RURBAN FINANCIAL CORP. SECOND AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT FOR MARK A. KLEIN
EXHIBIT
10.2
SECOND
AMENDED AND RESTATED
FOR
▇▇▇▇ ▇. ▇▇▇▇▇
THIS
AGREEMENT between RFC and the Executive was originally effective as of the first
day of March, 2006 (the “Effective Date”) and was amended and restated effective
December 31, 2008 for the purpose of complying with the requirements of Section
409A of the Code. Effective as of this 30th day of July, 2010, RFC
and the Executive hereby amend and restate this Agreement in its entirety for a
second time as set forth herein, and remove the Subsidiary as a party
hereto.
WITNESSETH:
WHEREAS,
RFC, the Subsidiary and the Executive previously entered into the Agreement on
March 1, 2006 for the purpose of providing the Executive with the benefits
described therein; and
WHEREAS, RFC, the Subsidiary and the
Executive wish to amend the Agreement to account for the Executive’s new
position as Chief Executive Officer of RFC, to remove the Subsidiary as a party
hereto, and to make other changes to the Agreement as set forth
herein.
NOW,
THEREFORE, in consideration of the services performed in the past and to be
performed in the future, as well as of the mutual promise and covenants herein
contained, the parties agree as follows:
AGREEMENT:
ARTICLE
1: DEFINITIONS
For
purposes of this Agreement, the following capitalized words and phrases shall
have the following meanings unless another context clearly requires another
meaning:
1.1 ACT. The Securities
Exchange Act of 1934, as amended.
1.2 AGREEMENT. This
Rurban Financial Corp. Second Amended and Restated Change of Control Agreement
for ▇▇▇▇ ▇. ▇▇▇▇▇, as it may be amended from time to time.
1.3 ANNUAL DIRECT
SALARY. The Executive’s annualized base salary based on the
highest base salary rate in effect for any pay period ending with or within the
thirty-six (36) consecutive calendar month period ending on or immediately
before the date on which it is being calculated, multiplied by twelve
(12). Annual Direct Salary will be determined without including any
employee or fringe benefits, bonuses, incentives or other compensation (other
than base salary) paid or earned during the calculation period.
1.4 CAUSE. The term
“Cause” shall be defined, for purposes of this Agreement, as the occurrence of
one or more of the following:
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EXHIBIT
10.2
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(a)
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The
willful failure by the Executive to substantially perform his duties
hereunder (other than a failure attributable to an event that constitutes
Good Reason or resulting from Executive’s incapacity because of death or
disability), after notice from RFC, and a failure to cure such violation
within twenty (20) days of said
notice;
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(b)
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The
willful engaging by the Executive in misconduct injurious to RFC or the
Change Entity;
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(c)
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Dishonesty,
insubordination or gross negligence of the Executive in the performance of
his duties;
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(d)
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Executive’s
breach of fiduciary duty involving personal
profit;
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(e)
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Executive’s
violation of any law, rule or regulation governing issuers of publicly
traded securities or banks or bank officers or any regulatory enforcement
actions issued by a regulatory authority against the
Executive;
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(f)
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Conduct
on the part of Executive which brings public discredit to RFC or the
Change Entity and, if the effect may be cured, a failure to cure within
twenty (20) days of the date notice of such conduct is delivered to the
Executive;
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(g)
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Executive’s
conviction of, or plea of guilty or nolo contendere to, a felony
(including conviction of or plea of guilty or nolo contendere to a
misdemeanor that was originally charged as a felony but was reduced to a
misdemeanor as a result of a plea bargain), crime of falsehood or a crime
involving moral turpitude or the actual incarceration of Executive for a
period of twenty (20) consecutive days or
more;
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(h)
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An
act by the Executive affecting any of RFC’s or the Change Entity’s
employees, customers, business associates, contractors or visitors that an
independent third party decides, after reasonable investigation,
constitutes unlawful discrimination or harassment or violates RFC’s or the
Change Entity’s policy concerning discrimination or
harassment;
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(i)
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Executive’s
theft or abuse of RFC’s or the Change Entity’s property or the property of
RFC’s or the Change Entity’s customers, employees, contractors, vendors or
business associates;
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(j)
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The
direction or recommendation of a state or federal bank regulatory
authority to remove Executive from his position(s) with Corporation or the
Change Entity;
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(k)
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Executive’s
willful failure to follow the good faith lawful instructions of the board
of directors of RFC or the Change Entity with regard to its operations,
after written notice and, if the event may be cured, a failure to cure
such violation within twenty (20) days of the date said notice is
delivered to the Executive;
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EXHIBIT
10.2
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(l)
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Material
breach of any contract or agreement that Executive entered into with RFC
or the Change Entity, including breach of any of the obligations described
in Article 4 and, if the breach may be cured, a failure to cure such
breach within twenty (20) days of the date notice of such breach is
delivered to the Executive;
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(m)
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Unauthorized
disclosure of the trade secrets or Confidential Information of RFC, the
Change Entity or any of their affiliates, trade partners or
vendors;
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(n)
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Any
intentional cooperation with any party attempting to effect a Change of
Control unless (i) the board of
directors of RFC has approved or ratified that action before the Change of
Control or (ii) that cooperation
is required by law.
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However,
Cause will not arise solely because the Executive is absent from active
employment during periods of vacation, consistent with RFC’s or the Change
Entity’s applicable vacation policy or other period of absence initiated by the
Executive and approved by RFC or the Change Entity.
Also, if, after the Executive
Terminates employment, RFC or the Change Entity learn that the Executive has
actively concealed conduct or an event that, if discovered before employment
Terminated, would have constituted “Cause,” the provisions of Section 3.1
will be applied retroactively to the date the Executive Terminated employment
and RFC or the Change Entity may recover any and all amounts paid to the
Executive (or to his or her beneficiaries) under this Agreement.
1.5 CHANGE
ENTITY. The entity resulting from a Change of Control or
succeeding to RFC’s interests as a result of a Change of Control.
1.6 CHANGE OF
CONTROL. For purposes of this Agreement, the term “Change of
Control” shall mean the earliest of any of the following:
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(a)
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Of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A or any successor rule or regulation
promulgated under the Act;
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(b)
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A
merger or consolidation of RFC with or purchase of all or substantially
all of RFC’s assets by another “person” or group of “persons” (as such
term is defined or used in Sections 3.13(d) and 14(d) of the Act) and, as
a result of such merger, consolidation or sale of assets, less than a
majority of the outstanding voting stock of the surviving, resulting or
purchasing person is owned, immediately after the transaction, by the
holders of the voting stock of RFC before the transaction, regardless of
when or how their voting stock was
acquired;
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EXHIBIT
10.2
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(c)
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Any
“person” (as such term is defined in Section 3(a)(9) of the Act and as
used in Sections 13(d)(3) and 14(d)(2) of the Act) becomes through any
means a “beneficial owner” (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of RFC representing fifty percent
(50%) or more of the combined voting power of RFC’s then outstanding
securities eligible to vote for the election of RFC’s board of
directors;
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(d)
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Any
“person” as defined above, other than RFC, the Executive or RFC’s ESOP, is
or becomes the “beneficial owner” (as defined in Rule 13d-3 and Rule
13d-5, or any successor rule or regulation, promulgated under the Act),
directly or indirectly, of securities of RFC which represent twenty-five
percent (25%) or more of the combined voting power of the securities of
RFC, then outstanding but disregarding any securities with respect to
which that acquirer has filed SEC Schedule 13G indicating that the
securities were not acquired and are not held for the purpose of or with
the effect of changing or influencing, directly or indirectly, RFC’s
management or policies, unless and until that entity or person files SEC
Schedule 13D, at which point this exception will not apply to such
securities, including those previously subject to an SEC Schedule 13G
filing; and
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(e)
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Individuals
who, on the Effective Date, constituted the board of directors of RFC (the
“Incumbent Directors”) cease for any reason to constitute at least a
majority of the members of RFC’s board of directors; provided that any
person becoming a director subsequent to the Effective Date whose election
or nomination for election was approved by a vote of at least two-thirds
of the then Incumbent Directors (either by a specific vote or by approval
of the proxy statement of RFC in which such person is named as a nominee
for director, without written objection to such nomination) shall be an
Incumbent Director; and further provided, however, that no individual
elected or nominated as a director of RFC initially as a result of an
actual or threatened election contest with respect to directors or any
other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than RFC’s board of directors shall ever be
deemed to be an Incumbent Director.
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If more
than one event that constitutes a Change of Control occurs during a Protection
Period, the Executive shall be entitled to the amount that produces the largest
after-tax amount generated by any of the Changes of Control.
Notwithstanding any other provision of
this Agreement, the Executive will not be entitled to any amount under this
Agreement if he acted in concert with any person or group (as defined above) to
effect a Change of Control, other than at the specific direction of the board of
directors of RFC and in his capacity as an employee of RFC.
1.7 CODE. The Internal
Revenue Code of 1986, as amended.
1.8 CONFIDENTIAL
INFORMATION. Any and all information (other than information
in the public domain) related to RFC’s or the Change Entity’s business,
including all processes, inventions, trade secrets, computer programs, technical
data, drawings or designs; information concerning pricing and pricing policies,
marketing techniques, plans and forecasts; new product information, information
concerning methods and manner of operations and information relating to the
identity and location of all past, present and prospective customers and
suppliers.
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EXHIBIT
10.2
1.9 [intentionally
deleted]
1.10 DATE OF THE CHANGE OF
CONTROL. For purposes of this Agreement, the “Date of the
Change of Control” shall mean the date the first of any of the events described
in Section 1.5 occurs.
1.11 EXCISE
TAXES. The tax imposed on any excess parachute payments
by Section 4999 of the Code.
1.12 EXECUTIVE. ▇▇▇▇ ▇.
▇▇▇▇▇, an individual.
1.13 GOOD REASON. For
purposes of this Agreement, the Executive will have “Good Reason” to terminate
the Executive’s employment with RFC if any of the following events occur during
the Protection Period without the Executive’s consent (provided that RFC does
not cure the effect of such event within thirty (30) days following its receipt
of written notice of such event from the Executive):
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(a)
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The
assignment of duties and responsibilities inconsistent with Executive’s
status as Chief Executive Officer of RFC, unless the Executive has
simultaneously been promoted to a more senior position and has been
assigned substantive duties normally associated with that new
position;
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(b)
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A
reassignment which requires Executive to move his office more than fifty
(50) miles from the location of RFC’s principal executive
office;
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(c)
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Any
reduction in the Executive’s Annual Direct Salary as in effect on the date
hereof or as the same may be increased from time to time, except such
reductions that are the result of a national financial depression, or
national or bank emergency when such reduction has been implemented for
RFC’s or the Change Entity’s senior management, as a
group;
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(d)
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Any
requirement that the Executive report to a corporate officer or employee
instead of reporting directly to the board of directors of RFC or the
Change Entity;
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(e)
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Failure
at any time to obtain an assumption of the obligations under this
Agreement by any successor, regardless of whether such entity becomes a
successor as a result of a merger, consolidation, sale of assets or any
other form of reorganization; and
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EXHIBIT 10.2
Notwithstanding the foregoing, Good
Reason shall cease to exist for an event on the ninetieth (90th) day following the later of its
occurrence or the Executive’s knowledge thereof, unless the Executive has given
RFC written notice of such event and the Executive’s intent to terminate for
Good Reason prior to such date.
1.14 NON-COMPETITION
AREA. The geographic area within fifty (50) miles of RFC’s
main office, as may be amended pursuant to Section 4.1(b).
1.15 NON-COMPETITION
PERIOD. The period beginning on the effective date of this
Agreement and extending throughout the two (2) year period following the
Executive’s Termination, as may be amended pursuant to Section
4.1(b).
1.16 PROTECTION
PERIOD. The period beginning on the first day the board of
directors of RFC learns of an event that, if completed, would result in a Change
of Control and ending on the last day of the twelfth (12th) complete calendar
month beginning after the Change of Control or, if longer, sixty (60) days
after: (a) the date the Executive learns of an event that constituted Good
Reason that arose or occurred during the period described above or (b) the
conclusion of an unsuccessful attempt to Terminate the Executive for Cause
during the period described above.
1.17 RFC. Rurban
Financial Corp., an Ohio corporation having a place of business at
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Defiance, Ohio.
1.18 SUBSIDIARY. The
State Bank and Trust Company, a subsidiary of RFC.
1.19 TERM. The term of
this Agreement, including any extensions or renewals, as set forth in Article
2.
1.20 TERMINATES. The
Executive’s “separation from service” within the meaning of Section 409A of the
Code from RFC and all persons with whom RFC would be considered a single
employer under Sections 414(b) and (c) of the Code.
ARTICLE
2: TERM
The Term
of this Agreement shall be from the Effective Date through the end of the
twenty-fourth (24th) consecutive calendar month beginning on or immediately
after the Effective Date. Unless RFC notifies the Executive in
writing to the contrary at least ninety (90) days before the end of the twelfth
(12th) consecutive calendar month beginning after the Effective Date (and,
thereafter, anniversaries of the Effective Date) the Term of this Agreement will
automatically be extended for an additional twelve (12) calendar month
period. No such notice of non-renewal may be delivered during any
Protection Period and this Agreement will not expire (except as specifically
provided below) and will remain in effect throughout any Protection Period
regardless of whether that Protection Period ends after the date the Agreement
otherwise would expire. Notwithstanding the foregoing, this Agreement
will terminate on the earliest of the following to occur:
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(a)
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The
Executive’s employment Terminates before the beginning of the Protection
Period;
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(b)
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The
Executive agrees, in writing, to terminate this Agreement, whether or not
it is replaced with a similar agreement;
or
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(c)
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All
payments due under this Agreement have been fully
paid.
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EXHIBIT
10.2
ARTICLE
3: PAYMENTS UPON TERMINATION
3.1 TERMINATION FOR CAUSE/WITHOUT GOOD
REASON. If the
Executive is Terminated for Cause or voluntarily Terminates without Good Reason,
all rights of the Executive under this Agreement shall cease as of the effective
date of such Termination, except that the Executive shall be entitled to
receive: (a) any accrued salary through the date of such Termination, which
shall be paid within thirty (30) days following the date of Termination; and
(b) any payments and benefits to which he is then entitled under the
employee benefit plans of RFC or the Change Entity as of the date of such
Termination, payable in accordance with the terms of such plan(s).
3.2 TERMINATION WITHOUT CAUSE/FOR GOOD
REASON. If, during a Protection Period, the Executive is involuntarily
Terminated other than for Cause or voluntarily Terminates for Good Reason, RFC
or the Change Entity shall:
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(a)
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Within
thirty (30) days following the Executive’s Termination, pay to the
Executive a lump sum cash amount equal to two and ninety-nine hundredths
(2.99) times the Executive’s Annual Direct Salary, subject to applicable
withholdings and taxes;
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(b)
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Provide
to the Executive (and the Executive’s family, if applicable, and if the
Executive had elected family coverage on the day before the date of
Termination) for a period of three (3) years continued health care, life
insurance and disability insurance coverage at the same level (both
separately with respect to each line of coverage and in the aggregate) and
subject to the same terms that were in effect on the first day of the
Protection Period. These benefits will be provided under the
insured arrangements maintained for active employees without cost to the
Executive. However, if RFC or the Change Entity is unable to
provide these benefits to the Executive through an insured arrangement
maintained for active employees and with the same tax consequences
available to active employees (“Equivalent Coverage”), RFC or the Change
Entity, whichever is appropriate, will distribute to the Executive
additional cash equal to the Executive’s cost of procuring Equivalent
Coverage (“Premium Burden”) (provided, however, that the Executives does
in fact procure Equivalent Coverage), plus an additional cash amount
sufficient to ensure that after all applicable federal, state and local
income, employment, wage and excise taxes (including those imposed under
Section 4999 of the Code with respect to this amount) (the “Gross-Up”),
the Executive has remaining cash equal to the Premium
Burden. Collectively, the Gross-Up and the Premium Burden are
referred to as the “Welfare Benefit Replacement Cost”. The
Executive agrees to make available to RFC or the Change Entity any
information reasonably necessary to calculate the amount of the Gross-Up;
and
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EXHIBIT
10.2
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(c)
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The
Executive also will be entitled to receive any other payments or benefits
to which he is then entitled under the terms of any other contract,
arrangement, agreement, plan or program in which he is or has been a
participant, payable pursuant to the terms of the applicable contract,
arrangement, agreement, plan or
program.
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The provisions of this Section 3.2
shall be subject to the following: (i) any continuation of welfare benefits,
other than the health care plan during the applicable COBRA continuation period
described in Section 4980B of the Code, and (ii) any payment of the Welfare
Benefit Replacement Cost made pursuant to Section 3.2(b) shall first be treated
as a “limited payment” within the meaning of Treasury Regulation §1.409A-1(b)(9)(v)(D) and any
payments in excess of the limited payment shall be subject to the following
limitations: (A) no benefit shall be provided, and no payment shall be made for
the Welfare Benefit Replacement Cost incurred beyond the period described in
Section 3.2(b) ; (B) the amount of benefits provided or payments made during any
taxable year of the Executive may not affect the amount of benefits provided or
expenses eligible for payment to the Executive in any other taxable year; (C)
any payment shall be made by no later than the end of the Executive’s
taxable year following the taxable year of the Executive in which the expense
being paid was incurred; and (D) the right to benefits or payment may not be
subject to liquidation or exchange for another benefit.
3.3 PAYMENT OF MONEY DUE
DECEASED/DISABLED EXECUTIVE. Subject to the last sentence of
this Section 3.3, if the Executive dies or develops a permanent disability while
employed, the Executive will not be entitled to any benefit under this
Agreement. For purposes of this Agreement, a permanent disability
shall mean a physical or mental impairment that renders Executive incapable of
performing the essential functions of his job, on a full-time basis, even taking
into account any reasonable accommodation required by law, as determined by a
physician who is selected by the agreement of Executive and RFC, for a period
greater than one hundred eighty (180) days. However, any amounts or
benefits that become due under Section 3.2 on account of an event occurring
before the Executive dies or becomes disabled will continue to be due and will
be unaffected by the Executive’s death or disability.
3.4 GOLDEN PARACHUTE
PROVISIONS.
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(a)
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Cut-Back. Notwithstanding
any provision in this Agreement to the contrary (other than Sections
3.2(b), 5.7 and 5.11, which will apply under the circumstances described
in those sections), if, as of the Date of the Change of Control, the
Change Entity (after consulting with an independent accounting or
compensation consulting subsidiary) determines that the compensation and
benefits provided to the Executive pursuant to or under this Agreement
(other than the Welfare Benefit Replacement Cost as defined in
Section 3.2(b) or the amounts described in Sections 3.2(b), 5.7
and/or 5.11), either alone or when combined with other compensation and
benefits received by the Executive, would constitute “excess parachute
payments” within the meaning of Section 280G of the Code or the
regulations adopted thereunder, the compensation and benefits payable
pursuant to or under this Agreement (other than the Welfare Benefit
Replacement Cost and the amounts described in Sections 5.7 and 5.11)
shall be reduced to the extent necessary so that no portion thereof shall
be subject to Excise Taxes. The Executive or any other party
entitled to receive the compensation or benefits hereunder may request a
determination as to whether the compensation or benefit would constitute a
parachute payment and, if requested, such determination shall be made by
an independent accounting or compensation consulting subsidiary (other
than the entity described in the first sentence of this section) selected
by the Change Entity and approved by the party requesting such
determination, the fees of which will be borne solely by the Change
Entity. Any reduction pursuant to this Section 3.4 shall be
made in accordance with Section 409A of the Code and the Treasury
Regulations promulgated thereunder.
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EXHIBIT
10.2
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(b)
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Subsequent
Determinations. If the Internal Revenue Service subsequently and
finally determines that the amount of compensation and benefits (including
after the reduction applied under Section 3.4(a)) will result in the
imposition of Excise Taxes, the Executive will immediately remit an
additional amount to the Change Entity equal to the difference between the
amount paid (other than the Welfare Benefit Replacement Cost and those
amounts described in Sections 5.7 and 5.11) and the minimum amount
necessary to avoid the imposition of Excise
Taxes.
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(c)
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Audit. The
Executive agrees to promptly notify the Change Entity of an assessment or
inquiry from the Internal Revenue Service relating to payments under this
Agreement that would, if made final, result in imposition of Excise Taxes
and also agrees to cooperate with the Change Entity in contesting any
assessment of Excise Taxes. However, the Change Entity will
have complete control over resolution of any claim by the Internal Revenue
Service that might result in the imposition of Excise Taxes (although it
will have no dispositive power over any other tax matter that may be
subject to the same audit) and the Change Entity will bear all costs
associated with that effort. Any such payment by the Change Entity shall
be subject to the following limitations: (i) the costs eligible for
payment shall include any costs arising during the lifetime of the
Executive; (ii) the amount of costs paid during any taxable year of the
Executive may not affect the amount of costs eligible for payment in any
other taxable of the Executive year; (iii) any costs being paid
shall be paid no later than December 31 of the year following the year in
which they were incurred; and (iv) the right to payment may not be subject
to liquidation or exchange for another
benefit.
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3.5 SIX-MONTH DISTRIBUTION DELAY FOR
SPECIFIED EMPLOYEES. Notwithstanding anything in this
Agreement to the contrary, in the event that the Executive is a “specified
employee” (as defined in Section 409A of the Code) of RFC, determined pursuant
to RFC’s policy for identifying specified employees, on the date of his
Termination, no payment on account of the Executive’s Termination shall be made
until the first (1st) day of the seventh (7th) month following the date of
Termination (or, if earlier, the date of his death). The cumulative
amount paid on such day shall include any payments that could not be made during
such period.
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EXHIBIT
10.2
ARTICLE
4: COVENANTS
4.1 NON-COMPETITION. In
consideration of the benefits provided in this Agreement:
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(a)
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Executive
hereby acknowledges and recognizes the highly competitive nature of the
business of RFC. Accordingly, Executive agrees that if a Change
of Control occurs and provided that Executive receives the payments
described in Sections 3.1 or 3.2 of this Agreement, then in consideration
of this benefit during the Non-Competition Period, Executive shall
not:
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(i)
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Within
the Non-Competition Area, provide financial or executive assistance to any
person, firm, corporation or enterprise engaged in (1) the banking or
financial services industry (including bank holding companies), or
(2) any other activity in which RFC engaged on the Date of the Change
of Control; or
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(ii)
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Directly
or indirectly contact, solicit or induce any person, corporation or other
entity who or which is a customer or referral source of RFC during the
term of Executive’s employment or on the date of Termination of
Executive’s employment, to become a customer or referral source for any
person or entity other than RFC or, if applicable, the Change Entity;
or
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(iii)
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Directly
or indirectly solicit, induce or encourage any employee of RFC or, if
applicable, the Change Entity or its subsidiaries, who is employed during
the term of Executive’s employment or on the date of Termination of
Executive’s employment, to leave the employ of Corporation or, if
applicable, the Change Entity or its subsidiaries or to seek, obtain or
accept employment with any person or entity other than Corporation or, if
applicable, the Change Entity or its
subsidiaries.
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(b)
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It
is expressly understood and agreed that, although Executive and RFC
consider the restrictions contained in this Section 4.1 reasonable for the
purpose of preserving for RFC and, if applicable, the Change Entity, its
good will and other proprietary rights, if a final judicial determination
is made by a court having jurisdiction that the Non-Competition Area, the
Non-Competition Period or any other restriction contained in this Section
4.1 is an unreasonable or otherwise unenforceable restriction against
Executive, the provisions of this Section 4.1 shall not be rendered void,
but shall be deemed amended to apply as to such maximum time and territory
and to such other extent as such court may judicially determine or
indicate to be reasonable.
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(c)
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The
existence of any immaterial claim or cause of action of the Executive
against RFC or, if applicable, the Change Entity, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by RFC of this covenant. The Executive agrees that
any breach of the restrictions set forth in this Section 4.1 will result
in irreparable injury to RFC or, if applicable, the Change Entity, for
which it will have no adequate remedy at law and RFC or, if applicable,
the Change Entity, shall be entitled to injunctive relief in order to
enforce the provisions hereof and/or seek specific performance and
damages.
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EXHIBIT
10.2
Prior to
the application of Section 3.4, RFC and/or the Change Entity will make
reasonable efforts to allocate value to the undertaking described in this
section and to allocate to that calculation the maximum amount due under Section
3.1.
4.2 UNAUTHORIZED
DISCLOSURE. During the term of Executive’s employment, or at
any later time, the Executive shall not, without the written consent of the
boards of directors of the Subsidiary (or, if applicable, the Change Entity) or
a person authorized by them knowingly use or disclose to any person, other than
an authorized employee of RFC (or, if applicable, the Change Entity), or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Executive of his duties as an executive of RFC (or,
if applicable, the Change Entity), any material Confidential Information
obtained by him while in the employ of Corporation (or, if applicable, the
Change Entity) with respect to any of the services, products, improvements,
formulas, designs or styles, processes, customers, customer lists, methods of
business or any business practices of RFC (or, if applicable, the Change Entity)
or affiliates, the disclosure of which could be or will be damaging to RFC (or,
if applicable, the Change Entity) or affiliates; provided, however, that
Confidential Information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by the Executive
or any person with the assistance, consent or direction of the Executive) or any
information of a type not otherwise considered confidential by persons engaged
in the same business or a business similar to that conducted by RFC or its
subsidiaries or affiliates or any information that must be disclosed as required
by law.
ARTICLE
5: MISCELLANEOUS
5.1 NO EMPLOYMENT
CONTRACT. This Agreement is not an employment
contract. Nothing contained herein shall guarantee or assure
Executive of continued employment by RFC or the Change Entity.
5.2 NOTICE. For the
purposes of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If
to the Executive:
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▇▇▇▇.
▇. ▇▇▇▇▇
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At
the last address on file with RFC
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If
to RFC:
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Human
Resource Director
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇,
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If
to the Change Entity:
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At
the address provided
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-11-
EXHIBIT
10.2
or to
such other address as Executive, RFC or the Change Entity may have furnished to
the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
5.3 SUCCESSORS; BINDING
AGREEMENT. This Agreement shall inure to the benefit of and be
binding upon RFC, the Change Entity and Executive, their respective personal
representatives, heirs, assigns or successors; provided, however, that the
Executive may not commute, anticipate, encumber, dispose of or assign any
payment herein except as specifically set forth in Sections 5.12(d) and (e) of
this Agreement.
5.4 SEVERABILITY. If
any provision of this Agreement is declared unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.
5.5 WAIVER;
AMENDMENT. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Executive and an executive officer specifically
designated by the board of directors or RFC or the Change Entity. No
waiver by either party, at any time, of any breach by the other party of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This
Agreement may be amended or canceled only by mutual agreement of the parties in
writing.
5.6 LIMITATION OF DAMAGES FOR BREACH OF
AGREEMENT. In the event of a breach of this Agreement, by RFC,
the Change Entity or the Executive, each hereby waives to the fullest extent
permitted by law the right to assert any claim against the others for punitive
or exemplary damages. In no event shall any party be entitled to the
recovery of attorneys’ fees or costs.
5.7 ARBITRATION.
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(a)
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Resolution of
Disputes. RFC and Executive recognize that in the event
a dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will
not afford a practical resolution of the issues within a reasonable period
of time. Consequently, each party agrees that all disputes,
disagreements and questions of interpretation concerning this Agreement,
except for any claims brought by RFC for equitable relief or an injunction
to enforce the restrictive covenants contained in Article 4, are to be
submitted for resolution, in Defiance County, Ohio to the American
Arbitration Association (the “Association”) in accordance with the
Association’s National Rules for the Resolution of Employment Disputes or
other applicable rules then in effect (“Rules”). RFC or
Executive may initiate an arbitration proceeding at any time by giving
notice to the other in accordance with the Rules. Corporation
and Executive may, as a matter of right, mutually agree on the appointment
of a particular arbitrator from the Association’s pool. The
arbitrator shall not be bound by the rules of evidence and procedure of
the courts of the State of Ohio, but shall be bound by the substantive law
applicable to this Agreement. The decision of the arbitrator,
absent fraud, duress, incompetence or gross and obvious error of fact,
shall be final and binding upon the parties and shall be enforceable in
courts of proper jurisdiction. Following written notice of a
request for arbitration, RFC and Executive shall be entitled to an
injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this Agreement, except as
otherwise provided herein.
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-12-
EXHIBIT
10.2
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(b)
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Costs. RFC
or the Change Entity will bear all reasonable costs associated with any
dispute arising under this Agreement, including reasonable accounting and
legal fees incurred by the Executive in connection with the arbitration
proceedings just described. Any such payment by RFC shall be subject to
the following limitations: (i) the costs eligible for payment shall
include any costs arising during the lifetime of the Executive; (ii) the
amount of costs paid during any taxable year of the Executive may not
affect the amount of costs eligible for payment in any other
taxable of the Executive year; (iii) any costs being paid shall
be paid no later than December 31 of the year following the year in which
they were incurred; and (iv) the right to payment may not be subject to
liquidation or exchange for another
benefit.
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(c)
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Gross-Up. If
it is subsequently determined that payment of these costs are excess
parachute payments, RFC or the Change Entity will fully gross-up the
Executive for the income, wage, employment and excise taxes associated
with that payment so that, after all applicable federal, state and local,
income, wage, employment and excise taxes (plus any assessed interest and
penalties), the Executive will have incurred no liability (either for
these fees or the taxes just listed) with respect to the matters
encompassed in this section. Any payment pursuant this Section
19(c) shall be made by no later than the end of the Executive’s taxable
year following the year in which the Executive remitted payment of the
taxes being grossed-up.
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If
otherwise due, payments not being contested under the procedures described
in this section will not be deferred during the pendency of procedures
described in this section.
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5.8 LAW GOVERNING. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio, without regard to its conflicts of law principles.
5.9 VALIDITY. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
5.10 HEADINGS. The
section headings of this Agreement are for convenience only and shall not
control or affect the meaning or construction or limit the scope or intent of
any of the provisions of this Agreement.
5.11 LEGAL FEES. RFC or
the Change Entity shall pay all reasonable legal, accounting and actuarial fees
and expenses incurred by the Executive in enforcing any right or benefit
provided by this Agreement, as provided in Section 5.7(b). If it is
subsequently determined that payment of these fees are excess parachute
payments, the Change Entity will fully gross-up the Executive for the income,
wage, employment and excise taxes associated with that payment so that, after
all applicable federal, state and local, income, wage, employment and excise
taxes (plus any assessed interest and penalties), the Executive will have
incurred no liability (either for these fees or the taxes just listed) with
respect to the matters encompassed in this section, as provided in Section
5.7(c).
-13-
EXHIBIT
10.2
5.12 OTHER PROVISIONS.
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(a)
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Except
as expressly provided in this Agreement, the Executive’s right to receive
the payments described in this Agreement will not decrease the amount of,
or otherwise adversely affect, any other benefits payable to the Executive
under any other plan, agreement or
arrangement.
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(b)
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The
Executive is not required to mitigate the amount of any payment described
in this Agreement by seeking other employment or otherwise, nor will the
amount of any payment or benefit provided for in this Agreement be reduced
by any compensation or benefits the Executive earns, or is entitled to
receive, in any capacity after Termination or by reason of the Executive’s
receipt of or right to receive any retirement or other benefits
attributable to employment.
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(c)
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Except
as expressly provided elsewhere in this Agreement, the amount of any
payment made under this Agreement will be reduced by amounts RFC or the
Change Entity, as applicable, is required to withhold in payment (or in
anticipation of payment) of any income, wage or employment taxes imposed
on the payment.
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(d)
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The
right of an Executive or any other person to receive any amount under this
Agreement may not be assigned, transferred, pledged or encumbered except
by will or by applicable laws of descent and distribution. Any
attempt to assign, transfer, pledge or encumber any amount that is or may
be receivable under this Agreement will be null and void and of no legal
effect. However, this section will not preclude payment of any
benefit to which a deceased Executive is
entitled.
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(e)
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Subject
to the preceding subsection (d), this Agreement inures to the benefit
of and may be enforced by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and
legatees.
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(f)
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If
the Executive’s employment relationship shifts between RFC and any related
entity before a Change of Control or after a Change of Control, between
the Change Entity and any entity related to the Change Entity and there
has been no intervening Termination, this Agreement will remain in full
force and effect and for all purposes of this Agreement, the Executive’s
new employer will be substituted for the Executive’s prior
employer.
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(g)
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If
the Executive’s employer is no longer related to RFC, whether or not as
part of a transaction that constitutes a Change of Control, this Agreement
will remain in full force and
effect.
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-14-
EXHIBIT
10.2
5.13 ENTIRE
AGREEMENT. This Agreement supersedes any and all prior
agreements, either oral or in writing, between the parties (including such
agreement with any subsidiary of RFC) with respect to payments upon Termination
after a Change of Control, and this Agreement contains all the covenants and
agreements between the parties with respect to same.
5.14 REGULATORY LIMITATIONS.
Notwithstanding anything to the contrary contained herein,
the Executive acknowledges and agrees that any payments made to the Executive
pursuant to this Agreement, or otherwise, are subject to and conditioned on
compliance with the provisions of 12 U.S.C. §1828(k) and Part 359 of the FDIC’s
regulations (12 C.F.R. Part 359), which provisions contain certain prohibitions
and limitations on the making of “golden parachute” and certain indemnification
payments by FDIC-insured institutions and their holding companies. In
the event any payments to the Executive pursuant to this Agreement are
prohibited or limited by the provisions of such statute and/or regulation, RFC
or the Change Entity, as applicable, will use its commercially reasonable
efforts to obtain the consent of the appropriate regulatory authorities to the
payment by RFC or the Change Entity, as applicable, to the Executive of the
maximum amount that is permitted (up to the amount payable under the terms of
this Agreement).
5.15 SECTION
409A. This Agreement is intended to comply with the
requirements of Section 409A of the Code and, to the maximum extent permitted by
law, shall be interpreted, construed and administered consistent with this
intent. None of RFC, the Subsidiary or any other person shall have
liability in the event this Agreement fails to comply with the requirements of
Section 409A of the Code. Nothing in this Agreement shall be
construed as the guarantee of any particular tax treatment to the
Executive.
[signature
page attached]
-15-
EXHIBIT
10.2
IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have
caused this Agreement to be duly executed in their respective names and, in the
case of RFC, by its authorized representative, the day and year above
mentioned.
| RURBAN FINANCIAL CORP. | |||||
| By: |
/s/▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
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| Its: |
Chairman
– Board of Directors
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| EXECUTIVE | |||||
| /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ | |||||
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| ▇▇▇▇ ▇. ▇▇▇▇▇ |
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