CHANGE IN CONTROL SEVERANCE AGREEMENT
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THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into
this ___th day of ________________ 2003 ("Effective Date"), by and between
Community First Bank (the "Bank") and ____________________ (the "Employee").
WHEREAS, the Employee is currently employed by the Bank as
______________________________ and is experienced in certain phases of the
business of the Bank; and
WHEREAS, the parties desire by this writing to set forth the rights and
responsibilities of the Bank and Employee if the Bank should undergo a change in
control (as defined hereinafter in the Agreement) after the Effective Date.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed in the capacity as the
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________________________________________ of the Bank. The Employee's employment
shall be for no definite period of time and the Employee or the Bank may
terminate such employment relationship at any time for any reason or no reason.
The employment at-will relationship remains in full force and effect regardless
of any statements to the contrary made by company personnel or set forth in any
documents other than those explicitly made to the contrary and signed by the
President or the Chairman of the Bank. The Employee shall render such
administrative and management services to the Bank and any to-be-formed parent
savings and loan holding company ("Parent") as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Employee's other duties shall be such as the Board of Directors for the Bank
(the "Board of Directors" or "Board") may from time to time reasonably direct,
including normal duties as an officer of the Bank and the Parent.
2. Term of Agreement. The term of this Agreement shall be for the
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period commencing on the Effective Date and ending ______ [not to exceed
thirty-six (36)] months thereafter ("Term"). Additionally, on, or before, each
annual anniversary date from the Effective Date, the Term of this Agreement may
be extended for an additional period beyond the then effective expiration date
upon a determination and resolution of the Board of Directors that the
performance of the Employee has met the requirements and standards of the Board,
and that the Term of such Agreement shall be extended. This Agreement shall be
deemed terminated upon the Employee's termination of employment with the Bank,
absent a Change in Control coincident or prior to such termination of
employment.
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3. Termination of Employment in Connection with or Subsequent to
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a Change in Control.
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(a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of Employee's employment under this Agreement,
absent Just Cause, in connection with, or within twenty-four (24) months after,
any Change in Control of the Bank or Parent, Employee shall be paid an amount
equal to ________________ (not to exceed 2.999 times 5 year average taxable
compensation) paid to the Employee by the Bank (whether said amounts were
received or deferred by the Employee) and the costs associated with maintaining
coverage under the Bank's medical and dental insurance reimbursement plans
similar to that in effect on the date of termination of employment for a period
of one year thereafter. Said sum shall be paid in one (1) lump sum not later
than the date of such termination and such payments shall be in lieu of any
other future payments which the Employee would be otherwise entitled to receive.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent so that no such payments made hereunder when
aggregated with all other payments to be made to the Employee by the Bank or the
Parent shall be deemed an "excess parachute payment" in accordance with Section
280G of the Internal Revenue Code of 1986, as amended (the "Code") and be
subject to the excise tax provided at Section 4999(a) of the Code. The term
"Change in Control" shall refer to (i) the control of voting proxies whether
related to stockholders or mutual members by any person, other than the Board of
Directors of the Bank, to direct more than 25% of the outstanding votes of the
Bank, the control of the election of a majority of the Bank's directors, or the
exercise of a controlling influence over the management or policies of the Bank
by any person or by persons acting as a group within the meaning of Section
13(d) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder ("Exchange Act"), (ii) an event whereby the
OTS, FDIC or any other department, agency or quasi-agency of the federal
government cause or bring about, without the consent of the Bank, a change in
the corporate structure or organization of the Bank; (iii) an event whereby the
OTS, FDIC or any other agency or quasi-agency of the federal government cause or
bring about, without the consent of the Bank, a taxation or involuntary
distribution of retained earnings or proceeds from the sale of securities to
depositors, borrowers, any government agency or organization or civic or
charitable organization; or (iv) a merger or other business combination between
the Bank and another corporate entity whereby the Bank is not the surviving
entity. In the event that the Bank shall convert in the future from
mutual-to-stock form, the term "Change in Control" shall also refer to: (i) the
sale of all, or a material portion, of the assets of the Bank or the Parent;
(ii) the merger or recapitalization of the Bank or the Parent whereby the Bank
or the Parent is not the surviving entity; (iii) a change in control of the Bank
or the Parent, as otherwise defined or determined by the Office of Thrift
Supervision or regulations promulgated by it; or (iv) the acquisition, directly
or indirectly, of the beneficial ownership (within the meaning of that term as
it is used in Section 13(d) of the Exchange Act) of twenty-five percent (25%) or
more of the outstanding voting securities of the Bank or the Parent by any
person, trust, entity or group. The term "person" means an individual other than
the Employee, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
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organization or any other form of entity not specifically listed herein. The
provisions of this Section 3(a) shall survive the expiration of this Agreement
occurring after a Change in Control.
(b) Notwithstanding any other provision of this Agreement to the
contrary except as provided at Sections 4 and 5, Employee may voluntarily
terminate his employment under this Agreement within twenty-four months
following a Change in Control of the Bank or Parent, and upon the occurrence, or
within 120 days thereafter, of any of the following events, which have not been
consented to in advance by the Employee in writing if: (i) the Employee would be
required to move his personal residence or perform his principal executive
functions more than thirty-five (35) miles from the Employee's primary office as
of the signing of this Agreement; (ii) in the organizational structure of the
Bank or Parent, the Employee would be required to report to a person or persons
other than the Board of the Bank or Parent, the President, or ___________; (iii)
the Bank or Parent should fail to maintain the Employee's base compensation in
effect as of the date of the Change in Control and existing employee benefits
plans, including material fringe benefit, stock option and retirement plans,
except to the extent that such reduction in benefit programs is part of an
overall adjustment in benefits for all employees of the Bank or Parent and does
not disproportionately adversely impact the Employee; (iv) the Employee would be
assigned duties and responsibilities other than those normally associated with
his position as referenced at Section 1, herein; (v) the Employee's
responsibilities or authority have in any way been materially diminished or
reduced, or (vi) the Employee is not re-elected to the Board of the Bank or the
Parent, if the Employee is then a member of the Board of Directors of the Bank.
Upon such voluntary termination of employment by the Employee in accordance with
this subsection, Employee shall thereupon be entitled to receive the payments
described in Section 3(a) of this Agreement. The provisions of this Section 3(b)
shall survive the expiration of this Agreement occurring after a Change in
Control.
4. Other Changes in Employment Status.
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Except as provided for at Section 3, herein, the Board of Directors may
terminate the Employee's employment at any time with or without Just Cause
within its sole discretion. This Agreement shall not be deemed to give the
Employee any right to be retained in the employment or service of the Bank, or
to interfere with the right of the Bank to terminate the employment of the
Employee at any time. The Employee shall have no right to receive compensation
or other benefits for any period after termination with or without Just Cause.
Termination for "Just Cause" shall include termination because of the Employee's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of the Agreement.
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5. Regulatory Exclusions.
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(a) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the contracting parties shall not be affected.
(b) If the Bank is in default (as defined in Section 3(x)(1) of FDIA)
all obligations under this Agreement shall terminate as of the date of default,
but this paragraph shall not affect any vested rights of the contracting
parties.
(c) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of the Office of Thrift
Supervision ("Director of OTS"), or his or her designee, at the time that the
Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of FDIA; or (ii) by the Director of the OTS, or his or her
designee, at the time that the Director of the OTS, or his or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director of the OTS to be in an
unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by such action.
(d) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), the
Bank's obligations under the Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank may within its discretion (i) pay the Employee all or
part of the compensation withheld while its contract obligations were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(e) Notwithstanding anything herein to the contrary, any payments made
to the Employee pursuant to the Agreement, or otherwise, shall be subject to and
conditioned upon compliance with 12 U.S.C. ss.1828(k) and any regulations
promulgated thereunder.
6. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Parent.
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(b) The Employee shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Bank.
7. Amendments. No amendments or additions to this Agreement shall be
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binding upon the parties hereto unless made in writing and signed by both
parties, except as herein otherwise specifically provided.
8. Applicable Law. This agreement shall be governed by all respects
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whether as to validity, construction, capacity, performance or otherwise, by the
laws of the Commonwealth of Kentucky, except to the extent that Federal law
shall be deemed to apply.
9. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
10. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in accordance with the rules then in effect of the district office
of the American Arbitration Association ("AAA") nearest to the home office of
the Bank, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise
reach a mutual settlement of such issue. Further, the settlement of the dispute
to be approved by the Board of the Bank may include a provision for the
reimbursement by the Bank to the Employee for all reasonable costs and expenses,
including reasonable attorneys' fees, arising from such dispute, proceedings or
actions, or the Board of the Bank or the Parent may authorize such reimbursement
of such reasonable costs and expenses by separate action upon a written action
and determination of the Board following settlement of the dispute. Such
reimbursement shall be paid within ten (10) days of Employee furnishing to the
Bank or Parent evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by Employee. The
provisions of this Section 10 shall survive the expiration of this Agreement.
11. Confidential Information. The Employee acknowledges that during his
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or her employment he or she will learn and have access to confidential
information regarding the Bank and the Parent and its customers and businesses
("Confidential Information"). The Employee agrees and covenants not to disclose
or use for his or her own benefit, or the benefit of any other person or entity,
any such Confidential Information, unless or until the Bank or the Parent
consents to such disclosure or use or such information becomes common knowledge
in the industry or is otherwise legally in the public domain. The Employee shall
not knowingly disclose or reveal to any unauthorized person any Confidential
Information relating to the Bank, the Parent, or any subsidiaries or affiliates,
or to any of the businesses operated by them, and the Employee confirms that
such information constitutes the exclusive property of the Bank and the Parent.
The Employee shall not otherwise knowingly act or conduct himself (a) to the
material detriment of the Bank or the Parent, or its subsidiaries, or
affiliates, or (b) in a manner which is inimical or contrary to the interests of
the Bank or the Parent. Employee acknowledges and agrees that the existence of
this
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Agreement and its terms and conditions constitutes Confidential Information of
the Bank, and the Employee agrees not to disclose the Agreement or its contents
without the prior written consent of the Bank. Notwithstanding the foregoing,
the Bank reserves the right in its sole discretion to make disclosure of this
Agreement as it deems necessary or appropriate in compliance with its regulatory
reporting requirements. Notwithstanding anything herein to the contrary, failure
by the Employee to comply with the provisions of this Section may result in the
immediate termination of the Agreement within the sole discretion of the Bank,
disciplinary action against the Employee taken by the Bank, including but not
limited to the termination of employment of the Employee for breach of the
Agreement and the provisions of this Section, and other remedies that may be
available in law or in equity.
12. Entire Agreement. This Agreement together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and first hereinabove written.
Community First Bank
ATTEST: By:
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Secretary
WITNESS:
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Employee
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