Change in Control Severance Agreement
MB
Financial Bank, N.A.
This
Severance Agreement, (the “Agreement”) is entered
into as of September 1, 2008 (the “Effective Date”), by and between MB Financial
Bank, N.A., a national banking association (the “Company”) and Xxxxxx X.
Field (the “Executive”);
Witnesseth
That:
Whereas, the Executive is
employed by the Company, and the Company desires to provide protection to
Executive in connection with any change in control of the Company.
Now,
Therefore, it is hereby agreed by and between the parties, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, as
follows:
Article
I. Establishment
and Purpose
1.1 Term of the
Agreement. Unless expired earlier as provided in Section 1.3
or terminated by the Company pursuant to Section 2.4, this Agreement will
commence on the Effective Date and remain in effect for an initial term of three
years which will be automatically extended for one year on each anniversary of
the Effective Date. In addition, if a Change in Control occurs while this
Agreement is effective, this Agreement will remain irrevocably in effect for the
greater of twenty-four months from the date of the Change in Control or until
all benefits have been paid to the Executive hereunder, and will then
expire.
1.2 Purpose of the
Agreement. The purpose of this Agreement is to advance the
interests of the Company by providing the Executive with an assurance of
equitable treatment, in terms of compensation and economic security, in the
event of an acquisition or other Change in Control of the Company. An
assurance of equitable treatment will enable the Executive to maintain
productivity and focus during a period of significant uncertainty that is
inherent in an acquisition or other Change in Control. Further, the
Company believes that agreements of this kind will aid it in attracting and
retaining the highly qualified, high-performing professionals who are essential
to its success.
1.3 Contractual Right to
Benefits. This Agreement establishes and vests in the
Executive a contractual right to the benefits to which he or she is entitled
hereunder, enforceable by the Executive against the Company. However,
nothing in this Agreement will require or be deemed to require the Company to
segregate, earmark, or otherwise set aside any funds or other assets to provide
for any payments to be made under it.
Subject
to Section 3.2, the Company will retain the right to terminate the Executive’s
employment at any time prior to a Change in Control of the
Company. If the Executive’s employment is terminated prior to a
Change in Control of the Company, this Agreement will no longer be applicable to
the Executive, and any and all rights and obligations of the Company and the
Executive under this Agreement will cease. Notwithstanding the
foregoing, if the effective date of a Change in Control occurs within six months
following the effective date of an involuntary termination without Just Cause,
the Executive's termination may be deemed to be a Qualifying Termination
pursuant to Section 3.2 of this Agreement as of the date of the Change in
Control.
Article
II. Definitions
and Construction
2.1 Definitions. Whenever
used in the Agreement, the following terms have the meanings set forth below
and, when the meaning is intended, the initial letter of the word is
capitalized.
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(a)
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“Average
Annual Bonus” means the Executive’s actual average annual bonus earned
over the two complete fiscal years prior to the Effective Date of
Termination, or, if shorter, over the Executive’s entire period of
employment. However, if the Executive’s period of employment is
less than one year, the average bonus will be considered
zero.
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(b)
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“Base
Salary” means the average annual salary received by the Executive during
the 24-month period immediately preceding the Effective Date of
Termination.
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(c)
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“Beneficial
Owner” has the meaning ascribed to that term in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, namely, any person, who
directly or indirectly, through any contract, arrangement, understanding
or otherwise, has or shares voting power, which includes the power to vote
or direct the voting of securities, and/or investment power, which
includes the power to dispose of, or direct the disposition of, a
security.
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(d)
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“Beneficiary”
means the persons or entities designated or deemed designated by
the Executive pursuant to Section 8.2
herein.
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(e)
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“Board”
means the Board of Directors of the
Company.
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(f) The
term “Change in Control” means (1) any Person is or becomes the Beneficial Owner
directly or indirectly of securities of the Parent or the Company representing
35% or more of the combined voting power of the Parent’s or the Company’s
outstanding securities entitled to vote generally in the election of directors;
(2) individuals who were members of the Parent Board on the Effective Date (the
“Incumbent Parent Board”) cease for any reason to constitute at least a majority
thereof, provided
that any person becoming a member of the Parent Board subsequent to the
Effective Date (a) whose appointment as a director by the Parent Board was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Parent Board, or (b) whose nomination for election as a member of the
Parent Board by the Corporation’s stockholders was approved by the Incumbent
Parent Board or recommended by the nominating committee serving under the
Incumbent Parent Board, shall be considered a member of the Incumbent Parent
Board; (3) consummation of a plan of reorganization, merger or consolidation
involving the Parent or the Company or the securities of either, other than (a)
in the case of the Parent, a transaction at the completion of which the
stockholders of the Parent immediately preceding completion of the transaction
hold more than 60% of the outstanding securities of the resulting entity
entitled to vote generally in the election of its directors or (b) in the case
of the Company, a transaction at the completion of which the Parent holds more
than 50% of the outstanding securities of the resulting institution entitled to
vote generally in the election of its directors; (4) consummation of a sale or
other disposition to an unaffiliated third party or parties of all or
substantially all of the assets of the Parent or the Company or approval by the
stockholders of the Parent or the Company of a plan of complete liquidation or
dissolution of the Parent or the Company; provided that for
purposes of clause (1), the term “Person” shall not include the Parent, any
Executive benefit plan of the Parent or the Company, or any corporation or other
entity owned directly or indirectly by the stockholders of the Parent in
substantially the same proportions as their ownership of stock of the
Parent. Each event comprising a “Change in Control” is intended to
constitute a “change in ownership or effective control,” or a “change in the
ownership of a substantial portion of the assets,” of the Parent or the Company
as such terms are defined for purposes of Section 409A of the Code and
“Change in Control” as used herein shall be interpreted consistently
therewith.
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(g)
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“Code”
means the Internal Revenue Code of 1986, as
amended.
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(h)
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“Company”
means MB Financial Bank, N.A., a national banking association, or any
successor thereto that adopts the Agreement, as provided in Section 8.1
herein.
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(i)
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“Compensation
Committee” means the Compensation Committee of the Board of Directors of
the Parent Company.
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(j)
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“Director”
means a member of the Board or of the Parent Board, as the case may
be.
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(k)
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“Disability”
means a physical or mental condition that would entitle the Executive to
benefits under the Company’s long-term disability plan, or if the Company
maintains no such plan, then under the federal Social Security
laws.
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(l)
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“Effective
Date of Termination” means the date on which a Qualifying Termination
occurs which triggers Severance Benefits
hereunder.
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(m)
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“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor to it.
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(n)
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“Expiration
Date” means the date the Agreement expires, as provided in Section 1.1
herein.
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(o)
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“Good
Reason” means (i) the occurrence of a ten percent or greater reduction in
the aggregate value of the Executive’s annual Base Salary, bonus
opportunity, and benefits excluding profit sharing; (ii) the assignment to
the Executive of any duties inconsistent with, and commonly (in the
banking industry) considered beneath, the Executive’s position, or a
change in the Executive’s status, offices, titles and reporting
relationships, authority, duties or responsibilities, or any other action
by the Company, in each case if the assignment, change or action results
in a significant diminution in the Executive’s position, authority, duties
or responsibility; or (iii) a required relocation of the Executive to a
location more than fifty miles from the Executive’s then existing job
location to which the Executive does not consent to in
writing. In determining whether an assignment, change or action
described in clause (ii) above constitutes Good Reason, due consideration
will be given to the size of the organization and other facts and
circumstances surrounding the Executive’s situation before and after the
assignment, change or action. For example, if the Executive is
moved to a position that carries a title generally considered to be of a
lower degree, but he or she is working in a larger division or company
than before the change, has more Executives reporting to him or her, or
has authority for projects controlling more dollars, or if other
circumstances exist that suggest the Executive’s new position is not a
demotion, then Good Reason will not exist for the Executive to terminate
his or her employment.
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(p)
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“Just
Cause” means a termination of the Executive’s employment by the Company,
for which no Severance Benefits are payable, as provided in Article
IV.
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(q)
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“Parent”
means MB Financial, Inc., a Maryland corporation, or any direct parent of
a successor of the Company that adopts the Agreement as provided in
Section 8.1.
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(r)
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“Parent
Board” means the Board of Directors of the
Parent.
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(s)
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“Person”
means a natural person, company, or government, or a political
subdivision, agency, or instrumentality of a government, including a
“group” as defined in Section 13(d) of the Exchange Act. When
two or more persons act as a partnership, limited partnership, syndicate
or other group for the purpose of acquiring the securities of the Company,
they will be deemed a Person for purposes of the
Agreement. “Person” will be construed in the same manner as
under Section 3(a)(9) of the Exchange Act, and “group” will be construed
in the same manner as under Section 13(d) of the Exchange
Act.
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(t)
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“Qualifying
Termination” means any of the events described in Section 3.2, the
occurrence of which triggers the payment of Severance
Benefits.
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(u)
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“Severance
Benefit” means the payment of severance compensation as provided in
Article III.
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2.2 Gender and
Number. Except where otherwise indicated by the context, any
masculine term used herein also includes the feminine, the plural includes the
singular, and the singular includes the plural.
2.3 Severability. If
any provision of this Agreement is held to be illegal or invalid for any reason,
the illegality or invalidity will not affect the remaining parts of this
Agreement, and this Agreement will be construed and enforced as if the illegal
or invalid provision had not been included.
2.4 Amendment or
Termination. The provisions of this Agreement may be amended
by written agreement between the Company and the Executive, with any material
amendment approved by the Compensation Committee or the
Board. Subject to the final sentence of Section 1.1, the Company may
terminate this Agreement by written resolution of the Compensation Committee or
the Board, effective as of a date at least twelve months following the date the
Company gives written notice to the Executive of its intent to terminate the
Agreement.
2.5 Applicable Law. To
the extent not preempted by the laws of the United States, the laws of the State
of Illinois, without regard to its conflict of laws provisions, will be the
controlling law in all matters relating to this Agreement.
Article
III. Severance
Benefits
3.1 Right to Severance
Benefits. Subject to the provisions hereof, the Executive will
be entitled to receive from the Company Severance Benefits as described in
Section 3.3 if there has been a Change in Control of the Company and if any of
the events designated within Section 3.2 occur. The Executive will
not be entitled to receive Severance Benefits if his or her employment with the
Company ends due to death, disability, voluntary retirement, a voluntary
termination by the Executive without Good Reason, or due to an involuntary
termination by the Company for Just Cause.
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3.2 Qualifying
Terminations. The occurrence of any one of the following
events within twenty-four calendar months after a Change in Control of the
Company will trigger the payment of Severance Benefits under this
Agreement:
(a) an
involuntary termination of the Executive’s employment without Just
Cause;
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(b)
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a
voluntary termination of the Executive’s employment with the Company, for
Good Reason;
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(c)
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the
failure or refusal of a successor company (including, but not limited to,
an individual, corporation, association, or partnership) to assume the
Company’s obligations under this Agreement, as required by Section 8.1;
and
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(d)
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a
breach by the Company or any successor company of any of the provisions of
this Agreement.
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In
addition, an involuntary termination without Just Cause will trigger the payment
of Severance Benefits under this Agreement if the Executive’s employment is
terminated by the Company without Just Cause within six months prior to a Change
in Control that actually occurs during the term of this Agreement and either (i)
the termination was at the request or direction of a Person who has entered into
an agreement with the Company the consummation of which would constitute a
Change in Control, or (ii) the Executive reasonably demonstrates that the
termination is otherwise in connection with or in anticipation of the Change in
Control.
3.3 Description of Severance
Benefits. If the Executive becomes entitled to receive
Severance Benefits, as provided in Sections 3.1 and 3.2, the Company will pay to
the Executive and provide him or her with the following:
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(a)
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an
amount equal to the Executive’s annual Base Salary multiplied by two;
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(b)
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an
amount equal to the Executive’s Average Annual Bonus multiplied by two;
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(c)
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immediate
vesting of the Executive's benefits, if any, under any and all
non-qualified retirement plans of the Company (or its affiliates) in which
the Executive participates; and
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(d)
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continuation
of the welfare benefits of medical, dental or other health coverage,
long-term disability, and group term life insurance at the same premium
cost to the Executive and at the same coverage level as in effect as of
the Executive’s Effective Date of Termination until the second anniversary of
the Effective Date of Termination, without regard to the federal income
tax consequences of that
continuation.
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The treatment of any options held by the Executive will be subject to the terms
of the plan or plans under which they were granted. Benefits under
subsection 3.3(d) will be discontinued prior to the end of the second anniversary of the
Effective Date of Termination if the Executive receives substantially similar
benefits in the aggregate from a subsequent employer, as determined by the
Compensation Committee. Continued medical, dental or other health
benefits under subsection 3.3(d) will count toward any COBRA continuation
coverage period that may apply to the Executive.
Article
IV. Just
Cause or Retirement
4.1 Just Cause. Nothing
in this Agreement will be construed to prevent the Company from terminating the
Executive’s employment for Just Cause. If the Company does so, no
Severance Benefits will be payable to the Executive under this
Agreement.
Just
Cause will be defined to include, but will not be limited to, willful, malicious
conduct by the Executive that is prejudicial to the best interests of the
Company, including theft, embezzlement, the conviction of a criminal act,
disclosure of trade secrets, a gross dereliction of duty, or other grave
misconduct on the part of the Executive that is injurious to the
Company.
4.2 Retirement. If the
Executive’s employment with the Company ends due to voluntary retirement, the
Executive: (i) will not be entitled to receive Severance Benefits under this
Agreement; and (ii) will not be eligible to participate in a Company-sponsored
severance plan or arrangement at any time following his or her
retirement.
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Article
V. Form
and Timing of Severance Benefits
5.1 Form and Timing of Severance
Benefits. The Severance Benefits described in Sections 3.3(a)
and (b) will be paid in cash to the Executive in a single lump sum as soon as
practicable following the Effective Date of Termination, but in no event more
than thirty days after the Effective Date of Termination. The vesting
of benefits under Section 3.3(c) shall occur on the Effective Date of
Termination.
The
Severance Benefits described in subsection 3.3(d) will be provided by the
Company to the Executive immediately upon the Effective Date of Termination and
will continue to be provided until the second anniversary of the
Effective Date of Termination. However, the Severance Benefits
described in subsection 3.3(d) will be discontinued prior to the end of the
two-year period
immediately upon the Executive's receiving similar benefits from a subsequent
employer, as determined by the Compensation Committee.
5.2 Withholding of
Taxes. The Company will withhold from any amounts payable
under this Agreement all Federal, state, city, or other taxes that are legally
required.
Article
VI. Tax
Gross Up Agreement
6.1 Tax Gross Up
Agreement. Contemporaneously with entering into this
Agreement, the Executive and Parent have entered into a Tax Gross-Up Agreement
to make the Executive whole in certain circumstances described therein from the
excise tax, if any, imposed under Section 280(G) of the Code.
Article
VII. Other
Rights and Benefits Not Affected
7.1 Other
Benefits. Except as provided in this Section below, neither
the provisions of this Agreement nor the Severance Benefits provided for
hereunder will reduce any amounts otherwise payable, or in any way diminish the
Executive’s rights as an Executive of the Company, whether existing now or
hereafter, under any benefit, incentive, retirement, stock option, stock bonus,
stock purchase plan, or any employment agreement, or other Agreement or
arrangement. Notwithstanding the foregoing, if the Executive is also
a covered Executive under a severance plan of the Company or one of its
affiliates, the Executive will be entitled to receive the Severance Benefits
provided under this Agreement in lieu of any severance pay or other benefits
provided under that severance plan. Benefits provided under this
Agreement will not increase any amounts otherwise payable under any other
arrangement, if that other arrangement does not provide that severance benefits
will be taken into account in determining benefits.
7.2 Employment
Status. This Agreement does not constitute a contract of
employment or impose on the Executive or the Company any obligation to retain
the Executive as an Executive, to change the status of the Executive’s
employment, or to change the Company’s policies regarding termination of
employment.
Article
VIII. Successors
8.1 Successors. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) of all or substantially all of the business
and/or assets of the Company or of any division or subsidiary thereof to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such an
assumption and agreement prior to the effectiveness of any such succession will
be a breach of this Agreement and will entitle the Executive to compensation
from the Company in the same amount and on the same terms as he or she would be
entitled hereunder if terminated voluntarily for Good Reason, except that, for
the purposes of implementing the foregoing, the date on which any succession
becomes effective will be deemed the Effective Date of Termination.
This
Agreement will inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. If the Executive dies while any
amount would still be payable to him or her hereunder had he or she continued to
live, any such amount, unless otherwise provided herein, will be paid in
accordance with the terms of this Agreement, to the Executive’s devisee,
legatee, or other designee, or if there is no such designee, to the Executive’s
estate.
8.2 Beneficiaries. The
Executive’s beneficiary under the qualified defined contribution plan of the
Company or an affiliate in which the Executive participates will be his or her
Beneficiary under this Agreement, unless the Executive otherwise designates a
Beneficiary in the form of a signed writing acceptable to the Compensation
Committee. The Executive may make or change such a designation at any
time.
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Article
IX. Administration
9.1 Administration. This
Agreement will be administered by the Compensation Committee. In that
capacity, the Compensation Committee, to the extent not contrary to the express
provisions of the Agreement, is authorized in its discretion to interpret this
Agreement, to prescribe and rescind rules and regulations, to provide conditions
and assurances deemed necessary and advisable, to protect the interests of the
Company, and to make all other determinations necessary or advisable for the
administration of this Agreement and similar Agreements.
In
fulfilling its administrative duties hereunder, the Compensation Committee may
rely on outside counsel, independent accountants, or other consultants to render
advice or assistance.
9.2
Indemnification and
Exculpation. The members of the Board and the Parent Board,
its agents and officers, directors, and Executives of the Company and its
affiliates will be indemnified and held harmless by the Company against and from
any and all loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by them in connection with or resulting from any claim,
action, suit, or proceeding to which they may be a party or in which they may be
involved by reason of any action taken or failure to act under this Agreement
and against and from any and all amounts paid by them in settlement (with the
Company’s written approval) or paid by them in satisfaction of a judgment in any
such action, suit, or proceeding. The foregoing provision will not
apply to any person if the loss, cost, liability, or expense is due to that
person’s gross negligence or willful misconduct.
Article
X.
Legal Fees and Arbitration
10.1 Legal Fees and
Expenses. The Company (or, in the event of the acquisition of
substantially all of the assets of the Company, the acquirer of those assets)
will pay all legal fees, costs of litigation, and expenses directly related to
legal fees and costs of litigation incurred in good faith by the Executive as a
result of the Company’s refusal to provide the Severance Benefits to which the
Executive becomes entitled under this Agreement, or as a result of the Company’s
contesting the validity, enforceability, or interpretation of this Agreement,
but in each case only if the Executive ultimately prevails in litigation
conducted as a result of the refusal or contest.
10.2 Arbitration. The
Executive and the Company will have the right and option to elect (in lieu of
litigation) to have any dispute or controversy arising under or in connection
with this Agreement settled by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by the Executive within fifty miles
from the location of his or her job, in accordance with rules of the American
Arbitration Association then in effect. Judgment may be entered on
the award of the arbitrator in any court having jurisdiction. All
expenses of arbitration, including the fees and expenses of the counsel for the
Executive, will be split between the Company and the Executive, unless the
Executive prevails, in which case the Company will bear the expenses of the
arbitration. Notwithstanding the right of the Executive or the
Company to elect to enter into arbitration, the Company and the Executive may
mutually agree to resolve any dispute or controversy arising under or in
connection with the Agreement in a court of law, in lieu of
arbitration.
Article
XI. Exclusivity
of Severance Benefits
11.1 Exclusivity of Severance
Benefits. Subject to Section 7.1, if the Company is
contractually obligated to pay to the Executive any severance benefits pursuant
to another agreement, plan, program, policy, or any other change of control
agreement, the terms and provisions of the program under which the
aggregate level of severance benefits is the highest (as determined by the
Executive) will operate to completely replace and supersede the terms and
provisions of this Agreement and/or all other programs that provide for the
payment of severance benefits.
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Article
XII. Code
Section 409A
12.1 Code Section
409A. The intent of the parties is that payments and benefits
under this Agreement comply with Internal Revenue Code Section 409A and the
regulations and guidance promulgated thereunder (collectively “Code Section
409A”) and, accordingly, to the maximum extent permitted, this Agreement shall
be interpreted to be in compliance therewith. If the Executive
notifies the Company (with specificity as to the reason therefore) that the
Executive believes that any provision of this Agreement would cause the
Executive to incur any additional tax or interest under Code Section 409A and
the Company concurs with such belief or the Company (without any obligation
whatsoever to do so) independently makes such determination, the Company shall,
after consulting with the Executive, reform such provision to try to comply with
Code Section 409A through good faith modifications to the minimum extent
reasonably appropriate to conform with Code Section 409A. To the
extent that any provision hereof is modified in order to comply with Code
Section 409A, such modification shall be made in good faith and shall, to the
maximum extent reasonably possible, maintain the original intent and economic
benefit to the Executive and the Company of the applicable provision without
violating the provisions of Code Section 409A.
If the
Executive is deemed on the date of “separation from service” to be a “specified
Executive” within the meaning of such terms under Code Section 409A(a)(2)(B),
then with regard to any payment or the provision of any benefit that is
specified as subject to this Section, such payment or benefit shall be made or
provided at the date which is the earlier of (A) the expiration of the six
(6)-month period measured from the date of such “separation from service” of the
Executive, and (B) the date of the Executive’s death (the “Delay
Period”). Upon the expiration of the Delay Period, all payments and
benefits delayed pursuant to this Section 12.1 (whether they would have
otherwise been payable in a single sum or in installments in the absence of such
delay) shall be paid or reimbursed to the Executive in a lump sum, and any
remaining payments and benefits due under this Agreement shall be paid or
provided in accordance with the normal payment dates specified for them
herein. Whenever a payment is to be made promptly after a date, it
shall be made within sixty (60) days thereafter.
With regard to any provision herein
that provides for reimbursement of expenses or in-kind benefits: (i) the right
to reimbursement or in-kind benefits is not subject to liquidation or exchange
for another benefit, and (ii) the amount of expenses eligible for reimbursement
or in-kind benefits provided during any taxable year shall not effect the
expenses eligible for reimbursement or in-kind benefits to be provided in any
other taxable year, provided that the foregoing shall not be violated with
regard to expenses covered by Code Section 105(h) that are subject to a limit
related to the period in which the arrangement is in effect. Any
expense or other reimbursement payment made pursuant to this Agreement or any
plan, program, agreement or arrangement of the Company referred to herein, shall
be made on or before the last day of the taxable year following the taxable year
in which such expense or other payment to be reimbursed.
In Witness
Whereof, the Executive has executed this Agreement and the Company has
caused this Agreement to be executed by a resolution of the Board, as of the day
and year first above written.
| MB FINANCIAL BANK, N.A. | EXECUTIVE | ||
| By: /s/ Xxxx X. York | By: /s/ Xxxxxx X. Field | ||
| Its: Vice President and Chief Financial Officer | Xxxxxx X. Field | ||
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