UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) January 16, 2007
MFB Corp.
(Exact Name of Registrant as Specified in Its Charter)
Indiana 0-23374
(State or Other Jurisdiction of Incorporation) (Commission File Number)
35-1907258
(IRS Employer Identification No.)
4100 Edison Lakes Parkway, Suite 300,
P.O. Box 528, Mishawaka, Indiana 46546 (Address of
Principal Executive Offices) (Zip Code)
(574) 277-4200
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
James P. Coleman III Special Termination Agreement
On January 16, 2007, MFB Financial (the "Bank"), a wholly owned subsidiary of
MFB Corp. (the "Company"), entered into a Special Termination Agreement with
James P. Coleman III, Executive Vice President and Director of Wealth Management
of the Bank. The Special Termination Agreement, which is effective as of January
16, 2007, has a one-year term, subject to annual extension by the Bank's Board
of Directors. If a change in control (as defined in the Special Termination
Agreement) of the Company or Bank occurs during the term of the Special
Termination Agreement and Mr. Coleman's employment is involuntarily terminated
within twelve months of that change in control, the Special Termination
Agreement provides that Mr. Coleman shall be entitled to a lump sum payment of
100% of his base amount compensation, as determined pursuant to Section
280G(b)(3) of the Internal Revenue Code. This termination benefit is to be paid
in cash within twenty-five business days after the date of severance of
employment. The Special Termination Agreement also provides for Mr. Coleman to
receive continued life, health and disability coverage for up to twelve months
following such an involuntary termination of his employment. Mr. Coleman's
current salary is $ 112,000. A copy of the Special Termination Agreement is
attached to this Current Report as Exhibit 10.1 and incorporated herein by
reference.
Terry L. Clark Employment Agreement
Also on January 16, 2007, the Board of Directors of the Bank promoted Terry L.
Clark to Executive Vice President and Chief Financial Officer of the Bank. Mr.
Clark had been serving as Vice President, Principal Financial Officer and
Controller. On the same date, the Bank also entered into an Employment Agreement
with Mr. Clark. The Employment Agreement is effective as of January 16, 2007,
and has a one-year term, subject to annual extension by the Board of Directors
of the Bank. Mr. Clark will receive a salary under the Employment Agreement
equal to his current salary, subject to increases approved by the Board of
Directors. Mr. Clark's current salary is $ 95,000. The Employment Agreement also
provides, among other things, for Mr. Clark to receive the fringe benefits and
participate in the benefit plans available to the Bank's employees. Mr. Clark
may terminate his employment upon sixty days' written notice to the Bank. The
Bank may discharge Mr. Clark for cause (as defined in the Employment Agreement)
at any time or in certain events specified by OTS regulations. If the Bank
terminates Mr. Clark's employment without cause or if Mr. Clark terminates his
employment for cause (as defined in the Employment Agreement), Mr. Clark will
receive his base compensation plus the incentive bonus he received for the tax
year preceding the date of termination for one additional twelve-month period if
the termination follows a change of control (as defined in the Employment
Agreement) of the Bank or Company or for the remaining term of the contract if
the termination does not follow a change of control. In addition, during such
periods, Mr. Clark will continue to participate in the Bank's group insurance
plans or receive comparable benefits. Moreover, within a period of three months
after such termination following a change of control, Mr. Clark will have the
right to cause the Bank to purchase any stock options he holds for a price equal
to the fair market value (as defined in the Employment Agreement) of the shares
subject to such options minus the option price. If the payments provided for in
the Employment Agreement, together with any other payments made to Mr. Clark by
the Bank, are deemed to be payments in violation of the "golden parachute" rules
of the Internal Revenue Code, such payments will be reduced to the largest
amount which would not cause the Bank to lose a tax deduction for such payments
under those rules. The Employment Agreement provides the Bank with protection of
its confidential business information and protection from competition by Mr.
Clark should he voluntarily terminate his employment without cause or be
terminated by the Bank for cause. A copy of the Employment Agreement is attached
to this Current Report on Form 8-K as Exhibit 10.2 and incorporated herein by
reference.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
10.1 Special Termination Agreement, dated January 16, 2007,
between MFB Financial and James P. Coleman III
10.2 Employment Agreement, dated January 16, 2007, between
MFB Financial and Terry L. Clark
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: January 16, 2007 MFB Corp.
By: /s/ Charles J Viater
Charles J. Viater, President and CEO
EXHIBIT INDEX
Exhibit No. Description Location
10.1 Special Termination Agreement, dated January 16, Attached
2007, between MFB Financial and James P. Coleman
III
10.2 Employment Agreement, dated January 16, 2007, Attached
between MFB Financial and Terry L. Clark
11
EXHIBIT 10.1
SPECIAL TERMINATION AGREEMENT
THIS SPECIAL TERMINATION AGREEMENT ("Agreement") is made and entered
into as of this 16th day of January, 2007, by and between MFB FINANCIAL, a
federally chartered savings association whose address is 4100 Edison Lakes
Parkway, Mishawaka, IN 46545 (which, together with any successor thereto which
executes and delivers the assumption agreement provided for in Section 12(a)
hereof or which otherwise becomes bound by the terms and provisions of this
Agreement by operation of law, is hereinafter referred to as the "Bank"), and
JAMES P. COLEMAN III, whose residence address is 15512 Durham Way West, Granger,
Indiana, 46530(the "Employee").
WHEREAS, the Employee is currently serving as Executive Vice President
and Director of Wealth Management of the Bank; and
WHEREAS, the Bank is a wholly-owned subsidiary of MFB Corp., a publicly
traded corporation organized under Indiana law (the "Holding Company"); and
WHEREAS, the Board of Directors of the Bank recognizes that, as is the
case with publicly held corporations generally, the possibility of a change in
control of the Holding Company may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment of the
Bank, the Holding Company and its shareholders; and
WHEREAS, the Board of Directors of the Bank believes it is in the best
interests of the Bank to enter into this Agreement with the Employee in order to
assure continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his or her assigned duties
without distraction in the face of potentially disruptive circumstances arising
from the possibility of a change in control of the Holding Company, although no
such change is now contemplated; and
WHEREAS, the Board of Directors of the Bank has approved and authorized
the execution of this Agreement with the Employee to take effect as stated in
Section 1 hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, it is agreed as
follows:
1. TERM OF AGREEMENT. The term of this Agreement shall be deemed to have
commenced as of the date hereof (the "Effective Date") and shall continue until
the anniversary of the Effective Date. Prior to that anniversary date and at
each anniversary date thereafter, the Board of Directors may review this
Agreement and, in its discretion, authorize extension thereof for an additional
one-year period.
2. PAYMENTS TO THE EMPLOYEE UPON CHANGE IN CONTROL.
(a) Upon the occurrence of a change in control of the Bank or the Holding
Company (as herein defined) at any time during the term of this Agreement
followed within 12 months by the involuntary termination of the Employee's
employment with the Bank, other than for cause (as defined in Section 2(d)
hereof) and whether or not such termination occurs during the term of this
Agreement, the provisions of Section 3 shall apply.
(b) A "change in control" of the Bank or the Holding Company shall mean an
acquisition of "control" of the Holding Company or of the Bank within the
meaning of 12 C.F.R. ss.574.4(a) (other than a change of control resulting from
a trustee or other fiduciary holding shares of capital stock of the Holding
Company under an employee benefit plan of the Holding Company or any of its
subsidiaries).
(c) The Employee's employment under this Agreement may be terminated at any time
by the Board of Directors of the Bank. The terms "involuntary termination" or
"involuntarily terminated" in this Agreement shall refer to the termination of
the employment of Employee without his or her express written consent. In
addition, a material diminution of or interference with the Employee's duties,
responsibilities and benefits shall be deemed and shall constitute an
involuntary termination of employment to the same extent as express notice of
such involuntary termination. By way of example and not by way of limitation,
any of the following actions, if unreasonable and materially adverse to the
Employee, shall constitute such diminution or interference unless consented to
in writing by the Employee: (1) the requirement that the Employee perform his or
her principal employment duties more than thirty-five (35) miles from his or her
primary office as of the date of the change in control; (2) a material reduction
in the Employee's salary, perquisites, contingent benefits or vacation time as
in effect on the date of the change in control as the same may be changed by
mutual agreement from time to time, unless part of an institution-wide
reduction; (3) the assignment to the Employee of duties and responsibilities
materially different from those normally associated with his or her position as
referenced in this Agreement; or (4) a material diminution or reduction in the
Employee's responsibilities or authority (including reporting responsibilities)
in connection with his or her employment with the Bank.
(d) The Employee shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon termination for cause. For purposes of this
Agreement, termination for "cause" shall include termination because of, in the
good faith determination of the Board of Directors of the Bank, the Employee's
personal dishonesty, incompetence, willful misconduct, breach of a fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, or regulation (other than a law, rule or
regulation relating to traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for cause unless and until there shall have been delivered to the
Employee a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors of the
Bank at a meeting of the Board called and held for such purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), such meeting and the
opportunity to be heard to be held prior to, or as soon as reasonably
practicable following, termination, but in no event later than 60 days following
such termination, finding that in the good faith opinion of the Board the
Employee was guilty of conduct constituting "cause" as set forth above and
specifying the particulars thereof in detail. If, following such meeting, the
Employee is reinstated, he or she shall be entitled to receive back pay for the
period following termination and continuing through reinstatement.
3. TERMINATION BENEFITS.
(a) If during the term of this Agreement there is a change in control of the
Bank or the Holding Company, and within 12 months following such change in
control there is an involuntary termination of the Employee's employment with
the Bank, other than for cause, whether or not such termination occurs during
the term of this Agreement, the Bank shall pay to the Employee in a lump sum in
cash within 25 business days after the date of severance of employment an amount
equal to 100 percent of the Employee's "base amount" of compensation, as defined
in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended ("Code").
(b) If during the term of this Agreement there is a change in control, and
within 12 months following such change in control there is an involuntary
termination of the Employee's employment, other than for cause, whether or not
such termination occurs during the term of this Agreement, the Bank shall cause
to be continued life, health and disability coverage substantially identical to
the coverage maintained by the Bank for the Employee prior to his or her
severance. Subject to applicable federal and state laws, such coverage shall
cease upon the earlier of the Employee's obtaining similar coverage by another
employer or twelve (12) months from the date of the Employee's termination. In
the event the Employee obtains new employment and receives less coverage for
life, health or disability, the Bank shall provide coverage substantially
identical to the coverage maintained by the Bank for the Employee prior to
termination for the balance of the twelve (12) month period.
4. CERTAIN REDUCTION OF PAYMENTS BY THE BANK.
(a) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment or distribution by the Bank to or for the
benefit of the Employee (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise) (a "Payment") would be
nondeductible (in whole or part) by the Bank for Federal income tax purposes
because of Section 280G of the Code, then the aggregate present value of amounts
payable or distributable to or for the benefit of the Employee pursuant to this
Agreement (such amounts payable or distributable pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be reduced to the Reduced
Amount. The "Reduced Amount" shall be an amount, not less than zero, expressed
in present value which maximizes the aggregate present value of Agreement
Payments without causing any Payment to be nondeductible by the Bank because of
Section 280G of the Code. For purposes of this Section 4, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.
(b) All determinations required to be made under this Section 4 shall be made by
the Bank's independent auditors, or at the election of such auditors by such
other firm or individuals of recognized expertise as such auditors may select
(such auditors or, if applicable, such other firm or individual, are hereinafter
referred to as the "Advisory Firm"). The Advisory Firm shall within ten business
days of the date of termination of the Employee's employment by the Bank or the
Holding Company resulting in benefit payments hereunder (the "Date of
Termination"), or at such earlier time as is requested by the Bank, provide to
both the Bank and the Employee an opinion (and detailed supporting calculations)
that the Bank has substantial authority to deduct for federal income tax
purposes the full amount of the Agreement Payments and that the Employee has
substantial authority not to report on his or her federal income tax return any
excise tax imposed by Section 4999 of the Code with respect to the Agreement
Payments. Any such determination and opinion by the Advisory Firm shall be
binding upon the Bank and the Employee. The Employee shall determine which and
how much, if any, of the Agreement Payments shall be eliminated or reduced
consistent with the requirements of this Section 4, provided that, if the
Employee does not make such determination within ten business days of the
receipt of the calculations made by the Advisory Firm, the Bank shall elect
which and how much, if any, of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Section 4 and shall notify the
Employee promptly of such election. Within five business days of the earlier of
(i) the Bank's receipt of the Employee's determination pursuant to the
immediately preceding sentence of this Agreement or (ii) the Bank's election in
lieu of such determination, the Bank shall pay to or distribute to or for the
benefit of the Employee such amounts as are then due the Employee under this
Agreement. The Bank and the Employee shall cooperate fully with the Advisory
Firm, including without limitation providing to the Advisory Firm all
information and materials reasonably requested by it, in connection with the
making of the determinations required under this Section 4.
(c) As a result of uncertainty in application of Section 280G of the Code at the
time of the initial determination by the Advisory Firm hereunder, it is possible
that Agreement Payments will have been made by the Bank which should not have
been made ("Overpayment") or that additional Agreement Payments will not have
been made by the Bank which should have been made ("Underpayment"), in each
case, consistent with the calculations required to be made hereunder. In the
event that the Advisory Firm, based upon the assertion by the Internal Revenue
Service against the Employee of a deficiency which the Advisory Firm believes
has a high probability of success, determines that an Overpayment has been made,
any such Overpayment paid or distributed by the Bank to or for the benefit of
Employee shall be treated for all purposes as a loan ab initio which the
Employee shall repay to the Bank together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code; provided, however,
that no such loan shall be deemed to have been made and no amount shall be
payable by the Employee to the Bank if and to the extent such deemed loan and
payment would not either reduce the amount on which the Employee is subject to
tax under Section 1 and Section 4999 of the Code or generate a refund of such
taxes. In the event that the Advisory Firm, based upon controlling precedent or
other substantial authority, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Bank to or for the benefit of
the Employee together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code.
5. REQUIRED REGULATORY PROVISIONS.
(a) The Bank may terminate the Employee's employment at any time. The Employee
shall not have the right to receive compensation or other benefits for any
period after a termination for cause as defined in Section 2(d) hereinabove.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S. C.
ss.1818 (e)(3) and (g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion (i)
pay the Employee all or part of the compensation withheld while its obligations
under this Agreement were suspended, and (ii) reinstate (in whole or in part)
any of the obligations which were suspended.
(c) If the Employee is removed from office and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. ss.
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate, as of the effective date of the order, but vested rights of the
parties shall not be affected.
(d) If the Bank is in default (as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this provision (d) shall not affect any vested
rights of the parties.
(e) All obligations under this Agreement may be terminated, except to the extent
determined that continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the Office of Thrift Supervision
(the "Director"), or his or her designee, at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act, 12 U.S.C. ss.1823(c), or (ii) by the Director, or his or
her designee, at the time the Director or his or her designee approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Director to be in an unsafe or unsound condition.
Any rights of the parties that have already vested, however, shall not be
affected by any such action.
6. REINSTATEMENT OF BENEFITS UNDER SECTION 3. In the event the Employee is
suspended and/or temporarily prohibited from participating in the conduct of the
Bank's affairs by a notice described in Section 5(b) hereof (the "Notice")
during the term of this Agreement and a change in control occurs, the Bank will
assume its obligation to pay and the Employee will be entitled to receive all of
the termination benefits provided for under Section 3 of this Agreement upon the
Bank's receipt of a dismissal of charges in the Notice.
7. 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 Employee.
8. 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
Employee, the Bank and their respective successors and assigns.
9. 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.
10. NO MITIGATION. Except as expressly provided herein, the amount of any
payment or benefit provided for in this Agreement shall not be reduced by any
compensation earned by the Employee as the result of employment by another
employer, by retirement benefits after the date of termination or otherwise.
11. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither party
may assign or delegate any of its rights or obligations hereunder without first
obtaining the written consent of the other party; provided, however, that the
Bank will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Bank, by an assumption agreement in form and
substance satisfactory to the Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Bank would be
required to perform it if no such succession or assignment had taken place.
Failure of the Bank to obtain such an assumption agreement prior to the
effectiveness of any such succession or assignment shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Bank in the
same amount and on the same terms as the compensation pursuant to Section 3
hereof. For purposes of implementing the provisions of this Section 11(a), the
date on which any such succession becomes effective shall be deemed the Date of
Termination.
(b) This Agreement and all rights of the Employee hereunder shall inure to the
benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any amounts would still
be payable to the Employee hereunder if the Employee had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Employee's devisee, legatee or other designee
or if there is no such designee, to the Employee's estate.
12. NOTICE.13. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement (provided that all
notices to the Bank shall be directed to the attention of the Board of Directors
of the Bank with a copy to the Secretary of the Bank), or to such other address
as either party may have furnished to the other in writing in accordance
herewith.
14. AMENDMENTS.15. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties, except as herein otherwise
provided.
16. PARAGRAPH HEADINGS.17. The paragraph headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
18. SEVERABILITY.19. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
20. GOVERNING LAW.21. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of
Indiana.
22. ARBITRATION.23. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered an the arbitrator's award in any court having jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
MFB FINANCIAL
By: /s/ Charles J. Viater
President and CEO
"BANK"
/s/ James P. Coleman, III
"Employee"
The undersigned, MFB Corp., sole shareholder of Bank, agrees that if it
shall be determined for any reason that any obligation on the part of Bank to
continue to make any payments due under this Agreement to Employee is
unenforceable for any reason, MFB Corp. agrees to honor the terms of this
Agreement and continue to make any such payments due hereunder to Employee or to
satisfy any such obligation pursuant to the terms of this Agreement, as though
it were the Bank hereunder.
MFB CORP.
By: /s/ Charles J. Viater
-----------------------------------------
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement, made and dated as of January 16, 2007, by and between
MFB FINANCIAL, a federal savings bank ("EMPLOYER"), and TERRY L. CLARK, a
resident of St. Joseph County, Indiana ("EMPLOYEE").
W I T N E S S E T H:
WHEREAS, Employee is hereby employed by Employer as its Executive Vice
President and Chief Financial Officer, and is expected to make valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to make valuable
contributions to Employer's business operations and not to seek or accept
employment elsewhere;
WHEREAS, Employee desires to be assured of a secure minimum
compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of an attempt by any person to
obtain control of Employer or of MFB Corp., the Indiana corporation which owns
all of the issued and outstanding capital stock of Employer (the "Holding
Company");
WHEREAS, Employer recognizes that when faced with a proposal for a
change of control of Employer or the Holding Company, Employee will have a
significant role in helping the Boards of Directors assess the options and
advising the Boards of Directors on what is in the best interests of Employer,
the Holding Company, and its shareholders, and it is necessary for Employee to
be able to provide this advice and counsel without being influenced by the
uncertainties of his own situation;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer as its Executive Vice President and Chief Financial
Officer, Employer and Employee, each intending to be legally bound, covenant and
agree as follows:
1. Upon the terms and subject to the conditions set forth in this Agreement,
Employer employs Employee as Employer's Executive Vice President and Chief
Financial Officer, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Executive Vice President and Chief
Financial Officer and to perform such duties in that office as may reasonably be
assigned to him by Employer's Board of Directors; provided, however that such
duties shall be performed in or from the offices of Employer currently located
at Mishawaka, Indiana, and shall be of the same character as those previously
performed by Employee's predecessor and generally associated with the office
held by Employee. Employee shall not be required to be absent from the location
of the principal executive offices of Employer on travel status or otherwise
more than 45 days in any calendar year. Employer shall not, without the written
consent of Employee, relocate or transfer Employee to a location more than 30
miles from his principal residence. Although while employed by Employer,
Employee shall devote substantially all his business time and efforts to
Employer's business and shall not engage in any other related business, Employee
may use his discretion in fixing his hours and schedule of work consistent with
the proper discharge of his duties.
3. The term of this Agreement shall begin January 16, 2007 (the "EFFECTIVE
DATE"), and shall end on the date which is one year following such date;
provided, however, that such term shall be extended for an additional month on
the first day of each month succeeding the Effective Date, so as to continue to
maintain a one-year term and shall continue to be so extended if Employer's
Board of Directors determines by resolution to extend this Agreement prior to
each anniversary of the Effective Date. If either party hereto gives written
notice to the other party not to extend this Agreement in any given month or if
the Board does not determine to extend the Agreement prior to each anniversary
of the Effective Date, no further extension shall occur and the term of this
Agreement shall end one year subsequent to the first day of the month in which
such notice not to extend is given or one year subsequent to the anniversary as
of which the Board does not elect to continue extending this Agreement (such
term, including any extension thereof shall herein be referred to as the
"TERM"). Notwithstanding the foregoing, this Agreement shall automatically
terminate (and the Term of this Agreement shall thereupon end) without notice
when Employee attains 65 years of age.
4. Employee shall receive an annual salary of $ 95,000 ("BASE COMPENSATION")
payable at regular intervals in accordance with Employer's normal payroll
practices now or hereafter in effect. Employer may consider and declare from
time to time increases in the salary it pays Employee and thereby increases in
his Base Compensation. Employer may also declare incentive bonuses from time to
time to be paid to Employee in addition to his annual salary. During the Term of
this Agreement, but only until such time as a Change of Control occurs, Employer
may also declare decreases in the salary it pays Employee if the operating
results of Employer are significantly less favorable than those for the fiscal
year ending September 30, 2006, and Employer makes similar decreases in the
salary it pays to other executive officers of Employer. After a Change in
Control, no such decreases in Base Compensation may be made, and Employer shall
consider and declare salary increases based upon the following standards:
Inflation;
Adjustments to the salaries of other senior management personnel; and
Past performance of Employee and the contribution which Employee makes
to the business and profits of Employer during the Term.
Any and all increases or decreases in Employee's salary pursuant to this section
shall cause the level of Base Compensation to be increased or decreased by the
amount of each such increase or decrease for purposes of this Agreement. The
increased or decreased level of Base Compensation as provided in this section
shall become the level of Base Compensation for the remainder of the Term of
this Agreement until there is a further increase or decrease in Base
Compensation as provided herein.
5. So long as Employee is employed by Employer pursuant to this Agreement
and subject to any waiting period requirements in such plans, he shall
be included as a participant in all present and future employee
benefit, retirement, and compensation plans generally available to
employees of Employer (other than Employer's recognition and retention
plan and trust), consistent with his Base Compensation and his position
as Executive Vice President and Chief Financial Officer of Employer,
including, without limitation, Employer's or the Holding Company's
pension plan, stock option plan, employee stock ownership plan, and
hospitalization, major medical, disability, dental and group life
insurance plans, each of which Employer agrees to continue in effect on
terms no less favorable than those currently in effect as of the date
hereof (as permitted by law) during the Term of this Agreement unless
prior to a Change of Control the operating results of Employer are
significantly less favorable than those for the fiscal year ending
September 30, 2006, and unless (either before or after a Change of
Control) changes in the accounting or tax treatment of such plans would
adversely affect Employer's operating results or financial condition in
a material way, and the Board of Directors of Employer or the Holding
Company concludes that modifications to such plans need to be made to
avoid such adverse effects.
6. So long as Employee is employed by Employer pursuant to this Agreement,
Employee shall receive reimbursement from Employer for all reasonable
business expenses incurred in the course of his employment by Employer,
upon submission to Employer of written vouchers and statements for
reimbursement. Employee shall attend, at his discretion, those
professional meetings, conventions, and/or similar functions that he
deems appropriate and useful for purposes of keeping abreast of current
developments in the industry and/or promoting the interests of
Employer. So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect vacation
policies applicable to Employee no less favorable from his point of
view than those written vacation policies in effect on the date hereof.
7. Subject to the respective continuing obligations of the parties,
including but not limited to those set forth in subsections 9(A), 9(B),
9(C) and 9(D) hereof, Employee's employment by Employer may be
terminated prior to the expiration of the Term of this Agreement as
follows:
(A) Employer, by action of its Board of Directors and upon written notice
to Employee, may terminate Employee's employment with Employer
immediately for cause. For purposes of this subsection 7(A), "cause"
shall be defined as (i) personal dishonesty, (ii) incompetence, (iii)
willful misconduct, (iv) breach of fiduciary duty involving personal
profit, (v) intentional failure to perform stated duties, (vi) willful
violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or
(vii) any material breach of any term, condition or covenant of this
Agreement.
(B) Employer, by action of its Board of Directors, may terminate Employee's
employment with Employer without cause at any time; provided, however,
that the "date of termination" for purposes of determining benefits
payable to Employee under subsection 8(B) hereof shall be the date
which is 60 days after Employee receives written notice of such
termination.
(C) Employee, by written notice to Employer, may terminate his employment
with Employer immediately for cause. For purposes of
this subsection 7(C), "cause" shall be defined as (i) any action by
Employer's Board of Directors to remove the Employee as
Executive Vice President and Chief Financial Officer of Employer,
except where the Employer's Board of Directors properly
acts to remove Employee from such office for "cause" as defined in
subsection 7(A) hereof, (ii) any action by Employer's
Board of Directors which Employee reasonably believes materially
limits, increases, or modifies Employee's duties and/or
authority as Executive Vice President and Chief Financial Officer of
Employer (including his authority, subject to corporate
controls no more restrictive than those in effect on the date hereof,
to hire and discharge employees who are not bona fide
officers of Employer), (iii) any failure of Employer to obtain the
assumption of the obligation to perform this Agreement by
any successor or the reaffirmation of such obligation by
Employer, as contemplated in section 20 hereof; or (iv) any
material breach by Employer of a term, condition or covenant of this
Agreement.
(D) Employee, upon sixty (60) days written notice to Employer, may
terminate his employment with Employer without cause.
(E) Employee's employment with Employer shall terminate in the event of
Employee's death or disability. For purposes hereof, "disability" shall
be defined as Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties required by his
employment for any consecutive One Hundred Eighty (180) day period,
provided that notice of any termination by Employer because of
Employee's "disability" shall have been given to Employee prior to the
full resumption by him of the performance of such duties.
8. In the event of termination of Employee's employment with Employer
pursuant to section 7 hereof, compensation shall continue to be paid by
Employer to Employee as follows:
(A) In the event of termination pursuant to subsection 7(A) or 7(D),
compensation provided for herein (including Base Compensation) shall
continue to be paid, and Employee shall continue to participate in the
employee benefit, incentive bonus, retirement, and compensation plans
and other perquisites as provided in sections 5 and 6 hereof, through
the date of termination specified in the notice of termination. Any
benefits payable under insurance, health, retirement and bonus plans as
a result of Employee's participation in such plans through such date
shall be paid when due under those plans. The date of termination
specified in any notice of termination pursuant to Subsection 7(A)
shall be no later than the last business day of the month in which such
notice is provided to Employee.
(B) In the event of termination pursuant to subsection 7(B) or 7(C),
compensation provided for herein (including Base
Compensation) shall continue to be paid, and Employee shall
continue to participate in the employee benefit, incentive
bonus, retirement, and compensation plans and other perquisites as
provided in sections 5 and 6 hereof, through the date of
termination specified in the notice of termination. Any benefits
payable under insurance, health, retirement and bonus plans
as a result of Employee's participation in such plans through
such date shall be paid when due under those plans. In
addition, Employee shall be entitled to continue to receive from
Employer his Base Compensation at the rate in effect at the
time of termination, plus any incentive bonus he received for the
tax year preceding the date of termination (1) for one
additional 12-month period if the termination follows a Change of
Control or (2) for the remaining Term of the Agreement if
the termination does not follow a Change of Control. In addition,
during such period, Employer will maintain in full force
and effect for the continued benefit of Employee each employee
welfare benefit plan and each employee pension benefit plan
(as such terms are defined in the Employee Retirement Income
Security Act of 1974, as amended) in which Employee was
entitled to participate immediately prior to the date of his
termination, unless an essentially equivalent and no less
favorable benefit is provided by a subsequent employer of Employee.
If the terms of any employee welfare benefit plan or
employee pension benefit plan of Employer or applicable laws do not
permit continued participation by Employee, Employer
will arrange to provide to Employee a benefit substantially similar
to, and no less favorable than, the benefit he was
entitled to receive under such plan at the end of the period of
coverage. For purposes of this Agreement, a "Change of
Control" shall mean an acquisition of "control" of the Holding
Company or of Employer within the meaning of 12 C.F.R.
ss. 574.4(a) (other than a change of control resulting from a trustee
or other fiduciary holding shares of Common Stock under
an employee benefit plan of the Holding Company or any of its
subsidiaries).
(C) In the event of termination pursuant to subsection 7(E), compensation
provided for herein (including Base Compensation) shall continue to be
paid, and Employee shall continue to participate in the employee
benefit, incentive bonus, retirement, and compensation plans and other
perquisites as provided in sections 5 and 6 hereof, (i) in the event of
Employee's death, through the date of death, or (ii) in the event of
Employee's disability, through the date of proper notice of disability
as required by subsection 7(D). Any benefits payable under insurance,
health, retirement and bonus plans as a result of Employer's
participation in such plans through such date shall be paid when due
under those plans.
(D) Employer will permit Employee or his personal representative(s)
or heirs, during a period of three months following
Employee's termination of employment by Employer for the reasons set
forth in subsections 7(B) or 7(C), if such termination
follows a Change of Control, to require Employer, upon written request,
to purchase all outstanding stock options previously
granted to Employee under any Holding Company stock option
plan then in effect whether or not such options are then
exercisable or have terminated at a cash purchase price equal to
the amount by which the aggregate "fair market value" of
the shares subject to such options exceeds the aggregate option price
for such shares. For purposes of this Agreement, the
term "fair market value" shall mean the higher of (1) the average of
the highest asked prices for Holding Company shares in
the over-the-counter market as reported on the NASDAQ system if
the shares are traded on such system for the 30 business
days preceding such termination, or (2) the average per share
price actually paid for the most highly priced 1% of the
Holding Company shares acquired in connection with the Change of
Control of the Holding Company by any person or group
acquiring such control.
9. In order to induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) While Employee is employed by Employer and for a period of three years
after termination of such employment for reasons other than those set
forth in subsections 7(B) or 7(C) of this Agreement, Employee shall not
divulge or furnish any trade secrets (as defined in IND. CODE ss.
24-2-3-2) of Employer or any confidential information acquired by him
while employed by Employer concerning the policies, plans, procedures
or customers of Employer to any person, firm or corporation, other than
Employer or upon its written request, or use any such trade secret or
confidential information directly or indirectly for Employee's own
benefit or for the benefit of any person, firm or corporation other
than Employer, since such trade secrets and confidential information
are confidential and shall at all times remain the property of
Employer.
(B) For a period of two years after termination of Employee's employment by
Employer for reasons other than those set forth in subsections 7(B) or
7(C) of this Agreement, Employee shall not directly or indirectly
provide banking or bank-related services to or solicit the banking or
bank-related business of any customer of Employer at the time of such
provision of services or solicitation which Employee served either
alone or with others while employed by Employer in any city, town,
borough, township, village or other place in which Employee performed
services for Employer during the last three years (or such shorter
period) he was employed by it, or assist any actual or potential
competitor of Employer to provide banking or bank-related services to
or solicit any such customer's banking or bank-related business in any
such place.
(C) While Employee is employed by Employer and for a period of one year
after termination of Employee's employment by Employer for reasons
other than those set forth in subsections 7(B) or 7(C) of this
Agreement, Employee shall not, directly or indirectly, as principal,
agent, or trustee, or through the agency of any corporation,
partnership, trade association, agent or agency, engage in any banking
or bank-related business or venture which competes with the business of
Employer as conducted during Employee's employment by Employer within
St. Joseph County or within a radius of 25 miles of any other office of
Employer where Employee was employed for more than six months in the
three years next preceding termination.
(D) If Employee's employment by Employer is terminated for any reason,
Employee will turn over immediately thereafter to Employer all business
correspondence, letters, papers, reports, customers' lists, financial
statements, credit reports or other confidential information or
documents of Employer or its affiliates in the possession or control of
Employee, all of which writings are and will continue to be the sole
and exclusive property of Employer or its affiliates.
If Employee's employment by Employer is terminated during the Term of this
Agreement for reasons set forth in subsections 7(B) or 7(C) of this Agreement,
Employee shall have no obligations to Employer with respect to noncompetition
under sections 9(A) through (C) hereof.
10. Any termination of Employee's employment with Employer as contemplated by
section 7 hereof, except in the circumstances of Employee's death, shall be
communicated by written "Notice of Termination" by the terminating party to the
other party hereto. Any "Notice of Termination" pursuant to subsections 7(A),
7(C) or 7(E) shall indicate the specific provisions of this Agreement relied
upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for such termination.
11. If Employee is suspended and/or temporarily prohibited from participating in
the conduct of Employer's affairs by a notice served under section 8(e)(3) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(e)(3) and
(g)(1)), Employer's obligations under this Agreement shall be suspended as of
the date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, Employer shall (i) pay Employee all or part of the
compensation withheld while its obligations under this Agreement were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
12. If Employee is removed and/or permanently prohibited from participating in
the conduct of Employer's affairs by an order issued under section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss. 1818(e)(4) or
(g)(1)), all obligations of Employer under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties to the
Agreement shall not be affected.
13. If Employer is in default (as defined in section 3(x)(1) of the Federal
Deposit Insurance Act), all obligations under this Agreement shall terminate as
of the date of default, but this provision shall not affect any vested rights of
Employer or Employee.
14. All obligations under this Agreement may be terminated except to the extent
determined that the continuation of the Agreement is necessary for the continued
operation of Employer: (i) by the Director of the Office of Thrift Supervision,
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation or Resolution Trust Corporation enters into an agreement
to provide assistance to or on behalf of Employer under the authority contained
in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director
at the time the Director approves a supervisory merger to resolve problems
related to operation of Employer or when Employer is determined by the Director
to be in an unsafe and unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by such action.
15. Anything in this Agreement to the contrary notwithstanding, in the event
that the Employer's independent public accountants determine that any payment by
the Employer to or for the benefit of the Employee, whether paid or payable
pursuant to the terms of this Agreement, would be non-deductible by the Employer
for federal income tax purposes because of Section 280G of the Internal Revenue
Code of 1986, as amended (the "CODE"), then the amount payable to or for the
benefit of the Employee pursuant to this Agreement shall be reduced (but not
below zero) to the Reduced Amount. For purposes of this section 15, the "Reduced
Amount" shall be the amount which maximizes the amount payable without causing
the payment to be non-deductible by the Employer because of Section 280G of the
Code. Any payments made to Employee pursuant to this Agreement, or otherwise,
are subject to and conditional upon their compliance with 12 U.S.C. ss.1828(k)
and any regulations promulgated thereunder, to the extent applicable to such
payments.
16. If a dispute arises regarding the termination of Employee pursuant to
section 7 hereof or as to the interpretation or enforcement of this Agreement
said dispute shall be resolved by binding arbitration determined in accordance
with the rules of the American Arbitration Association and if Employee obtains a
final award in his favor or his claim is settled by Employer prior to the
rendering of an award by such arbitration, all reasonable legal fees and
expenses incurred by Employee in contesting or disputing any such termination or
seeking to obtain or enforce any right or benefit provided for in this Agreement
or otherwise pursuing his claim shall be paid by Employer, to the extent
permitted by law.
17. Should Employee die after termination of his employment with Employer while
any amounts are payable to him hereunder, this Agreement shall inure to the
benefit of and be enforceable by Employee's executors, administrators, heirs,
distributees, devisees and legatees and all amounts payable hereunder shall be
paid in accordance with the terms of this Agreement to Employee's devisee,
legatee or other designee or, if there is no such designee, to his estate.
18. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Employee: Terry L. Clark
15239 Jackson Road
Mishawaka, IN 46544
If to Employer: MFB Financial
121 South Church Street
P.O. Box 528
Mishawaka, Indiana 46546
or to such address as either party hereto may have furnished to the other party
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
19. This Agreement supersedes and replaces any pre-existing employment agreement
between the Employer and the Employee. The validity, interpretation, and
performance of this Agreement shall be governed by the laws of the State of
Indiana, exist as otherwise required by mandatory operation of federal law.
20. Employer shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Employer, by agreement in form and substance satisfactory
to Employee to expressly assume and agree to perform this Agreement in the same
manner and same extent that Employer would be required to perform it if no such
succession had taken place. Failure of Employer to obtain such agreement prior
to the effectiveness of any such succession shall be a material intentional
breach of this Agreement and shall entitle Employee to terminate his employment
with Employer pursuant to subsection 7(C) hereof. As used in this Agreement,
"Employer" shall mean Employer as herein before defined and any successor to its
business or assets as aforesaid.
21. No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by
Employee and Employer. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of dissimilar provisions or conditions at the same or any prior
subsequent time. No agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.
22. The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provisions of this
Agreement which shall remain in full force and effect.
23. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same agreement.
24. This Agreement is personal in nature and neither party hereto shall, without
consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder except as provided in section 17 and section 20 above.
Without limiting the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by pledge, creation
of a security interest or otherwise, other than a transfer by his will or by the
laws of descent or distribution as set forth in section 17 hereof, and in the
event of any attempted assignment or transfer contrary to this paragraph,
Employer shall have no liability to pay any amounts so attempted to be assigned
or transferred.
25. If any of the provisions in this Agreement shall conflict with 12 C.F.R. ss.
563.39(b), as it may be amended from time to time, the requirements of such
regulation shall supersede any contrary provisions herein and shall prevail.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed and delivered as of the day and year first above set forth.
MFB FINANCIAL
By: /s/ Charles J. Viater
Name: Charles J. Viater
Title: President and CEO
"EMPLOYER"
/s/ Terry L. Clark
Terry L. Clark
"EMPLOYEE"
The undersigned, MFB Corp., sole shareholder of Employer, agrees that
if it shall be determined for any reason that any obligation on the part of
Employer to continue to make any payments due under this Agreement to Employee
is unenforceable for any reason, MFB Corp. agrees to honor the terms of this
Agreement and continue to make any such payments due hereunder to Employee
pursuant to the terms of this Agreement.
MFB CORP.
By: /s/ Charles J. Viater
Name: Charles J. Viater
Title: President and CEO