Exhibit 10.1

 

Transitional Retirement Agreement

 

This Transitional Retirement Agreement is made and entered into effective
November 1, 2019, by and among Lakeland Financial Corporation, an Indiana
corporation (the “Company”), Lake City Bank, an Indiana chartered bank with its
main office located in Warsaw, Indiana (the “Bank”), and Kevin Deardorff (the
“Executive,” and together with the Company and the Bank, the “Parties”).

 

Recitals

 

A.                Executive is currently employed as the Executive Vice
President, Retail Banking Administration of the Company and the Bank.

 

B.                 Executive and the Company are parties to that certain Change
in Control Agreement, dated as of March 1, 2016 (the “CIC Agreement”).

 

C.                Executive and the Company have discussed Executive’s
retirement from the Company and the benefit of continuing Executive’s employment
for a period of time to facilitate a smooth transition of Executive’s duties and
responsibilities.

 

D.                The Company desires, with Executive’s assistance, to implement
a succession plan with respect to Executive’s employment, and Executive desires
to provide such assistance.

 

E.                 The Company and the Bank desire to continue to employ
Executive pursuant to the terms of this Agreement and Executive desires to
continue to be employed by the Company pursuant to such terms until Executive’s
retirement.

 

F.                 The Parties have made commitments to each other on a variety
of important issues concerning Executive’s employment, including the performance
that will be expected of Executive, the compensation Executive will be paid, how
long and under what circumstances Executive will remain employed, and the
financial details relating to any decision that either the Company or Executive
may make to terminate this Agreement and Executive’s employment with the
Company.

 

G.                The Parties desire to enter into this Agreement as of the
Effective Date and, to the extent provided herein, to have this Agreement
supersede all prior employment agreements or change in control agreements
between the Parties, whether or not in writing, and to have any such prior
agreements become null and void as of the Effective Date.

 

Agreement

 

In consideration of the foregoing and the mutual promises and covenants of the
Parties set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, hereby expressly covenant and agree as
follows:

 

Section 1.                  Prior Agreements. As of the Effective Date, this
Agreement shall supersede and replace any and all prior agreements respecting
Executive’s employment by, or service to, the Company, as may from time to time
have been made by and between the Parties, whether or not in writing, including
without limitation the CIC Agreement; provided, however, that any vested
benefits due to Executive pursuant to any pension plan, welfare benefit plan, or
any other employee benefit plan shall continue to be available to Executive
subject to the terms and conditions of the applicable plan as may be in effect
from time to time.

 

 

 

 

Section 2.                  Employment Period and Duties. Executive’s employment
with the Company shall continue for the period commencing on the Effective Date
and ending on June 30, 2021 (the “Retirement Date, and such period between the
Effective Date and the Retirement Date, the “Employment Period”).

 

(a)                  Executive shall continue to provide all current services as
the Executive Vice President, Retail Banking Administration until December 31,
2019 (the “Succession Date,” and such period between the Effective Date and the
Succession Date, the “EVP Period”). Executive’s principal responsibility during
the EVP Period will be the transition of his role and responsibilities to the
Senior Vice President, Retail Banking (the “SVP”). Executive shall also actively
participate in the completion of the 2020 budget and strategic initiatives.

 

(b)                  Following the Succession Date through the Retirement Date
(such period, the “Advisor Period”), Executive shall serve as the Retail Banking
Advisor. During the Advisor Period, Executive will be a full-time, non-executive
employee. Executive’s duties during the Advisor Period shall include advising
the President and Chief Executive Officer of the Company and the Bank, advising
and regularly meeting with the SVP, actively participating in community events
for the Bank, and continuing to serve on community boards as a representative of
the Bank.

 

Section 3.                  Compensation and Benefits. During the Employment
Period, the Company shall compensate Executive for Executive’s services as
follows:

 

(a)               Annual Base Salary. Executive shall be paid a base salary at
the following annual rates in accordance with the normal payroll practices of
the Company then in effect (the “Annual Base Salary”), subject to any increase
as determined by the Board of Directors of the Company (the “Board”) in its sole
discretion. From the Effective Date until December 31, 2020, Executive’s Annual
Base Salary rate shall be two hundred and fifty-three thousand dollars
($253,000). From January 1, 2021 through the Retirement Date, Executive’s Annual
Base Salary rate shall be one hundred and twenty-six thousand five hundred
dollars ($126,500).

 

(b)               Annual Incentive Bonus. Executive shall continue to be
eligible to receive performance-based annual incentive bonuses (each, the
“Incentive Bonus”) from the Company. The Incentive Bonus shall be established
and determined in accordance with the Company’s annual cash incentive plan, as
may be in effect from time to time, or otherwise as determined by the Board,
provided that the target level of the Incentive Bonus shall be forty percent
(40%) of the Annual Base Salary then in effect. The Incentive Bonus for 2021
shall be prorated based on the number of days worked during 2021 through the
Retirement Date.

 

(c)               Long Term Incentive Plan. Executive shall be entitled to
receive equity-based awards for the 2019-2021 (“Plan 14”) and 2020-2022 (“Plan
15”) Performance Periods under, and subject to the terms of, the Company’s 2017
Equity Incentive Plan (the “Equity Plan”). Executive shall not be entitled to
receive an equity-based award for the 2021-2023 Performance Period. The target
number of shares for Plan 14 and Plan 15 awards shall be five thousand four
hundred (5,400) shares. Such awards will vest as of the Retirement Date on a pro
rata basis (based upon the number of days employed during the applicable
Performance Periods) at one hundred percent (100%) of realized performance for
the target number of shares. Executive’s currently outstanding awards for the
2017-2019 and 2018-2020 Performance Periods shall continue to vest and become
payable as long as Executive remains an employee of the Company through the end
of the applicable Performance Periods.

 

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(d)               Employee Benefits. Executive and Executive’s dependents, as
the case may be, shall be eligible to participate, subject to the terms thereof,
in all tax qualified retirement and similar benefit plans and all medical,
dental, disability, group and executive life, accidental death and travel
accident insurance, holiday and other paid time off policies, and other similar
welfare benefit plans of the Company as may be in effect from time to time with
respect to senior executives employed by the Company, on as favorable a basis as
other similarly situated and performing executives.

 

Section 4.                  Termination.

 

(a)                  In the event of a Termination, as defined in CIC Agreement,
or a termination of Executive’s employment due to death or Disability (as
defined in the Equity Plan) this Agreement and the obligations and benefits
hereunder shall remain in full force and effect as if Executive was employed
through the Retirement Date.

 

(b)                  In the event Executive’s employment is terminated by the
Company for Cause or Executive resigns other than for Good Reason (each as
defined in CIC Agreement), the Company shall have no further obligations to
Executive (except payment of the Annual Base Salary accrued through the date of
the said termination), and the Company shall continue to have all other rights
available hereunder, including all rights under Section 6.

 

Section 5.                  Release. In exchange for the benefits set forth in
this Agreement, within twenty-one (21) days following the Retirement Date, or
upon a Termination, if applicable, Executive shall execute and return to the
Company a general release and waiver, in a form acceptable to the Company.

 

Section 6.                  Post-Termination Covenants. Section 6 of the CIC
Agreement is fully incorporated by reference as if fully restated herein and
shall remain in full force and effect; provided, however, that for purposes of
this Agreement, the term “Restricted Period” as used therein shall mean the
period during the Executive’s employment with the Company and any affiliate and
for five (5) years immediately following the termination of the Executive’s
employment for any reason.

 

Section 7.                  Governing Law. This Agreement shall be governed by
and construed under the laws of the State of Indiana, without regard to
principles of conflict of laws (whether in the State of Indiana or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Indiana.

 

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Section 8.                  Choice of Venue and Consent to Jurisdiction. Each
Party hereby irrevocably submits to the exclusive jurisdiction of the courts
located in the City of Warsaw, Indiana, if such courts have or can acquire
jurisdiction, and if such jurisdiction does not exist and cannot be acquired, to
the exclusive jurisdiction of the United States District Court serving the City
of Warsaw, Indiana, for the purpose of any suit, action, or other proceeding
arising out of or based on this Agreement or any other agreement contemplated
hereby or any subject matter hereof, whether in tort, contract, or otherwise.

 

Section 9.                  Withholding of Taxes. The Company may withhold from
any benefits payable under this Agreement all federal, state, city and other
taxes as may be required pursuant to any law, governmental regulation, or
ruling.

 

Section 10.              No Assignment. Executive’s right to receive 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 Section 10, the Company and its affiliates 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 Executive’s
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees, and legatees.

 

Section 11.              Successors. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors, and assigns.

 

Section 12.              Amendment. This Agreement may not be amended or
modified except by written agreement signed by the Parties.

 

Section 13.              Entire Agreement. This Agreement constitutes the entire
agreement between the Parties concerning the subject matter hereof, and
supersedes all prior negotiations, undertakings, agreements and arrangements
with respect thereto, whether written or oral. 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. The
various covenants and provisions of this Agreement are intended to be severable
and to constitute independent and distinct binding obligations. Without limiting
the generality of the foregoing, if the scope of any covenant contained in this
Agreement is too broad to permit enforcement to its full extent, such covenant
shall be enforced to the maximum extent permitted by law, and such scope may be
judicially modified accordingly.

 

Section 14.              Code Section 409A.

 

(a)               To the extent any provision of this Agreement or action by the
Company would subject Executive to liability for interest or additional taxes
under Code Section 409A, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Company. It is intended that this
Agreement will comply with Code Section 409A, and this Agreement shall be
administered accordingly and interpreted and construed on a basis consistent
with such intent. Notwithstanding any provision of this Agreement to the
contrary, no termination or similar payments or benefits shall be payable
hereunder on account of a Termination unless such Termination constitutes a
“separation from service” within the meaning of Code Section 409A. For purposes
of Code Section 409A, all installment payments of deferred compensation made
hereunder, or pursuant to another plan or arrangement, shall be deemed to be
separate payments. To the extent any reimbursements or in-kind benefit payments
under this Agreement are subject to Code Section 409A, such reimbursements and
in-kind benefit payments shall be made in accordance with Treasury Regulation
Section 1.409A-3(i)(1)(iv). This Agreement may be amended to the extent
necessary (including retroactively) by the Company to avoid the application of
taxes or interest under Code Section 409A, while maintaining to the maximum
extent practicable the original intent of this Agreement. This Section 13 shall
not be construed as a guarantee of any particular tax effect for Executive’s
benefits under this Agreement and the Company does not guarantee that any such
benefits will satisfy the provisions of Code Section 409A or any other provision
of the Code.

 

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(b)               Notwithstanding any provision of this Agreement to the
contrary, if Executive is determined to be a Specified Employee as of the
Termination Date, then, to the extent required pursuant to Code Section 409A,
payments due under this Agreement that are deemed to be deferred compensation
shall be subject to a six-month delay following the Termination Date; and all
delayed payments shall be accumulated and paid in a lump-sum payment as of the
first day of the seventh month following the Termination Date (or, if earlier,
as of Executive’s death), with all such delayed payments being credited with
interest (compounded monthly) for this period of delay equal to the prime rate
in effect on the first day of such six-month period. Any portion of the benefits
hereunder that were not otherwise due to be paid during the six-month period
following the Termination Date shall be paid to Executive in accordance with the
payment schedule established herein.

 

Section 15.              Survival. The provisions of Section 6 shall survive the
termination of this Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, each of the Company and the Bank has caused this Agreement
to be executed in its name and on its behalf, and Executive acknowledges
understanding and acceptance of, and agrees to, the terms of this Agreement, all
as of the Effective Date.

 

 

  LAKELAND FINANCIAL CORPORATION       By:           Print Name:          
Title:                 LAKE CITY BANK          By:           Print Name:        
  Title:                 Kevin Deardorff                By:  

 

 

 

 

 

 

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