CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made as of the
______ day of ______________________, 200[ ], (the "Effective Date") by and
between LAKELAND FINANCIAL CORPORATION, an Indiana corporation, (the
"Company") and __________________________ (the "Executive").
RECITALS
A. The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company and its Affiliates will have the continued dedication of the
Executive, notwithstanding the possibility, threat or occurrence of a Change
in Control (as defined below) of the Company.
B. The Executive is currently serving as an Executive of the
Company or one of its Affiliates.
C. The Company desires to continue to employ the Executive as
an Executive of the Company or one of its Affiliates and the Executive is
willing to continue such employment.
D. The Company recognizes that circumstances may arise in which a
change of control of the Company through acquisition or otherwise may occur
thereby causing uncertainty of employment without regard to the competence or
past contributions of the Executive, which uncertainty may result in the loss
of valuable services of the Executive, and the Company and the Executive wish
to provide reasonable security to the Executive against changes in the
employment relationship in the event of any such change in control.
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter contained, it is covenanted and agreed by and
between the parties hereto as follows:
1. Payment of Severance Amount. If the Executive's employment by
the Company, or any Affiliate or successor of the Company, is terminated by
either the Company or the Executive during the time periods set forth in
subparagraphs (a) and (b) below, then the Company shall pay the Executive an
amount equal to the Change in Control Severance Amount, payable in one (1)
lump sum within fifteen (15) days after the Executive's termination of
employment:
(a) termination by the Company, or any Affiliate or successor of
the Company, without Cause, within either twelve (12) months
prior to a Change in Control or twelve (12) months immediately
following a Change in Control; or
(b) termination by the Executive, for any reason, within twelve
(12) months immediately following a Change in Control.
2. Definitions. As used throughout this Agreement, all of the terms
defined in this paragraph 2 shall have the meanings given below.
A. The "Act" shall mean the Securities Exchange Act of
1934, as amended.
B. An "Affiliate" shall mean any entity which owns or
controls, is owned by or is under common ownership or control with,
the Company.
C. A "Change in Control" shall mean a Change in Control
of a nature such that (1) it would be required to be reported by a
person or entity subject to the reporting requirements of Section 14(a)
of the Act in response to Schedule 14A of Regulation 14A, or successor
provisions thereto, as in effect on the date hereof, (2) a "person" or
"group" (as those terms are used in Sections 13(d) and 14(d) of the
Act), is or becomes the "beneficial owner" (as defined in Rule 13d-3
issued under the Act), directly or indirectly, of securities of the
Company, representing in excess of thirty percent (30%) of the voting
securities of the Company then outstanding, followed by the election
by said person or group of one or more representatives to the Board;
(3) a person or group, as hereinabove defined, is or becomes the
beneficial owner, directly or indirectly, of securities of the Company,
representing in excess of fifty percent (50%) of the voting securities
of the Company then outstanding, whether or not followed by the
election by said person or group of one or more representatives to the
Board; or (4) any other event, including but not limited to those set
forth in paragraphs (1) through (3) above, which shall have the effect
of placing control of the business and affairs of the Company in a
person or group as hereinabove defined, other than or different from
the present shareholders of the Company.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur solely because fifty-one percent (51%) or more of
the combined voting power of the then outstanding securities of the
Company are acquired by: (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for
employees of the Company or its Affiliates; or (2) any corporation
which, immediately prior to such acquisition, is owned directly or
indirectly by the stockholders in the same proportion as their
ownership of stock immediately prior to such acquisition.
D. "Change in Control Severance Amount" shall mean the
amount equal to two (2) times the sum of (i) the greater of the
Executive's then current annual base salary or the Executive's annual
base salary as of the date one (1) day prior to his or her Termination
Date and (ii) fifteen percent (15%) of the amount determined under
(i) above.
E. "Cause" shall mean only a termination by the Company
or an Affiliate as a result of the Executive's fraud, misappropriation
of or intentional material damage to the property or business of the
Company (including its Affiliates), substantial and material failure
by the Executive to fulfill the duties and responsibilities of his or
her regular position and/or comply with the Company's or its
Affiliates' policies, rules or regulations, or the Executive's
conviction of a felony.
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F. "Termination Date" shall mean the date of employment
termination indicated in the written notice provided by the Company or
the Executive to the other.
3. Medical and Dental Benefits. If the Executive is entitled to a
Change in Control Severance Amount hereunder, then to the extent that the
Executive or any of the Executive's dependents may be covered nder the terms
of any medical and dental plans of the Company (or any Affiliate) for active
employees immediately prior to the Termination Date, the Company will provide
the Executive and those dependents with equivalent coverages for a period not
to exceed twenty-four (24) months from the Termination Date. The coverages may
be procured directly by the Company (or any Affiliate, if appropriate) apart
from, and outside of the terms of the plans themselves; provided that the
Executive and the Executive's dependents comply with all of the conditions of
the medical or dental plans. In the event the Executive or any of the
Executive's dependents become eligible for coverage under the terms of any
other medical and/or dental plan of a subsequent employer which plan benefits
are comparable to Company (or any Affiliate) plan benefits, coverage under the
Company's (or any Affiliate's) plans will cease for the Executive and/or
dependent. The Executive and Executive's dependents must notify the Company
(or any Affiliate) of any subsequent employment and provide information
regarding medical and/or dental coverage available. In the event the Company
(or any Affiliate) discovers that the Executive and/or dependent has become
employed and not provided the above notification, all payments and benefits
under this Agreement will cease.
4. Golden Parachute Payment Adjustment. It is the intention of the
parties that the Change in Control Severance Amount under this Agreement and
the value of all other amounts and benefits provided pursuant to a Change in
Control, either under this Agreement or any other plan or agreement to which
the Executive is a party, shall not constitute "excess parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and any regulations thereunder. However, if the
independent accountants acting as auditors for the Company on the date of a
Change in Control (or another accounting firm designated by the parties)
determine, in consultation with legal counsel acceptable to the parties,
that any amount payable to the Executive by the Company under this Agreement,
or any other plan or agreement under which the Executive participates or is a
party, would constitute an excess parachute payment within the meaning of
Section 280G of the Code and be subject to the "excise tax" imposed by Section
4999 of the Code, then the Company shall pay to the Executive the amount of
such excise tax and all federal and state income or other taxes with respect
to the payment of the amount f such excise tax, including all such taxes with
respect to any such additional amount. If at a later date, the Internal
Revenue Service assesses a deficiency against the Executive for the excise tax
which is greater than that which was determined at the time such amounts were
paid, the Company shall pay to the Executive the amount of such excise tax
plus any interest, penalties and professional fees or expenses, incurred by
the Executive as a result of such assessment, including all such taxes with
respect to any such additional amount. The highest marginal tax rate
applicable to individuals at the time of payment of such amounts will be used
for purposes of determining the federal and state income and other taxes with
respect thereto. The Company shall withhold from any amounts paid under this
Agreement the amount of any excise tax or other federal, state or local taxes
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then required to be withheld. Computations of the amount of any supplemental
compensation paid under this subparagraph shall be made by the independent
public accountants then regularly retained by the Company, in consultation
with legal counsel acceptable to the parties. The Company shall pay all
accountant and legal counsel fees and expenses.
5. A. Restrictive Covenant. The Company and the Executive have
jointly reviewed the customer lists and operations of the Company and have
agreed that the primary service area of the lending and deposit taking
functions of the Company and its Affiliates in which the Executive has
actively participated extends to an area encompassing sixty (60) mile radius
from the center of Warsaw, Indiana. Therefore, as an essential ingredient of
and in consideration of this Agreement and the payment of the Change in
Control Severance Amount, the Executive hereby agrees that, except with
the express prior written consent of the Company, for a period of two (2)
years after the termination of the Executive's employment with the Company
in connection with or upon a Change in Control and the Executive's receipt
of the Change in Control Severance Amount (the "Restrictive Period"), he will
not directly or indirectly compete with the business of the Company,
including, but not by way of limitation, by directly or indirectly owning,
managing, operating, controlling, financing, or by directly or indirectly
serving as an executive, officer or director of or consultant to, or by
soliciting or inducing, or attempting to solicit or induce, any employee
or agent of the Company or an Affiliate to terminate employment and become
employed by any person, firm, partnership, corporation, trust or other entity
which owns or operates, a bank, savings and loan association, credit union
or similar financial institution (a "Financial Institution") within a fifty
(50) mile radius of the center of Warsaw, Indiana the "Restrictive Covenant").
If the Executive violates the Restrictive Covenant and the Company brings
legal action for injunctive or other relief, the Company shall not, as a
result of the time involved in obtaining such relief, be deprived of the
benefit of the full period of the Restrictive Covenant. Accordingly, the
Restrictive Covenant shall be deemed to have the duration specified in this
paragraph computed from the date the relief is granted but reduced by the time
between the period when the Restrictive Period began to run and the date of
the first violation of the Restrictive Covenant by the Executive. The
foregoing Restrictive Covenant shall not prohibit the Executive from owning
directly or indirectly capital stock or similar securities which do not
represent more than one percent (1%) of the outstanding capital stock of any
Financial Institution listed on a securities exchange or quoted on the
National Association of Securities Dealers Automated Quotation System.
Notwithstanding the above, the Restrictive Covenant will be unenforceable in
the event the Executive elects to forego and not receive the Change in Control
Severance Amount.
B. Remedies for Breach of Restrictive Covenant. The Executive
acknowledges that the restrictions contained in this paragraph are reasonable
and necessary for the protection of the legitimate business interests of the
Company and its Affiliates, that any violation of these restrictions would
cause substantial injury to the Company and such interests, that the Company
would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to the Company to enter into this Agreement. In the event of any
violation or threatened violation of these restrictions, the Company, in
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addition to and not in limitation of, any other rights, remedies or damages
available to the Company under this Agreement or otherwise at law or in
equity, shall be entitled to preliminary and permanent injunctive relief to
prevent or restrain any such violation by the Executive and any and all
persons directly or indirectly acting for or with him, as the case may be.
6. Notices. Notices and all other communications under this
Agreement shall be in writing and shall be deemed given when mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Company to:
Lakeland Financial Corporation
Attention: Chairman of the Board
202 East Center Street
P.O. Box 1387
Warsaw, Indiana 46580
If to the Executive to:
_________________________________
_________________________________
_________________________________
or to such other address as either party may furnish to the other in writing,
except that notices of changes of address shall be effective only upon receipt.
7. Applicable Law. This Agreement is entered into under, and
shall be governed for all purposes by, the laws of the state of Indiana.
8. Severability. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement and
all other provisions shall remain in full force and effect.
9. Withholding of Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes
as may be required pursuant to any law, governmental regulation or ruling.
10. Not an Employment Agreement. Nothing in this Agreement shall
give the Executive any rights (or impose any obligations) to continued
employment by the Company or any Affiliate or successor of the Company, nor
shall it give the Company any rights (or impose any obligations) for the
continued performance of duties by the Executive for the Company or any
Affiliate or successor of the Company.
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11. No Assignment. The Executive's rights to receive payments
or benefits under this Agreement shall not be assignable or transferable
whether by pledge, creation of a security interest or otherwise, other than a
transfer by will or by the laws of descent or distribution. In the event of
any attempted assignment or transfer contrary to this paragraph, the Company
shall have no liability to pay any amount so attempted to be assigned or
transferred. This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
12. Successors. This Agreement shall be binding upon and inure
to the benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (a) the
person or entity acquiring the assets, or a substantial portion of the assets,
shall expressly assume by an instrument in writing all duties and obligations
of the Company under this Agreement, or (b) the Company shall provide,
through the establishment of a separate reserve, for the payment in full of
all amounts which are or may reasonably be expected to become payable to the
Executive under this Agreement.
13. Legal Fees. All reasonable legal fees and related expenses
(including the costs of experts, evidence and counsel) paid or incurred by
the Executive pursuant to any dispute or question of interpretation relating
this Agreement shall be paid or reimbursed by the Company if the Executive is
successful on the merits pursuant to a legal judgment, arbitration or
settlement.
14. Term. The term of this Agreement shall commence on the
Effective Date and shall continue for a period of two (2) years. This
Agreement shall automatically extend for one (1) year on each anniversary
of the Effective Date, unless terminated by either party effective as of
the last day of the then current two (2) year extension by written notice to
that effect delivered to the other not less than ninety (90) days prior to the
anniversary of the Effective Date; provided however, no termination of this
Agreement shall be effective if a Change in Control occurs within twelve (12)
months of such termination. In the event of a Change in Control during the
term of this Agreement, this Agreement shall remain in effect for the Covered
Period.
15. Amendment. This Agreement may not be amended or modified
except by written agreement signed by the Executive and the Company.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first written.
LAKELAND FINANCIAL CORPORATION
By:
---------------------------------- ----------------------------------
R. Douglas Grant [Executive]
Chairman of the Board
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