EXHIBIT 10.26
XXXXXX X. XXXXXXXX
CHANGE OF CONTROL AND NON-COMPETE AGREEMENT
THIS CHANGE OF CONTROL AND NON-COMPETE AGREEMENT (this "Agreement") is
made as Of June 4, 2002 (the "Effective Date"), between COVEST BANCSHARES, INC.,
a Delaware corporation (the "Company") and XXXXXX X. XXXXXXXX ("Executive").
RECITALS
A. The Company owns all of the outstanding stock of CoVest Banc, National
Association, a national banking association with its main office located in Des
Plaines, Illinois (the "Bank").
B. Executive is currently serving as an executive of the Company or the
Bank, and the Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company and its Affiliates (as defined below) will have the continued
dedication of Executive, notwithstanding the possibility, threat or occurrence
of a Change of Control (as defined below) of the Company or the Bank.
C. The Company desires to continue to employ Executive as an executive of
the Company or one of its Affiliates and Executive is willing to continue such
employment.
D. The Company recognizes that future circumstances could arise that might
lead to a Change of Control of the Company or the Bank and that this
possibility could cause Executive uncertainty with respect to continued
employment, regardless of Executive's competence or past contributions.
E. To alleviate such uncertainty, which could result in the loss by the
Company of Executive's valuable services, the Company wishes to provide
reasonable security to Executive in the form of this Agreement against
changes in the employment relationship in the event of any such Change of
Control.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, it is covenanted and agreed by and between
the parties hereto as follows:
AGREEMENTS
1. Term With Automatic Renewal Provisions. The term of this
Agreement shall commence on the Effective Date and shall continue for a
period of one (1) year. This Agreement shall automatically extend for one
(1) year on each anniversary of the Effective Date, unless terminated by
either party effective as of the last day of the then current one (1) year
extension by written notice to that effect delivered to the other not fewer
than ninety (90) days prior to the anniversary of the Effective Date;
provided, however, no termination of this Agreement shall be effective if a
Change of Control occurs within twelve (12) months after the effective date
of such termination. Notwithstanding anything contained herein to the
contrary, if a Change of Control occurs during the term of this Agreement,
this Agreement shall remain in effect for the one (1) year period following
the Change of Control and shall then terminate. Notwithstanding anything to
the contrary herein, this Agreement shall immediately terminate upon
Executive's voluntary termination prior to a Change of Control and in such
case Executive shall not be entitled to the benefits hereunder.
2. Payment of Severance Amount. Subject to the conditions of this
Section and Executive's continued compliance with the restrictions contained
in Section 4 hereof, if Executive's employment by the Company or the Bank, or
any successor of either of them, is terminated on the one hand by the
Company, the Bank or such successor, or on the other hand by Executive, in
either case during the time periods and under the circumstances set forth in
subsections (a) and (b) below, then the Company or its successor, as the case
may be, shall pay Executive an amount in cash equal to the Severance Amount,
payable in equal installments in accordance with the Company's payroll
practices over the twelve (12) month period immediately following the date of
Executive's termination of employment:
(a) termination of Executive's employment by the Company or the
Bank, or any successor of either of them, without Cause, within either
six (6) months prior to a Change of Control or twelve (12) months
immediately following a Change of Control; or
(b) termination of Executive's employment by Executive, other
than as a result of Executive's death, disability or normal retirement
pursuant to a retirement plan to which Executive was subject prior to
any Change of Control, after a Change in Duties, which Change in Duties
and termination of employment occurs within twelve (12) months
immediately following a Change of Control.
3. Definitions. In addition to those terms defined throughout this
Agreement, the following capitalized terms, when used herein, shall have the
following meanings:
(a) "Affiliate" means any entity that owns or controls, is owned by or is under
common ownership or control with, the Company, including without limitation, the
Bank.
(b) "Annual Base Salary" means, as determined on the Termination Date, an amount
that is equal to the greater of:
(i) Executive's annual salary, excluding bonuses, benefits and special incentive
payments, on the date of the earliest event that constitutes a Change of
Control; or (ii) Executive's annual salary, excluding bonuses, benefits and
special incentive payments, as of the Termination Date.
(c) "Cause" means the termination of Executive's employment as a result of:
(i) a material violation by Executive of any applicable material law or
regulation respecting the business of the Company or any of its Affiliates;
(ii) a finding that Executive is guilty of a felony or an act of dishonesty in
connection with the performance of his duties as an officer of the Company or
any Affiliate, or any other action or inaction by Executive that disqualifies
Executive from serving as an officer of the Company or any Affiliate; or
(iii) the willful or negligent failure of Executive to perform Executive's
assigned duties in any material respect.
(d) "Change in Duties" means any one or more of the following events that occurs
after a Change of Control:
(i) a significant change in the nature or scope of Executive's authority or
duties from those applicable to Executive immediately prior to the date on which
a Change of Control occurs;
(ii) a reduction in Executive's Annual Base Salary (within the meaning of
Section 3(b)(i)) from that provided to Executive immediately prior to the date
on which a Change of Control occurs;
(iii) Executive's eligibility to participate, and participation, in bonus, stock
option, incentive award and other compensation plans that provide
opportunities to receive compensation are not the same or greater than that of
executives of any successor of the Company (including its Affiliates)
with comparable duties to those of Executive; or
(iv) a change, without Executive's written agreement, in the location of
Executive's principal place of employment with the Company (including its
Affiliates) by more than thirty-five (35) miles from the location where
Executive was principally employed immediately prior to the date on which a
Change of Control occurs.
(e) "Change of Control" means any of the following:
(i) the consummation of the acquisition by any person (as such term is defined
in Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or more of the
combined voting power of the then outstanding Voting Securities of the Company;
(ii) the individuals who, as of the date hereof, are members of the Board cease
for any reason to constitute a majority of the Board, unless the election, or
nomination for election by the stockholders, of any new director was approved
by a vote of a majority of the Board, and such new director shall, for purposes
of this Agreement, be considered as a member of the Board; or
(iii) approval by the stockholders of: (1) a merger or consolidation to which
the Company is a party if the stockholders of the Company immediately before
such merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than sixty-seven percent (67%)
of the combined voting power of the then outstanding Voting Securities of the
entity resulting from such merger or consolidation in substantially the same
proportion as their ownership of the combined voting power of the Company's
Voting Securities outstanding immediately before such merger or consolidation;
or (2) a complete liquidation or dissolution or sale or other disposition of
all or substantially all of the assets of the Company or the Bank.
Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding Voting Securities is acquired by:
(1) a trustee or other fiduciary holding securities under one or more employee
benefit plans maintained for employees of the entity; or (2) any corporation
which, immediately prior to such acquisition, is owned directly or indirectly
by the stockholders in the same proportion as their ownership of stock
immediately prior to such acquisition.
(f) "Severance Amount" means the amount equal to all amounts earned or accrued,
but unpaid, through the Termination Date, including Annual Base Salary (within
the meaning of Section 3(b)(i)) and vacation pay, plus an amount equal to one
(1) times Executive's Annual Base Salary.
(g) "Termination Date" means the effective date of termination of Executive's
employment with the Company or any of its Affiliates.
(h) "Voting Securities" means any securities that ordinarily possess the power
to vote in the election of members of the Board without the happening of any
pre-condition or contingency.
4. Restrictive Covenant. During the term of his employment and for the period
ending twenty-four (24) months after the date Executive's employment with the
Company and its Affiliates terminates (the "Non-Compete Period"), the Executive
shall not, in the Territory, as defined below,(except in his capacity as an
officer of the Company or its Affiliates), (a)
engage or participate in the business of an institution insured by the Federal
Deposit Insurance Corporation or the National Credit Union Administration (an
"Insured Institution"), (b) engage or participate in, be employed by or render
services to any Insured Institution or any affiliate thereof engaged in lending
activities, or (c) directly or indirectly become interested in any Insured
Institution or any affiliate thereof engaged in lending activities referred to
in clause (b) above in any capacity, including without limitation, as an
individual, partner, shareholder, lender, officer, director, principal, agent or
trustee; provided, however, that the Executive may own, directly or indirectly,
solely as an investment, securities of any Insured Institution or affiliate
thereof if Executive is not a controlling person of such entity, or a member of
a group which controls such entity and Executive does not own more than 5% of
any class of equity securities of such entity. "Territory" for purposes hereof
shall mean the area within a twenty-five (25) mile radius of the main office of
the Company. In addition, during the Non-Compete Period, Executive will not
directly or indirectly solicit, induce or encourage any entity or person who,
as of the date immediately preceding the date of the termination of Executive's
employment, is an employee or a customer of the Company or any of its Affiliates
to terminate his, her or its relationship with the Company or any of its
Affiliates.
5. Notices. Notices and all other communications under this Agreement shall be
in writing and shall be deemed given when mailed by United States registered or
certified mail, return receipt requested, postage prepaid, to the addresses of
each party set forth in the signature page hereof, or to such other address as
either party may furnish to the other in writing, except that notices of changes
of address shall be effective only upon receipt.
6. Applicable Law. This Agreement is entered into under, and shall be governed
for all purposes by, the laws of the state of Illinois.
7. Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other provisions
shall remain in full force and effect.
8. Withholding of Taxes. The Company may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law, governmental regulation or ruling.
9. Not an Employment Agreement. Nothing in this Agreement shall give Executive
any rights (or impose any obligations) to continued employment by the Company or
any Affiliate or the successor of either, nor shall it give the Company any
rights (or impose any obligations) for the continued performance of duties by
Executive for the Company or any Affiliate or the successor of either.
10. No Assignment. Executive's rights to receive payments or benefits under
this Agreement shall not be assignable or transferable whether by pledge,
creation of a security interest or otherwise, other than a transfer by will or
by the laws of descent or distribution. In the event of any attempted
assignment or transfer contrary to this paragraph, the Company shall have no
liability to pay any amount so attempted to be assigned or transferred. This
Agreement shall inure to the benefit of and be enforceable by Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
11. Successors. This Agreement shall be binding upon and inure to the benefit
of the Company, its successors and assigns (including, without limitation, any
company into or with which the Company may merge or consolidate). The Company
agrees that it will not effect the sale or other disposition of all or
substantially all of its assets or the Bank's assets unless either: (a) the
person or entity acquiring the assets, or a substantial portion of the assets,
shall expressly assume by an instrument in writing all duties and obligations
of the Company under this Agreement; or (b) the Company shall provide, through
the establishment of a separate reserve, for the payment in full of all amounts
which are or may reasonably be expected to become payable to Executive under
this Agreement.
12. Legal Fees. All reasonable legal fees and related expenses (including the
costs of experts, evidence and counsel) paid or incurred by Executive pursuant
to any dispute relating to this Agreement shall be paid or reimbursed by the
Company if Executive is successful on the merits pursuant to a legal judgment,
arbitration or settlement.
13. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement between the parties respecting the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral. This Agreement may not be
amended or modified except by written agreement signed by Executive and the
Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first written.
COVEST BANCSHARES, INC.
XXXXXX X. XXXXXXXX
By:
Name:
Title:
000 Xxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000-0000
Address:
