payable hereunder, nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments, alimony or separate
maintenance owed by the Executive or his Beneficiary, nor be transferable by
operation of law in the event of bankruptcy, insolvency or otherwise.
SECTION IX
ACT PROVISIONS
--------------
9.1 Named Fiduciary. The Administrator shall be the Named Fiduciary of this
---------------
Plan. The Administrator shall be responsible for the management, control
and administration of the Plan as established herein. The Administrator may
delegate to others certain aspects of the management and operational
responsibilities of the Plan, including the employment of advisors and the
delegation of ministerial duties to qualified individuals.
9.2 Claims Procedure and Arbitration. In the event that benefits under this
--------------------------------
Plan are not paid to the Executive (or to his Beneficiary in the case of
the Executive's death) and such claimants feel they
8
are entitled to receive such benefits, then a written claim must be made to
the Administrator within sixty (60) days from the date payments are
refused. The Administrator shall review the written claim and, if the claim
is denied, in whole or in part, they shall provide in writing, within
thirty (30) days of receipt of such claim, their specific reasons for such
denial, reference to the provisions of this Plan or the Joinder Agreement
upon which the denial is based, and any additional material or information
necessary to perfect the claim. Such writing by the Administrator shall
further indicate the additional steps which must be undertaken by claimants
if an additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the Administrator in
writing within thirty (30) days of the first claim denial. Claimants may
review this Plan, the Joinder Agreement or any documents relating thereto
and submit any issues and comments, in writing, they may feel appropriate.
In its sole discretion, the Administrator shall then review the second
claim and provide a written decision within thirty (30) days of receipt of
such claim. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of this Plan or
the Joinder Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon completed
performance of this Plan and the Joinder Agreement or the meaning and
effect of the terms and conditions thereof, then claimants may submit the
dispute to mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered by
the AAA under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
SECTION X
MISCELLANEOUS
-------------
10.1 No Effect on Employment Rights. Nothing contained herein will confer upon
------------------------------
the Executive the right to be retained in the employment of the Bank nor
limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of the Plan.
10.2 State Law. The Plan is established under, and will be construed according
---------
to, the laws of the State of Illinois, to the extent such laws are not
preempted by the Act and valid regulations published thereunder.
10.3 Severability. In the event that any of the provisions of this Plan or
------------
portion thereof, are held to be inoperative or invalid by any court of
competent jurisdiction, then: (1) insofar as is reasonable, effect will be
given to the intent manifested in the provisions held invalid or
inoperative, and (2) the validity and enforceability of the remaining
provisions will not be affected thereby.
10.4 Incapacity of Recipient. In the event the Executive is declared
-----------------------
incompetent and a conservator or other person legally charged with the care
of his person or Estate is appointed, any benefits under the Plan to which
such Executive is entitled shall be paid to such conservator or other
person legally charged with the care of his person or Estate.
9
10.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
-----------------
current address and the current address of his Beneficiaries. If the
location of the Executive is not made known to the Bank within three years
after the date upon which any payment of any benefits may first be made,
the Bank shall delay payment of the Executive's benefit payment(s) until
the location of the Executive is made known to the Bank; however, the Bank
shall only be obligated to hold such benefit payment(s) for the Executive
until the expiration of three (3) years. Upon expiration of the three (3)
year period, the Bank may discharge its obligation by payment to the
Executive's Beneficiary. If the location of the Executive's Beneficiary is
not made known to the Bank by the end of an additional two (2) month
period following expiration of the three (3) year period, the Bank may
discharge its obligation by payment to the Executive's Estate. If there is
no Estate in existence at such time or if such fact cannot be determined
by the Bank, the Executive and his Beneficiary(ies) shall thereupon
forfeit any rights to the balance, if any, of any benefits provided for
such Executive and/or Beneficiary under this Plan.
10.6 Limitations on Liability. Notwithstanding any of the preceding provisions
------------------------
of the Plan, no individual acting as an employee or agent of the Bank, or
as a member of the Board of Executives shall be personally liable to the
Executive or any other person for any claim, loss, liability or expense
incurred in connection with this Plan.
10.7 Gender. Whenever in this Plan words are used in the masculine or neuter
------
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
10.8 Effect on Other Corporate Benefit Plans. Nothing contained in this Plan
---------------------------------------
shall affect the right of the Executive to participate in or be covered by
any qualified or non-qualified pension, profit sharing, group, bonus or
other supplemental compensation or fringe benefit agreement constituting a
part of the Bank's existing or future compensation structure.
10.9 Inurement. This Plan shall be binding upon and shall inure to the benefit
---------
of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
10.10 Source of Payments. All payments provided in this Plan shall be timely
------------------
paid in cash or check from the general funds of the Bank or the assets of
the rabbi trust. The Holding Company guarantees payment and provision of
all amounts and benefits due to the Executives and, if such amounts and
benefits are not timely paid or provided by the Bank, or a rabbi trust,
such amounts and benefits shall be paid or provided by the Holding
Company.
10.11 Modification of Benefit Eligibility Date. In the event that a Executive
----------------------------------------
desires to modify his Benefit Eligibility Date or Payout Period with
respect to future Elective Contributions, the Executive may do so at the
time and in the manner that the Executive is entitled to adjust his
Elective Contribution, pursuant to Section IV of the Plan. In the event
that an Executive desires to modify his Benefit Eligibility Date or Payout
Period with respect to amounts accrued in his Elective Contribution
Account the Executive may do so, provided, however, that any such
modification is made no later than twenty-four (24) months prior to the
date of both (i) the Executive's existing Benefit Eligibility Date (at the
time of such modification) and (ii) the Executive's Benefit Eligibility
Date, as modified.
10
10.12 Tax Withholding. The Bank may withhold from any benefits payable under
---------------
this Plan all federal, state, city, or other taxes as shall be required
pursuant to any law or governmental regulation then in effect.
10.13 Headings. Headings and sub-headings in this Plan are inserted for
--------
reference and convenience only and shall not be deemed a part of this
Plan.
SECTION XI
AMENDMENT/REVOCATION
--------------------
This Plan shall not be amended, modified or revoked at any time, in whole
or part, without the mutual written consent of the Executive and the Bank, and
such mutual consent shall be required even if the Executive is no longer
employed by the Bank.
SECTION XII
EXECUTION
---------
12.1 This Plan sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the
subject matter hereof are merged into and superseded by this Plan.
12.2 This Plan shall be executed in triplicate, each copy of which, when so
executed and delivered, shall be an original, but all three copies shall
together constitute one and the same instrument.
11
