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Exhibit
10.6
FORM OF
CHANGE IN
CONTROL
SEVERANCE
AGREEMENT
THIS CHANGE IN CONTROL
SEVERANCE AGREEMENT (the “Agreement”) is entered
into effective as of this [date] , by and between FIRST
SAVINGS BANK, FSB , and [NAME] (the
“Executive”).
WHEREAS, the Executive
has contributed to the profitability, growth, and financial
strength of First Savings Bank, FSB;
WHEREAS , First
Savings Bank, FSB wishes to provide additional incentives for the
Executive to remain in the employment of First Savings Bank,
FSB;
NOW THEREFORE, in
consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.
1. Termination after a
Change in Control .
(a) Cash benefit . If
the Executive’s employment terminates involuntarily but
without Cause or voluntarily but with Good Reason, in either case
within 12 months after a Change in Control, First Savings Bank, FSB
(the “Bank”) shall make a lump-sum payment to the
Executive in an amount in cash equal to three times the
Executive’s base salary (at the rate in effect immediately
prior to the Change in Control or, if higher, the rate in effect
when the Executive terminates employment). Unless a delay in
payment is required under Section 1(b) of this Agreement, the
payment required under this Section 1(a) shall be made within
five (5) business days after the Executive’s employment
termination. The amount payable to the Executive hereunder shall
not be reduced to account for the time value of money or discounted
to present value. If the Executive’s employment terminates
involuntarily but without Cause before the Change in Control occurs
but after discussions regarding the Change in Control commence,
then for purposes of this Agreement the Executive’s
employment shall be deemed to have terminated immediately after the
Change in Control and, unless delay is required under
Section 1(b) of this Agreement, the Executive shall be
entitled to the cash benefit under this Section 1(a) within
five (5) business days after the Change in Control.
(b) Payment of the
benefit . If when employment termination occurs the Executive
is a “specified employee” within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), if the cash severance benefit under
Section 1(a) would be considered deferred compensation under
Section 409A of the Code, and finally if an exemption from the
six-month delay requirement of Section 409A(a)(2)(B)(i) of the
Code is not available, payment of the benefit under
Section 1(a) shall be delayed and shall be made to the
Executive in a single lump sum without interest on the first day of
the seventh (7 th ) month after the month in which the Executive’s
employment terminates. References in this Agreement to
Section 409A of the Code include rules, regulations, and
guidance of general application issued by the Department of the
Treasury under Section 409A of the Code.
(c) Change in Control
defined . For purposes of this Agreement, a Change in Control
means a change in control as defined in Section 409A of the
Code, including –
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(1) |
Change in ownership : a change in ownership of First
Savings Financial Group, Inc. (the “Company”) occurs on
the date any one person or group accumulates ownership of Company
stock constituting more than 50% of the total fair market value or
total voting power of Company stock, or |
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(2) |
Change in effective control : ( x ) any one
person or more than one person acting as a group acquires within a
12-month period ownership of Company stock possessing 30% or more
of the total voting power of Company stock, or ( y ) a
majority of the Company’s board of directors is replaced
during any 12-month period by directors whose appointment or
election is not endorsed in advance by a majority of the
Company’s board of directors, or |
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(3) |
Change in ownership of a substantial portion of assets :
a change in ownership of a substantial portion of the
Company’s assets occurs if in a 12-month period any one
person or more than one person acting as a group acquires from the
Company assets having a total gross fair market value equal to or
exceeding 40% of the total gross fair market value of all of the
Company’s assets immediately before the acquisition or
acquisitions. For this purpose, gross fair market value means the
value of the Company’s assets, or the value of the assets
being disposed of, determined without regard to any liabilities
associated with the assets. |
(d) Involuntary
termination with Cause defined . For purposes of this Agreement
involuntary termination of the Executive’s employment shall
be considered involuntary termination with Cause if the Executive
shall have been terminated for any of the following
reasons:
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(4) |
Breach of fiduciary duty involving personal profit; |
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(5) |
Intentional failure to perform stated duties; |
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(6) |
Willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease-and-desist
order; or |
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(7) |
Material breach of any provision of this Agreement. |
For purposes of this Agreement, no act
or failure to act on the Executive’s part shall be deemed to
have been intentional if it was due primarily to an error in
judgment or negligence. An act or failure to act on the
Executive’s part shall be considered intentional if it is not
in good faith and if it is without a reasonable belief that the
action or failure to act is in the Bank’s best interests. Any
act or failure to act based upon authority granted by resolutions
duly adopted by the board of directors or based upon the advice of
counsel for the Bank shall be conclusively presumed to be in good
faith and in the Bank’s best interests.
(e) Voluntary termination
with Good Reason defined . For purposes of this Agreement a
voluntary termination by the Executive shall be considered a
voluntary termination with Good Reason if the conditions stated in
both clauses (1) and (2) are satisfied –
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(1) |
a voluntary termination by the Executive shall be considered a
voluntary termination with Good Reason if any of the following
occur without the Executive’s advance written consent, and
the term Good Reason shall mean the occurrence of any of the
following without the Executive’s advance written consent
– |
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(i) |
a material diminution of the Executive’s base
salary, |
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(ii) |
a material diminution of the Executive’s authority,
duties, or responsibilities, |
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(iii) |
a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive is
required to report, or |
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(iv) |
a change by more than thirty-five (35) miles in the
geographic location at which the Executive must perform
services. |
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(2) |
the Executive must give notice to the Bank of the existence of
one or more of the conditions described in clause (1) within
sixty (60) days after the initial existence of the condition,
and the Bank shall have thirty (30) days thereafter to remedy
the condition. In addition, the Executive’s voluntary
termination because of the existence of one or more of the
conditions described in clause (1) must occur within six
months after the initial existence of the condition. |
2. Continuation of
Benefits .
(a) Benefits . Subject
to Section 2(b) of this Agreement, if the Executive’s
employment terminates involuntarily but without Cause or
voluntarily but for Good Reason within twelve (12) months
after a Change in Control, the Bank shall continue or cause to be
continued life and health insurance coverage substantially
identical to the coverage maintained for the Executive before
termination and in accordance with the same schedule prevailing
before employment termination. The insurance coverage shall cease
thirty-six (36) months after the Executive’s
termination, whichever occurs first.
(b) Alternative lump-sum
cash payment . If ( x ) under the terms of the
applicable policy or policies for the insurance benefits specified
in Section 2(a) it is not possible to continue the
Executive’s coverage, or ( y ) if when employment
termination occurs the Executive is a specified employee within the
meaning of Section 409A of the Code, if any of the continued
insurance coverage benefits specified in Section 2(a) would be
considered deferred compensation under Section 409A of the
Code, and finally if an exemption from the six-month delay
requirement of Section 409A(a)(2)(B)(i) of the Code is not
available for that particular insurance benefit, instead of
continued insurance coverage under Section 2(a) the Bank shall
pay or cause to be paid to the Executive in a single lump sum an
amount in cash equal to the present value of the Bank’s
projected cost to maintain that particular insurance benefit had
the Executive’s employment not terminated, assuming continued
coverage for thirty-six (36) months. The lump-sum payment
shall be made within five (5) business days after employment
termination or, if the Executive is a specified employee within the
meaning of Section 409A of the Code and an exemption from the
six-month delay requirement of Section 409A(a)(2)(B)(i) of the
Code is not available, on the first day of the seventh month after
the month in which the Executive’s employment
terminates.
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3. Termination for
Which No Benefits Are Payable . Despite anything in this
Agreement
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