EXHIBIT 10.3
FORM OF
CLOVER LEAF BANK, ▇▇
▇▇▇▇▇▇▇▇▇ AGREEMENT
This AGREEMENT is made effective as of ______________ __, 2001 by and
between Clover Leaf Bank, SB, a stock savings bank (the "Bank"), and
_______________________ (the "Executive"). Any reference to "Company" herein
shall mean Clover Leaf Financial Corp., or any successor thereto.
WHEREAS, the Bank recognizes the substantial contribution the Executive has
made to the Bank and wishes to protect his position therewith for the period
provided in this Agreement; and
WHEREAS, the Executive has been elected to, and has agreed to serve in the
position of ___________________ for the Bank, a position of substantial
responsibility;
NOW, THEREFORE, in consideration of the contribution of the Executive, and
upon the other terms and conditions hereinafter provided, the parties hereto
agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of [ ] ( ) full calendar
months thereafter. Commencing on the first anniversary date of this Agreement
and continuing at each anniversary date thereafter, the Board of Directors of
the Bank (the "Board") may extend the Agreement for an additional year. The
Board will conduct a performance evaluation of the Executive for purposes of
determining whether to extend the Agreement, and the results thereof shall be
included in the minutes of the Board's meeting. If the Executive is also a
director then he or she shall abstain from any and all voting with respect to
the extension of the term of such Executive's Agreement.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL
(a) Upon the occurrence of a Change in Control of the Bank or the Company
(as herein defined) followed at any time during the term of this
Agreement by the voluntary or involuntary termination of the
Executive's employment, other than for Cause, as defined in Section
2(c) hereof, the provisions of Section 3 shall apply. Upon the
occurrence of a Change in Control, the Executive shall have the right
to elect to voluntarily terminate his employment at any time during
the term of this Agreement following any demotion, loss of title,
office or significant authority, reduction in his annual compensation
or benefits, or relocation of his principal place of employment by
more than 30 miles from its location immediately prior to the Change
in Control.
(b) A "Change in Control" of the Bank or the Company shall mean a change
in control of a nature that: (i) would be required to be reported in
response to Item 1(a) of the current report on Form 8K, as in effect
on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"); or (ii) results in a Change
in Control of the Bank or the Company within the meaning of the Bank
Holding Company Act of 1956, as amended, and applicable rules and
regulations promulgated thereunder (collectively, the "BHCA") as in
effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred
at such time as (a) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25 % or more of
the combined voting power of Company's outstanding securities, except
for any securities purchased by the Bank's employee stock ownership
plan or trust; or (b) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's stockholders
was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered
as though he were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially
all the assets of the Bank or the Company or similar transaction in
which the Bank or Company is not the surviving institution occurs; or
(d) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the current management of the Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one or more
corporations as a result of which the outstanding shares of the class
of securities then subject to the plan are to be exchanged for or
converted into cash or property or securities not issued by the
Company; or (e) a tender offer is made for 25% or more of the voting
securities of the Company and the shareholders owning beneficially or
of record 25% or more of the outstanding securities of the Company
have tendered or offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender
offeror.
(c) The Executive shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon Termination for Cause. The term
"Termination for Cause" shall mean termination because of the
Executive's intentional failure to perform stated duties, personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary
duty involving personal profit, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses) or
final cease and
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desist order, or any material breach of any material provision of this
Agreement. In determining incompetence, the acts or omissions shall be
measured against standards generally prevailing in the savings
institution industry. Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the
members of the Board at a meeting of the Board called and held for
that purpose (after reasonable notice to the Executive and an
opportunity for him, together with counsel, to be heard before the
Board), finding that in the good faith opinion of the Board, the
Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not
have the right to receive compensation or other benefits for any
period after Termination for Cause.
3. TERMINATION
(a) Upon the occurrence of a Change in Control, followed at any time
during the term of this Agreement by the voluntary or involuntary
termination of the Executive's employment other than for Termination
for Cause, the Bank shall be obligated to pay the Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay, a sum equal to three
times the average of the three preceding years' annual base salary,
including bonuses and any other cash compensation paid or accrued by
the Executive during such years, and the amount of any benefits
received pursuant to any employee benefit plans on behalf of the
Executive maintained by the Bank during such years, excluding benefits
continued pursuant to (b) below. If the Executive has been employed by
the Bank for less than one year, then the severance pay shall be a sum
equal to thirty-six times the average monthly salary, including
bonuses and any other cash compensation paid or accrued by the
Executive during such period, and the amount of any benefits received
pursuant to any employee benefit plans on behalf of the Executive
maintained by the Bank during such period, excluding benefits
continued pursuant to (b) below, for the period over which the
Executive has been employed by the Bank. At the election of the
Executive, or his estate, as the case may be, which election is to be
made within thirty (30) days of the Date of Termination (as defined in
Section 4(b)), such payment may be made in a lump sum or paid in equal
monthly installments during the thirty-six (36) months following the
Executive's termination. In the event that no election is made,
payment to the Executive will be made on a monthly basis during the
remaining term of this Agreement.
(b) Upon the occurrence of a Change in Control of the Bank followed at any
time during the term of this Agreement by the Executive's voluntary or
involuntary termination of employment, other than for Termination for
Cause, the Bank shall
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cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Bank for the
Executive prior to his severance. Such coverage and payments shall
cease upon expiration of thirty-six (36) months.
(c) Upon the occurrence of a Change in Control, the Executive will have
such rights as specified in any other employee benefit plan with
respect to options and such other rights as may have been granted to
the Executive under such plans.
(d) In the event that the Executive is receiving monthly payments pursuant
to Section 3(a) hereof, on an annual basis, thereafter, the Executive
shall elect whether the balance of the amount payable under the
Agreement at that time shall be paid in a lump sum or on a pro rata
basis. Such election shall be irrevocable for the year for which such
election is made.
(e) Notwithstanding the preceding paragraphs of this Section 3, in no
event shall the aggregate payments or benefits to be made or afforded
to the Executive under said paragraphs (the "Termination Benefits")
constitute an "excess parachute payment" under Section 280G of the
Code or any successor thereto, and in order to avoid such a result,
Termination Benefits will be reduced, if necessary, to an amount (the
"Non-Triggering Amount"), the value of which is one dollar ($1.00)
less than an amount equal to three (3) times the Executive's "base
amount", as determined in accordance with said Section 280G. The
allocation of the reduction required hereby among Termination Benefits
provided by the preceding paragraphs of this Section 3 shall be
determined by the Executive.
4. NOTICE OF TERMINATION
(a) Any purported termination by the Bank or by the Executive shall be
communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(b) "Date of Termination" shall mean (A) if the Executive's employment is
terminated for Disability, thirty (30) days after a Notice of
Termination is given (provided that he shall not have returned to the
performance of his duties on a full-time basis during such thirty (30)
day period), and (B) if his employment is terminated for any other
reason, the date specified in the Notice of Termination (which, in the
case of a Termination for Cause, shall be immediate). Except as set
forth below in paragraph (c), in no event shall the Date of
Termination exceed 30 days from the date Notice of Termination is
given.
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(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, except upon
the occurrence of a Change in Control and voluntary termination by the
Executive, in which case the date of termination shall be the date
specified in the Notice, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a
final judgment, order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no appeal having
been perfected) and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given
in good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Bank will continue to pay the
Executive his full compensation in effect when the notice giving rise
to the dispute was given (including, but not limited to, Base Salary)
and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of
dispute was given, until the earlier of 120 days from the date of the
Notice of Termination or the date upon which the dispute is finally
resolved in accordance with this Agreement. Amounts paid under this
Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under
this Agreement. Notwithstanding the foregoing, no compensation or
benefits shall be paid to the Executive in the event the Executive is
Terminated for Cause. In the event that such Termination for Cause is
found to have been wrongful or such dispute is otherwise decided in
the Executive's favor, the Executive shall be entitled to receive all
compensation and benefits which accrued for up to a period of nine
months after the Termination for Cause.
5. SOURCE OF PAYMENTS
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the Bank.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior agreement between the Bank and the Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of a kind elsewhere provided. No provision
of this Agreement shall be interpreted to mean that the Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.
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7. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to
execution, attachment, levy, or similar process or assignment by
operation of law, and any attempt, voluntary or involuntary, to affect
any such action shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of, the
Executive, the Bank and their respective successors and assigns.
8. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) 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 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 or as to any act other than that specifically
waived.
9. REQUIRED PROVISIONS
(a) The Bank may terminate the Executive's employment at any time. The
Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in
Section 2(c) hereinabove.
(b) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's affairs by
a notice served under Section 8(e)(3) (12 USCss.1818(e)(3)) or 8(g)
(12 USCss.1818(g)) of the Federal Deposit Insurance Act, as amended by
the Financial Institutions Reform, Recovery and Enforcement Act of
1989, the Bank's obligations under this contract 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 in its
discretion (i) pay the Executive all or part of the compensation
withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were
suspended.
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(c) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued
under Section 8(e) (12 USC ss.1818(e)) or 8(g) (12 USC ss. 1818(g)) of
the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, all
obligations of the Bank under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting
parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x) (12 USC
ss.1813(x)(1)) of the Federal Deposit Insurance Act, as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989,
all obligations of the Bank under this contract shall terminate as of
the date of default, but this paragraph shall not affect any vested
rights of the contracting parties.
(e) All obligations of the Bank under this contract shall be terminated,
except to the extent determined that continuation of the contract is
necessary for the continued operation of the Bank, (i) by the Federal
Deposit Insurance Corporation ("FDIC"), at the time the FDIC enters
into an agreement to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) (12 USCss.1823(c)) of
the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989; or (ii)
when the Bank is determined by the FDIC 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.
10. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
11. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
12. GOVERNING LAW
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Illinois, unless
preempted by Federal law as now or hereafter in effect.
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Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
subject to Section 3(c) hereof, the Executive shall be entitled to seek specific
performance of his right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
13. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by the Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank if the Executive is successful on the merits pursuant
to a legal judgment, arbitration or settlement.
14. INDEMNIFICATION
The Bank shall provide the Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
the Executive (and his heirs, executors and administrators) to the fullest
extent permitted under federal law and as provided in the Bank's Charter and
Bylaws against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Bank
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements (such settlements must be approved by the
Board of Directors of the Bank). If such action, suit or proceeding is brought
against the Executive in his capacity as an officer or director of the Bank,
however, such indemnification shall not extend to matters as to which the
Executive is finally adjudged to be liable for willful misconduct in the
performance of his duties. No indemnifications shall be paid that would violate
12 U.S.C. 1828(k) or any regulations promulgated thereunder.
15. SUCCESSOR TO THE BANK
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
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16. SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and the Executive has signed this Agreement, on the
day and date first above written.
ATTEST: CLOVER LEAF BANK, SB
By:___________________________
President
WITNESS: EXECUTIVE
By:___________________________
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