CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is made and entered into
on December 8, 2003 (the "Effective Date") by and among Xxxxxx X. Xxxxx
("Executive"), Clover Leaf Bank, an Illinois-chartered commercial bank (the
"Bank"), and Clover Leaf Financial Corp., a Delaware corporation (the "Holding
Company").
RECITALS
A. Executive is currently employed as the President and Chief Executive
Officer of the Bank and the Holding Company.
B. The parties hereto have on this day entered into an Executive
Employment Agreement ("Employment Agreement"), a copy of which is attached
hereto as Exhibit 1.
C. The Bank, the Holding Company, and Executive desire for Executive to
receive severance pay and other benefits as set forth in this Agreement if
Executive's employment with the Bank is terminated in connection with a sale of
the Bank, all on the terms and conditions set forth below.
AGREEMENT
In consideration of the mutual promises contained in this Agreement and
in the Employment Agreement, the parties agree as follows:
1. DEFINED TERMS. Whether or not the Employment Agreement is in effect
from time to time during the term of this Agreement, capitalized terms in this
Agreement shall have the same meanings, respectively, as assigned to them in the
Employment Agreement, except as the express terms of this Agreement otherwise
provide or the context hereof clearly and unambiguously requires.
2. TERM OF AGREEMENT. THE term of this Agreement shall commence on the
Effective Date and shall continue for so long as Executive is employed by the
Bank or any Affiliate, whether pursuant to the Employment Agreement, any
subsequent agreement, or as an at-will employee, unless otherwise agreed in
writing by the parties.
3. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" means the
occurrence of any of the following events:
(i) The consummation of a transaction that results in the reorganization,
merger, or consolidation of the Holding Company or the Bank with one or
more other persons. For purposes of this Section 3, the term "person"
shall have the meaning assigned to it under Sections 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934.
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(ii) The acquisition by any person or by any persons acting in concert of
(A) all or substantially all of the assets of the Holding Company or the
Bank (B) or the acquisition of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of
50% or more of the outstanding securities of the Holding Company entitled
to vote generally in the election of directors ("Voting Shares").
(iii) The complete liquidation or dissolution of the Holding Company or
the Bank.
(b) Notwithstanding the foregoing, in no event shall a Change in Control
be deemed to have occurred as a result of any acquisition of securities or
assets of the Company, the Bank, or any other Affiliate by the Company, the
Bank, any other Affiliate, any employee benefit plan maintained by any of them,
or individuals or entities which own, collectively, immediately prior to the
transaction at issue, more than 50% of the Voting Shares.
(c) The person(s) that acquire in connection with any Change in Control
the beneficial ownership of 50% or more of the outstanding Voting Shares or all
or substantially all of the assets of the Holding Company or the Bank, and any
subsidiary or affiliate of such person(s) which operates the Bank's business
after a Change in Control, are referred to in this Agreement collectively as the
"Acquirer."
4. CHANGE IN CONTROL NOTICE. The Bank agrees to give Executive at least
60 days advance written notice ("Change in Control Notice") of any proposed or
anticipated Change in Control or, if it is not practicable for the Bank to give
Executive at least 60 days advance notice, then the Bank shall give Executive a
Change in Control Notice as soon as practicable in the circumstances. For
purposes of the calculations in Section 5, the Bank will be deemed to have given
Executive a Change in Control Notice on the date (the "Change of Control Notice
Date") that is the earliest of: (i) the date it actually gives Executive a
Change in Control Notice, (ii) a transaction that could result in a Change in
Control is approved by the Bank Board, the Holding Company Board, or the
Company's Shareholders, if Executive has actual knowledge of such approval or is
given notice (stating that such transaction will be considered at such meeting)
of the meeting; (iii) a transaction that could result in a Change in Control is
considered at a meeting of the Bank Board, the Holding Company Board, or the
Holding Company's Shareholders if Executive attends or is given notice (stating
that such transaction will be considered at such meeting) of the meeting; or
(iv) an application for approval of a Change in Control is submitted to any
government regulatory agency (the approval of which is required to effectuate a
Change in Control) if Executive has actual notice that such an application is
submitted.
5. EXECUTIVE'S RIGHTS UPON A CHANGE IN CONTROL.
(a) Executive shall have the right to receive the Severance Package (as
defined below) upon the occurrence of any of the following:
(i) Executive's employment is terminated, other than for Cause, whether
pursuant to paragraph (d) of Section 4 of the Employment Agreement or
pursuant to the Bank's or any Affiliate's rights under any subsequent
agreement or at-will employment
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arrangement, during the period beginning on the Change in Control Notice
Date and ending on the date the Change in Control is effective ("Change
in Control Effective Date").
(ii) The Acquirer does not offer employment to Executive as a
management-level employee prior to the Change in Control Effective Date
and Executive does not become employed by the Acquirer after the Change
in Control Effective Date; or
(iii) The Acquirer offers employment to Executive prior to the Change in
Control Effective Date as a management-level employee and Executive
declines such offer of employment because it is not comparable to
Executive's employment by the Bank (or other Affiliate) and Executive
does not become employed by the Acquirer after the Change in Control
Effective Date. An offer of employment shall be deemed not comparable to
Executive's employment by the Bank (or other Affiliate) if:
(A) The offer is for a term that expires (or may be terminated by
the Acquirer without cause) prior to the end of the remaining
Employment Term under the Employment Agreement or the remaining
term of any other written employment agreement between the Bank
(or other Affiliate) and Executive, in either case without regard
to provisions of any such agreement affecting the length of the
term in the event of a Change in Control; or
(B) The offer is for less salary and/or substantially reduced
benefits than the salary and benefits provided to Executive by the
Bank or any Affiliate at the Change in Control Notice Date.
(1) The Acquirer shall be deemed to have offered Executive
comparable benefits if the Acquirer offers to pay Executive
additional cash compensation in an amount reasonably
calculated, taking into account income taxes, to equal the
cost to Executive of acquiring the difference in benefits
offered by the Acquirer compared to those provided to
Executive by the Bank (or other Affiliate) at the Change in
Control Notice Date. For purposes of this paragraph only,
"benefits" shall include retirement plans, health
insurance, life insurance, disability insurance, and other
items of employee benefits.
(b) The Severance Package shall consist of:
(i) Monthly payments, commencing 30 days after the Change in Control
Effective Date and payable on the same day of each calendar month
thereafter for a total of 36 payments, in an amount equal to the greater
of (A) $12,000.00 per month, or (B) the amount of monthly salary
Executive is receiving from the Bank (or other Affiliate) at the Change
in Control Notice Date, or at the time the Change in Control Effective
Date, whichever is greater.
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(ii) Payment of Executive's health insurance premiums for 18 months after
the termination of Executive's employment by the Bank (or other
Affiliate), provided that Executive shall be responsible to make a proper
COBRA election in order to qualify for continued health insurance
coverage. Provided further, the liability of the Bank and the Holding
Company pursuant to this paragraph shall not in any case exceed the
amount of such insurance premiums. In no case shall the Bank be liable
for any medical expenses or other amount in excess of the cost of such
premiums.
(c) For purposes of this Section 5, the term "salary" has the same
meaning as "Base Salary" as defined in the Employment Agreement, whether or not
the Employment Agreement is then in effect, and shall not include additional
compensation from stock options, incentive bonus plans, other bonuses, or other
forms of compensation.
(d) Executive shall immediately notify the Bank and the Holding Company
in writing: (i) of any offer of Employment by the Acquirer or any related or
affiliated entity or individual, if such offer is made prior to or on the Change
in Control Effective Date, which notice by Executive shall include all material
terms and conditions of such offer, and (ii) if Executive becomes employed by
the Acquirer or any related or affiliated entity or individual prior to or as of
the Change in Control Effective Date, which notice by Executive shall include
all material terms and conditions of such employment.
(e) In the event of a material breach of this Agreement by the Bank of
the Holding Company (but without regard to any act or omission of the Acquirer)
that is not cured (if it can be cured) within a reasonable time (not to exceed
30 days) after notice of the breach and demand for cure is given to the Bank and
the Holding Company by Executive, all amounts described in paragraph (b)(i) of
this Section 5 that are otherwise payable pursuant to the terms of this Section
5 (without regard to this paragraph (e)) shall be accelerated and become
immediately due and payable to Executive. This shall not relieve the Bank and
the Holding Company of the obligation to continue paying Executive's health
insurance premiums pursuant to paragraph (b)(ii) of this Section 5 for the time
period provided for therein.
(f) In the event that Executive becomes entitled to the Severance
Package, the Bank or the Holding Company shall, on or before the Change
in Control Effective Date, provide reasonable security for payment of the
amounts due to Executive pursuant to this Section 5. Such security may
include the Bank or the Holding Company:
(i) purchasing an annuity for Executive that will pay him at least the
amount due to him pursuant to paragraph (b)(i) of this Section 5 over the
same time period;
(ii) paying an amount equal to the amounts payable pursuant to paragraph
(b) of this Section 5 into escrow with an independent escrow agent
pursuant to an escrow agreement that allows Executive to demand the
escrowed amount to the extend the Bank and the Holding Company default in
payment of those amounts;
(iii) providing a letter of credit to secure the obligations to Executive
pursuant to this Section 5; or
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(iv) providing reasonable security for the obligations to Executive
under this Section 5 by other means.
(g) Notwithstanding the preceding paragraphs of this Section 5, in no
event shall the aggregate payments or benefits to be made or afforded to
Executive as the Severance Package constitute an "excess parachute payment" as
defined in Section 280G of the Internal Revenue Code or any successor thereto,
or any similar provision or any subsequent federal tax law, and in order to
avoid such a result, the Bank (or other Affiliate) will reduce the payments
and/or benefits so that their aggregate value is one dollar ($1.00) less than an
amount equal to three (3) times Executive's "base amount," as determined in
accordance with said Section 280G.
(h) Notwithstanding anything else, Executive shall not have the right to
receive the Severance Package if his employment is terminated by the Bank (or
other Affiliate), or is not offered employment as a management-level employee by
the Acquirer, for Cause. For this purpose, "Cause" shall have the same meaning
as assigned to it in the Employment Agreement, whether or not the Employment
Agreement is then in effect.
(i) The Bank and the Holding Company shall be jointly and severally
liable for payment of the Severance Package, if Executive is entitled to it
pursuant to this Agreement, except to the extent it is actually paid by the
Acquirer or any other entity or individual.
6. MISCELLANEOUS PROVISIONS.
(a) This Agreement and the Employment Agreement contain the entire
understanding between the parties hereto related to Executive's employment by
the Bank and other Affiliates and payments to him upon the termination of his
employment. This Agreement supersedes any prior agreement between Executive and
the Bank or any other Affiliate regarding the subject matter hereof. There are
no representations or agreements, written or oral, between Executive and the
Bank or any other Affiliate concerning the employment of the Executive or any of
the subject matter of this Agreement. No agreement, amendment, or modification
of any agreement, terms of employment, or other understanding between Executive
and the Bank (or other Affiliate) shall be binding on any party unless set forth
in writing and signed by all parties thereto.
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that, because
this Agreement is entered into as part of the consideration for the personal
services of Executive, which are unique and of a personal nature, Executive may
not assign this Agreement or any of his rights hereunder. The Bank and/or the
Holding Company may assign any or all of their respective rights and obligations
hereunder, but any such assignment shall not relieve the Bank or the Holding
Company of liability for any breach of this Agreement by either of them or by
any assignee unless Executive so agrees in writing.
(c) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except
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by written instrument of the party charged with such waiver or estoppel. No such
written waiver shall be deemed a continuing waiver unless specifically stated
therein, and each such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for
the future as to any act other than that specifically waived.
(d) If for any reason any term of this Agreement or part thereof is held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other term, and all terms and parts thereof shall continue in full force and
effect to the greatest extent allowed by law.
(e) The section and paragraph headings are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
(f) This Employment Agreement shall be deemed for all purposes as drafted
and prepared by all parties hereto and no provision of this Agreement shall be
construed against any party on the ground that such party drafted or
participated in the drafting of such provision or any other part or all of this
Agreement.
(g) In the event of the dispute regarding the terms or performance of
this Agreement, the prevailing party shall be entitled to recover its attorneys'
fees and costs, in addition to all other remedies to which such party is
entitled.
(h) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois.
(i) All of the terms of this Agreement shall survive its termination for
so long as Executive has or may have a right to any payments hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
Executive: Clover Leaf Bank
/s/ Xxxxxx X. Xxxxx /s/ Xxxxxx X. Xxxxxxxx
------------------------- ----------------------------
Xxxxxx X. Xxxxx By: Xxxxxx X. Xxxxxxxx, Chairman
Attest:
/s/ Xxxx X. Xxxxxx
----------------------------
By: Xxxx X. Xxxxxx, Vice Chairman
Clover Leaf Financial Corp.
/s/ Xxxxxx X. Xxxxxxxx
----------------------------
By: Xxxxxx X. Xxxxxxxx, Chairman
Attest:
/s/ Xxxx X. Xxxxxx
----------------------------
By: Xxxx X. Xxxxxx, Vice Chairman
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