EMPLOYMENT AGREEMENT
Exhibit No 10.1
THIS EMPLOYMENT AGREEMENT (the “Agreement”), entered into and effective as of the 1st day of
January, 2008 (the “Effective Date”), by and between First Financial Bank, N.A. (the “Bank”) and
Xxxxxx X. Xxxxxx (the “Employee”).
WHEREAS, the Employee has heretofore been employed by the Bank as its President and Chief
Executive Officer and has performed valuable services for the Bank; and
WHEREAS, the Board of Directors of the Bank (the “Board”) believes it is in the best interest
of the Bank to enter into this Agreement with the Employee in order to assure continuity of
management of the Bank to reinforce and encourage the continued attention and dedication of the
Employee to his assigned duties; and
WHEREAS, the parties desire, by this writing, to set forth the continuing employment
relationship between the Bank and the Employee.
NOW, THEREFORE, in consideration of the premises contained herein and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Employee and
the Bank agree as follows:
1. Employment. The Employee is employed as the President and Chief Executive Officer
of the Bank. The Employee shall render such administrative and management services for the Bank as
are currently rendered and as are currently performed by persons situated in a similar executive
capacity. The Employee shall also promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank. The Employee’s other duties shall be such as the Board
may, from time to time, reasonably direct, including normal duties as an officer of the Bank.
During the term of this Agreement, the Employee shall be nominated and elected to serve as a
Director of the Bank or of any successor to the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during the term of this
Agreement a base salary at the rate of $467,960.32 per annum, payable in cash not less frequently
than monthly. Such base salary shall be effective and calculated commencing as of the Effective
Date. The Bank may consider and declare from time to time increases in the base salary it pays the
Employee. Prior to a Change in Control (as hereinafter defined), the Bank may also declare
decreases in the base salary it pays the Employee if the operating results of the Bank are
significantly less favorable than those for the fiscal year ending December 31, 2001, and the Bank
makes similar decreases in the base salary it pays to other executive officers of the Bank. After
a Change in Control, the Bank shall consider and declare salary increases in base salary based upon
the following standards:
(a) Inflation;
(b) Adjustments to the base salaries of other senior management personnel;
(c) Past performance of the Employee; and
(d) The contribution which the Employee makes to the business and profits of the Bank
during the term of this Agreement.
3. Bonuses. The Employee shall participate in any year end bonus granted to other
employees by the Board. The Employee shall further participate in an equitable manner with all
other senior management employees of the Bank in any discretionary bonuses that the Board may award
from time to time to the Bank’s senior management employees. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee’s right to participate in such
discretionary bonuses.
4. Benefits.
(a) Participation in Retirement, Medical and Other Benefit Plans. During the
term of this Agreement, the Employee shall be eligible to participate in the following
benefit plans; group hospitalization, disability, health, dental, sick leave, retirement,
supplemental retirement, pension, 401(k), employee stock ownership plan, and all other
present or future qualified and/or nonqualified plans provided by the Bank generally, or to
executive officers of the Bank, which benefits, taken as a whole, must be at least as
favorable as those in effect on the Effective Date, unless the continued operation of such
plans or changes in the accounting, legal or tax treatment of such plans would adversely
affect the Bank’s operating results or financial condition in a material way, and the Board
concludes that modifications to such plans are necessary to avoid such adverse effects and
such modifications apply consistently to all employees of the Bank participating in the
affected plans. In addition, the Employee shall be eligible to participate in any fringe
benefits which are or may become available to the Bank’s senior management employees,
including, for example, any stock option or incentive compensation (including, but not
limited to the First Financial Corporation 2001 Long-Term Incentive Plan and 2005 Long-Term
Incentive Plan (“LTIP”)) or performance-based plans, any insurance programs (including, but
not limited to, any group and executive life insurance programs), and any other benefits
which are commensurate with the responsibilities and functions to be performed by the
Employee under this Agreement. All the employee benefits referenced in this subsection 4(a)
are collectively referred to hereinafter as “Employee Benefits.”
(b) Benefits After Retirement. Upon retirement of the Employee during the term
of this Agreement, the Bank agrees to continue, at no greater cost to Employee than is
generally allocated to all employees, full coverage for the Employee, his spouse and his
children living in his household under the health, life and disability plans as adopted by
the Bank which shall be no less favorable than those in effect on the Effective Date of
this Agreement. The Bank agrees to continue such health coverage until both the Employee
and his spouse are eligible for coverage by Medicare. When both the Employee and his spouse
become eligible for Medicare coverage, the Bank agrees to pay for supplemental coverage for
both the Employee and his spouse until the death of the Employee and his spouse. The
Employee shall be entitled to a life insurance policy on his life in the maximum amount
established by the group life insurance plan from time to time which amount shall be no less
than the limit on the Effective Date of three times his annual salary (subject to a $350,000
maximum), provided at the Bank’s cost. The Employee shall also be entitled to a life
insurance policy on his life in the amount established by the Bank’s insurance program for
executive officers from time to time. The Bank shall continue to pay to the Employee the
annual premiums, which are required to keep the life insurance policy in force, on behalf of
the Employee pursuant to the Bank’s insurance program for executive officers.
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(c) Expenses and Membership. The Employee shall be reimbursed for all
reasonable out-of-pocket business expenses which he shall incur in connection with his
services under this Agreement, upon substantiation of such expenses in accordance with the
policies of the Bank. In addition, the Employee shall be reimbursed for all reasonable
out-of-pocket expenses incurred by him to satisfy his continuing legal education
requirements for his license to practice law in the State of Indiana. So long as the
Employee is employed by the Bank pursuant to this Agreement, the Employee shall be entitled
to continue his memberships in the American, Indiana and Terre Haute Bar Associations, the
American Association for Justice and the Indiana Trial Lawyers Association and the Country
Club of Terre Haute, and Bank shall continue to pay or reimburse the Employee for the dues
and assessments for such memberships.
(d) Automobile. So long as the Employee is employed by the Bank pursuant to
this Agreement, the Employee shall be entitled to continue to use a Bank-owned automobile of
commensurate quality and value as that presently used by him on the same terms and
conditions in effect with respect to such use on the Effective Date of this Agreement. The
Bank shall provide and pay the premiums for full insurance coverage on the automobile. Such
insurance coverage shall be no less than the coverage provided on the Effective Date of this
Agreement. The Bank shall also pay for the cost of maintenance and repair of the
automobile. All benefits referenced in this subsection 4(d) are collectively referred to
hereinafter as “Automobile Benefits.”
(e) Vacation, Sick Leave and Disability. The Employee shall be entitled to 30
days vacation annually and shall be entitled to the same sick leave and disability leave as
other employees of the Bank.
The Employee shall not receive any additional compensation from the Bank on account of
his failure to take a vacation or sick leave, and the Employee shall not accumulate unused
vacation or sick leave from one fiscal year to the next, except in either case to the extent
authorized by the Board or permitted for other employees of the Bank.
In addition to the aforesaid paid vacations, the Employee shall be entitled, without
loss of pay, to absent himself voluntarily from the performance of his employment with the
Bank for such additional periods of time and for such valid and legitimate reasons as the
Board may in its discretion determine and to attend the continuing legal education seminars
contemplated by subsection 4(c) hereof. Further, the Board may grant to the Employee a
leave or leaves of absence, with or without pay, at such time or times and upon such terms
and conditions as such Board in its discretion may determine.
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(f) Other Policies. All other matters relating to the employment of the
Employee by the Bank not specifically addressed in this Agreement shall be subject to the
general policies regarding employees of the Bank as in effect from time to time.
5. Term of Employment. The Bank hereby employs the Employee, and the Employee hereby
accepts such employment under the terms of this Agreement, for the period commencing on the
Effective Date and ending sixty months thereafter (or such earlier date as is determined in
accordance with Section 8). Additionally, on each annual anniversary date from the Effective Date,
the Employee’s term of employment shall be extended for an additional one-year period beyond the
then effective expiration date, provided the Board determines in a duly adopted resolution that
this Agreement shall be extended. Only those members of the Board who have no personal interest in
this Agreement shall discuss and vote on the approval, subsequent review and extension of this
Agreement. The initial term of this Agreement and all extensions thereof are hereinafter referred
to individually and collectively as the “Term.”
6. Covenants.
(a) Loyalty.
(i) During the period of his employment hereunder and except for illnesses,
reasonable vacation periods, and reasonable leaves of absence, the Employee shall
devote all of his full business time, attention, skill and efforts to the faithful
performance of his duties hereunder; provided, however, from time to time, the
Employee may serve on the Boards of Directors of, and hold any other offices or
positions in, companies or organizations, and may perform legal services either
directly or as a result of an of counsel or analogous position with a law firm for
clients which will not present any conflict of interest with the Bank or any of its
subsidiaries or affiliates, or unfavorably affect the performance of Employee’s
duties pursuant to this Agreement, or will not violate any applicable statute or
regulation. “Full business time” is hereby defined as that amount of time usually
devoted to like companies by similarly situated executive officers. During the term
of his employment under this Agreement, the Employee shall not engage in any
business or activity contrary to the business affairs or interests of the Bank, or
be gainfully employed in any other position or job other than as provided above.
(ii) Nothing contained in this Section shall be deemed to prevent or limit the
Employee’s right to invest in the capital stock or other securities of any business
dissimilar from that of the Bank, or, solely as a passive or minority investor, in
any business.
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(b) Nonsolicitation. The Employee hereby understands and acknowledges that, by
virtue of his position with the Bank, he will have advantageous familiarity and personal
contacts with the Bank’s customers, wherever located, and the business, operations and
affairs of the Bank. Accordingly, while the Employee is employed by the Bank and for a
period of one year after termination of the Employee’s employment with the Bank for any
reason (whether with or without cause or whether by the Bank or the Employee) or the
expiration of the Term, the Employee shall not, directly or indirectly, or individually or
jointly, (i) solicit any non-legal business of any party which is a customer of the Bank at
the time of such termination or any party which was a customer of the Bank during the one
year period immediately preceding such termination, (ii) request or advise any customers or
suppliers of the Bank to terminate, reduce, limit or change their business or relationship
with the Bank, or (iii) induce, request or attempt to influence any employee of the Bank to
terminate his employment with the Bank, unless such actions are taken in connection with
Employee engaging in the practice of law.
For purposes of this Agreement, the term “solicit” means any direct or indirect
communication of any kind whatsoever, regardless of by whom initiated, which encourages or
requests any person or entity, in any manner, to cease doing business with the Bank.
(c) Noncompetition. During the period of his employment hereunder, and for a
period of two years following the termination hereof, the Employee shall not, directly or
indirectly:
(i) As owner, officer, director, stockholder, investor, proprietor, organizer
or otherwise, engage in the same trade or business as the Bank, as conducted on the
date hereof, which would conflict with the interests of the Bank or in a trade or
business competitive with that of the Bank, which would conflict with the interests
of the Bank, as conducted on the date hereof; or
(ii) Offer or provide employment (whether such employment is with the Employee
or any other business or enterprise), either on a full-time or part-time or
consulting basis, to any person who then currently is, or who within one (1) year
prior to such offer or provision of employment has been, a management-level employee
of the Bank. This subsection 6(c)(ii) shall only apply in the event the Employee
voluntarily terminates his employment with the Bank.
The restrictions contained in this paragraph upon the activities of the Employee
following termination of employment shall be limited to the following geographic areas
(hereinafter referred to as “Restricted Geographical Area”):
(1) Terre Haute, Indiana; and
(2) The thirty mile radius of Terre Haute, Indiana.
Nothing contained in this Section 6 shall prevent or restrict the Employee from
engaging in the practice of law, including within the Restricted Geographical Area. In
addition, nothing contained in this subsection shall prevent or limit the Employee’s right
to invest in the capital stock or other securities of any business dissimilar from that of
the Bank, or, solely as a passive or minority investor, in any business.
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If the Employee does not comply with the provisions of this Section, the two year
period of non-competition provided herein shall be tolled and deemed not to run during any
period(s) of noncompliance, the intention of the parties being to provide two full years of
non-competition by the Employee after the termination or expiration of this Agreement.
(d) Nondisclosure. The term “Confidential Information” as used herein shall
mean any and all customer lists, computer hardware, software and related material, trade
secrets (as defined in I.C. 24-2-3-2), know-how, skills, knowledge, ideas, knowledge of
customer’s commercial requirements, pricing methods, sales and marketing techniques, dealer
relationships and agreements, financial information, intellectual property, codes, research,
development, research and development programs, processes, documentation, or devices used in
or pertaining to the Bank’s business (i) which relate in any way to the Bank’s business,
products or processes; or (ii) which are discovered, conceived, developed or reduced to
practice by the Employee, either alone or with others either during the Term, at the Bank’s
expense, or on the Bank’s premises.
(i) During the course of his services hereunder the Employee may become
knowledgeable about, or become in possession of, Confidential Information. If such
Confidential Information were to be divulged or become known to any competitor of
the Bank or to any other person outside the employ of the Bank, or if the Employee
were to consent to be employed by any competitor of the Bank or to engage in
competition with the Bank, the Bank would be irreparably harmed. In addition, the
Employee has or may develop relationships with the Bank’s customers which could be
used to solicit the business of such customers away from the Bank. The Bank and the
Employee have entered into this Agreement to guard against such potential harm.
(ii) The Employee shall not, directly or indirectly, use any Confidential
Information for any purpose other than the benefit of the Bank or communicate,
deliver, exhibit or provide any Confidential Information to any person, firm,
partnership, corporation, organization or entity, except as required in the normal
course of the Employee’s service as a consultant or as an employee of the Bank. The
covenant contained in this subsection shall be binding upon the Employee during the
Term and following the termination hereof until either (i) such Confidential
Information becomes obsolete; or (ii) such Confidential Information becomes
generally known in the Bank’s trade or industry by means other than a breach of this
covenant.
(iii) The Employee agrees that all Confidential Information and all records,
documents and materials relating to such Confidential Information, shall be and
remain the sole and exclusive property of the Bank.
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(e) Remedies. The Employee agrees that the Bank will suffer irreparable
damage and injury and will not have an adequate remedy at law in the event of any breach by
the Employee of any provision of this Section. Accordingly, in the event the Bank seeks,
under law or in equity, a temporary restraining order, permanent injunction or a decree of
specific performance of the provisions of this Section, no bond or other security shall be
required. The Bank shall be entitled to recover from the Employee, reasonable attorneys’
fees and expenses incurred in any action wherein the Bank successfully enforces any of the
provisions of this Section against the breach or threatened breach of those provisions by
the Employee. The remedies described in this Section are not exclusive and are in addition
to all other remedies the Bank may have at law, in equity, or otherwise.
(i) The Employee and the Bank acknowledge and agree that in the event of
termination of the Employee’s employment for any reason whatsoever, the Employee can
obtain other engagements or employment of a kind and nature similar to that
contemplated herein outside the Restricted Geographical Area and that the issuance
of an injunction to enforce the provisions of this Section will not prevent him from
earning a livelihood.
(ii) The covenants on the part of the Employee contained in this Section are
essential terms and conditions to the Bank entering into this Agreement, and shall
be construed as independent of any other provision in this Agreement.
(f) Surrender of Records. Upon termination of the Employee’s employment for
any reason, the Employee shall immediately surrender to the Bank any and all computer
hardware, software and related materials, records, notes, documents, forms, manuals,
photographs, instructions, lists, drawings, blueprints, programs, diagrams or other written
or printed material (including any and all copies made at any time whatsoever) in his
possession or control which pertain to the business of the Bank or its affiliates including
any Confidential Information in the Employee’s personal notes, address books, calendars,
rolodexes, personal data assistants, etc.
7. Standards. The Employee shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time to time. The Bank
will provide the Employee with the working facilities and staff commensurate with his position or
positions and necessary or advisable for him to perform his duties.
8. Termination and Termination Pay. Subject to Section 10 hereof, the Employee’s
employment hereunder may be terminated under the following circumstances:
(a) Death. The Employee’s employment shall terminate upon his death during the
Term of this Agreement, in which event the Employee’s estate or designated beneficiaries
shall be entitled to receive the base salary, bonuses, vested rights, and Employee Benefits
due the Employee through the last day of the calendar month in which his death occurred.
Any benefits payable under insurance, health, retirement, bonus, incentive (including, but
not limited to, the LTIP), performance or other plans as a result of the Employee’s
participation in such plans through such date shall be paid when and as due under those
plans.
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(b) Disability.
(i) The Bank may terminate the Employee’s employment, as a result of the
Employee’s Disability, in a manner consistent with the Bank’s and the Employee’s
rights and obligations under the Americans with Disabilities Act or other applicable
state and federal laws concerning disability. For the purpose of this Agreement,
“Disability” means the Employee is:
(1) Unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous
period of not less than 12 months, or
(2) By reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Employer.
(ii) During any period that the Employee shall receive disability benefits and
to the extent that the Employee shall be physically and mentally able to do so, he
shall furnish such information, assistance and documents so as to assist in the
continued ongoing business of the Bank.
(iii) In the event of Employee’s termination of employment by the Bank due to
Disability, the Employee shall be entitled to receive the base salary, bonuses,
vested rights, and Employee Benefits due the Employee through his date of
termination. Any benefits payable under insurance, health, retirement, bonus,
incentive (including, but not limited to, the LTIP), performance or other plans as a
result of Employee’s participation in such plans through such date of termination
shall be paid when and as due under those plans.
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(c) Just Cause. The Board may, by written notice to the Employee, immediately
terminate his employment at any time, for Just Cause. The Employee shall have no right to
receive any base salary, bonuses or other Employee Benefits, except as provided by law,
whatsoever for any period after his termination for Just Cause. However, the vested rights
of the Employee as of his date of termination shall not be
affected. Any benefits payable under insurance, health, retirement, bonus, incentive
(including, but not limited to, the LTIP), performance or other plans as a result of
Employee’s participation in such plans through such date of termination shall be paid when
and as due under those plans. Termination for “Just Cause” shall mean termination because
of:
(i) An intentional act of fraud, embezzlement, theft, or personal dishonesty;
willful misconduct, or breach of fiduciary duty involving personal profit by the
Employee in the course of his employment or director service. No act or failure to
act shall be deemed to have been intentional or willful if it was due primarily to
an error in judgment or negligence. An act or failure to act shall be considered
intentional or willful if it is not in good faith and if it is without a reasonable
belief that the action or failure to act is in the best interest of the Bank;
(ii) Intentional wrongful damage by the Employee to the business or property of
the Bank, causing material harm to the Bank;
(iii) Breach by the Employee of any confidentiality or non-disclosure agreement
in effect from time to time with the Bank;
(iv) Gross negligence or insubordination by the Employee in the performance of
his duties; or
(v) Removal or permanent prohibition of the Employee from participating in the
conduct of Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the
Federal Deposit Insurance Act, 12 USC 1818(e)(4) and (g)(1).
Notwithstanding the foregoing, in the event of termination for Just Cause there shall
be 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 at a meeting of the Board
called and held for that 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 Just Cause and specifying the particulars thereof in detail. If,
following such meeting, the Employee is reinstated, he shall be entitled to receive the base
salary, bonuses, all Employee Benefits, and all other fringe benefits provided for under
this Agreement for the period following termination and continuing through reinstatement as
though he was never terminated.
(d) Without Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time for a reason other than Just Cause, in
which event the Employee shall be entitled to receive the following compensation and
benefits (unless such termination occurs within the time period set forth in subsection
10(a) hereof, in which event the benefits and compensation provided for in Section 10
shall apply):
(i) The base salary provided pursuant to Section 2 hereof as in effect on the
date of termination, through the Expiration Date of this Agreement as determined
pursuant to Section 5 hereof (including any renewal or extension of this Agreement)
(the “Expiration Date”);
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(ii) An amount equal to the bonuses received by or payable to the Employee in
the calendar year prior to the calendar year in which the Employee is terminated,
for each year remaining through the Expiration Date; and
(iii) Cash reimbursement to the Employee in an amount equal to the cost to the
Employee (demonstrated by submission to the Bank of invoices, bills, or other proof
of payment by the Employee) of (A) all health insurance premiums for the Employee,
his spouse and child living in the Employee’s household and Medicare supplement
insurance, and life insurance (all as described in subsection 4(b)); (B) all other
Employee Benefits (all as defined in subsection 4(a) excluding payments under the
LTIP which will be made in accordance with the terms and conditions of the LTIP);
and (C) professional and club dues, the cost of Employee’s continuing legal
education requirements (as described in subsection 4(c)), all Automobile Benefits
(as defined in subsection 4(d)) and other benefits which the Employee would
otherwise have been eligible to participate in or receive, through the Expiration
Date, based upon the benefit levels substantially equal to those that the Bank
provided for the Employee at the date of the Employee’s termination of employment.
The Employee shall also be entitled to receive an amount necessary to provide any
cash payments received under this subsection 8(d)(iii) net of all income and payroll
taxes that would not have been payable by the Employee had he continued
participation in the benefit plan or program instead of receiving cash
reimbursement.
Notwithstanding the foregoing, but only to the extent required under federal banking
law, the amount payable under subsection 8(d) shall be reduced to the extent that on the
date of the Employee’s termination of employment, the present value of the benefits payable
under subsections 8(d)(i), (ii) and (iii) exceed any limitation on severance benefits that
is imposed by the Office of the Comptroller of the Currency (the “OCC”) on such benefits.
All amounts payable to the Employee under subsections 8(d)(i) and (ii) shall be paid in
one lump sum within ten days of such termination. All amounts payable to the Employee under
subsection 8(d)(iii) shall be paid on the first day of each month following the Employee’s
termination of employment, in an amount equal to the total reimbursable amount (demonstrated
by invoices, bills or other proof of payment submitted by the Employee). Such amounts must
be submitted for reimbursement no later than the earlier of (i) six months after the date
such amounts are paid by the Employee; or (ii) March 15th of the year following the year in
which the Employee paid the amount.
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(e) Voluntary for Good Reason. The Employee may voluntarily terminate his
employment under this Agreement for Good Reason, and the Employee shall thereupon be
entitled to receive the same amount payable under subsections 8(d) (i) and (ii) hereof,
within 30 days following his date of termination and under subsection 8(d)(iii) as provided
in subsection 8(d). For purposes of this Agreement, “Good Reason” means the occurrence of
any of the following events, which has not been consented to in advance by the Employee in
writing (unless such voluntary termination occurs within the time period set forth in
subsection 10(b) hereof, in which event the benefits and compensation provided for in
Section 10 shall apply):
(i) The requirement that the Employee move his personal residence;
(ii) A reduction of ten percent or more in the Employee’s base salary, unless
part of an institution-wide reduction and similar to the reduction in the base
salary of all other executive officers of the Bank;
(iii) The removal of the Employee from participation in any incentive
compensation (including, but not limited to, the LTIP) or performance-based
compensation plans or bonus plans unless the Bank terminates participation in the
plan or plans with respect to all other executive officers of the Bank;
(iv) The failure by the Bank to continue to provide the Employee with the base
salary, bonuses or benefits provided for under subsections 4(a), (c), (d) and (e) of
this Agreement, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under those Sections or under any
benefit plan or program in which the Employee now or hereafter becomes eligible to
participate, or the taking of any action by the Bank which would directly or
indirectly reduce any such benefits or deprive the Employee of any such benefit
enjoyed by him, unless part of an institution-wide reduction and applied similarly
to all other executive officers of the Bank:
(v) The assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced in Section
1;
(vi) A failure to elect or re-elect the Employee to the Board or a failure on
the part of First Financial Corporation to honor its obligation to nominate Employee
to the Board of Directors of First Financial Corporation;
(vii) A material diminution or reduction in the Employee’s responsibilities or
authority (including reporting responsibilities) in connection with his employment
with the Bank; or
(viii) A material reduction in the secretarial or administrative support of the
Employee.
Notwithstanding the foregoing, but only to the extent required under federal banking law, the
amount payable under this subsection shall be reduced to the extent that on the date of the
Employee’s termination of employment, the present value of the benefits payable under
subsections 8(d)(i), (ii) and (iii) exceed any limitation on severance benefits that is imposed by
the OCC on such benefits.
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(f) Voluntary Termination by Employee. Subject to subsection 4(b) and Section
10, the Employee may voluntarily terminate employment with the Bank during the term of this
Agreement, upon at least 90 days’ prior written notice to the Board of Directors, in which
case the Employee shall receive only his base salary, bonuses, vested rights and benefits up
to the date of his termination, such benefits to be paid when and as due under those plans
(unless such termination occurs pursuant to subsection 10(b) hereof, in which event the
benefits, bonuses and base salary provided for in subsection 10(a) shall apply).
(g) Termination or Suspension Under Federal Law.
(i) If the Employee is removed and/or permanently prohibited from participating
in the conduct of the Bank’s affairs by an order issued under Sections 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and
(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 Employee shall not be
affected.
(ii) If the Bank is in default (as defined in Section 3(x)(1) of the FDIA), all
obligations under this Agreement shall terminate as of the date of default; but the
vested rights of the Employee shall not be affected.
(iii) All obligations under this Agreement shall terminate, except to the
extent it is determined that the continuation of this Agreement is necessary for the
continued operation of the Bank; (A) by the OCC or its designee, at the time that
the Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of FDIA; or (B) by the OCC, or its designee, at the time that the OCC
or its designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the OCC to be in an unsafe
or unsound condition. Such action shall not affect any vested rights of the
Employee.
(iv) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA suspends
and/or temporarily prohibits the Employee from participating in the conduct of the
Bank’s affairs, the Bank’s obligations under this Agreement shall be suspended as of
the date of such service, unless stayed by appropriate proceedings. However, the
vested rights of the Employee as of the date of suspension will not be affected. If
the charges in the notice are dismissed, the Bank may in its discretion (A) pay the
Employee all or part of the compensation withheld while its contract obligations
were suspended, and (B) reinstate (in whole or in part) any of its obligations which
were suspended.
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(h) Separation from Service. If the Employee qualifies as a Key Employee (as
defined in subsection 8(h)(i)) at the time of his Separation from Service (as defined in
subsection 8(h)(ii)), the Bank may not make a payment pursuant to subsections 8(d)
(disregarding subsection 8(d)(iii)(A)) and 8(e) and Section 10 (disregarding subsection
10(a)(1)(ii)(B)) earlier than six months following the date of the Employee’s Separation
from Service (or, if earlier, the date of the Employee’s death). Payments to which the Key
Employee would otherwise be entitled during the first six months following the date of his
Separation from Service will be accumulated and paid to the Employee on the first day of the
seventh month following the Employee’s Separation from Service.
(i) Key Employee means an employee who is:
(1) An officer of the Bank or First Financial Corporation having annual
compensation greater than $140,000;
(2) A five percent owner of the Bank or First Financial Corporation; or
(3) A one percent owner of the Bank or First Financial Corporation
having an annual compensation from the employer of more than $150,000.
The $140,000 amount in subsection 8(h)(i)(1) will be adjusted at the same
time and in the same manner as under Code Section 415(d), except that the
base period shall be the calendar quarter beginning July 1, 2001, and any
increase under this sentence which is not a multiple of $5,000 shall be
rounded to the next lower multiple of $5,000.
(ii) Separation from Service means the date on which the Employee dies, retires
or otherwise experiences a Termination of Employment with the Bank. Provided,
however, a Separation from Service does not occur if the Employee is on military
leave, sick leave or other bona fide leave of absence if the period of such leave
does not exceed six months, or if longer, so long as the Employee retains a right to
reemployment with the Bank under an applicable statute or by contract. For purposes
of this subsection 8(h)(ii), a leave of absence constitutes a bona fide leave of
absence only if there is a reasonable expectation that the Employee will return to
perform services for the Bank or First Financial Corporation. If the period of
leave exceeds six months and the Employee does not retain the right to reemployment
under an applicable statute or by contract, the employment relationship is deemed to
terminate on the first date immediately following such six-month period.
Notwithstanding the foregoing, where a leave of absence is due to any medically
determinable physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than six months,
where such impairment causes the Employee to be unable to perform the duties of his
position of employment or any substantially similar position of employment, a
29-month period of absence may be substituted for such six-month period. The
Employee shall incur a
“Termination of Employment” for purposes of this subsection 8(h)(ii) when a
termination of employment has occurred under Treasury Regulation 1.409A-1(h)(ii).
13
9. No Mitigation. The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise and no such payment
shall be offset or reduced by the amount of any compensation or benefits provided to the Employee
in any subsequent employment.
10. Change in Control.
(a) Change in Control; Involuntary Termination.
(1) Notwithstanding any provision herein to the contrary, if the Employee’s
employment under this Agreement is terminated by the Bank, without the Employee’s
prior written consent and for a reason other than Just Cause, in connection with or
within 12 months after a Change in Control, as defined in subsection 10(a)(4), the
Employee shall be paid the greater of:
(i) The total amount payable under subsection 8(d); or
(ii) The product of 2.99 times the sum of: (A) his base salary in
effect as of the date of the Change in Control; (B) an amount equal to the
bonuses received by or payable to the Employee in the calendar year prior to
the year in which the Change in Control occurs; and (C) cash reimbursement
to the Employee in an amount equal to the cost to the Employee (demonstrated
by submission to the Bank of invoices, bills or other proof of payment by
the Employee) of obtaining all Employee Benefits (all as defined in
subsection 4(a) excluding payments under the LTIP which will be made in
accordance with the terms and conditions of the LTIP), health insurance
premiums for the Employee, his spouse and child living in the Employee’s
household, Medicare supplement insurance, life insurance (all as described
in subsection 4(b)), professional and club dues, the cost of Employee’s
continuing legal education requirements (all as described in subsection
4(c)), all Automobile Benefits (as defined in subsection 4(d)) and other
benefits which the Employee would otherwise have been eligible to
participate in or receive, through the Expiration Date, based upon the
benefit levels substantially equal to those that the Bank provided for the
Employee at the date of the Employee’s termination of employment. The
Employee shall also be entitled to receive an amount necessary to provide
any cash payments received under this subsection 10(a)(ii) net of all income
and payroll taxes that would not have been payable by the Employee had he
continued participation in the benefit plan or program instead of receiving
cash reimbursement.
(2) To the extent payments received based on the Employee’s termination of
employment in connection with a Change in Control, or within 12 months after a
Change in Control are considered “excess parachute payments” pursuant to the Code
Section 280G, the provisions of “Internal Revenue Code Section 280G Gross-Up” below
shall apply.
14
(3) Internal Revenue Code Section 280G Gross-Up.
(i) Additional Payment to Account for Excise Taxes. If, as a
result of a termination of employment in connection with a Change in
Control, or with 12 months after a Change in Control, the Employee becomes
entitled to the amount payable under subsection 10(a), or under any other
benefit, compensation, or incentive plan (including, but not limited to, the
LTIP) or arrangement of or with the Bank or First Financial Corporation
(collectively, the “Total Benefits”), and if any part of the Total
Benefits is subject to the Excise Tax under Code Sections 280G and 4999 (the
“Excise Tax”), the Bank or First Financial Corporation shall pay to
the Employee the following additional amounts, consisting of (A) a payment
equal to the Excise Tax payable by the Employee on the Total Benefits under
Code Section 4999 (the “Excise Tax Payment”), and (B) a payment
equal to the amount necessary to provide the Excise Tax Payment net of all
income, payroll and excise taxes. Together, the additional amounts
described in clauses (A) and (B) are referred to herein as the “Gross-Up
Payments.”
(ii) Calculating the Excise Tax. Determination of whether any
of the Total Benefits will be subject to the Excise Tax and the
determination of the amount of the Excise Tax shall be made in accordance
with the following:
(A) Determination of Parachute Payments Subject to the
Excise Tax. Any payments or benefits received or to be received
by the Employee in connection with a Change in Control or the
Employee’s termination of employment in connection with a Change in
Control, or within 12 months after a Change in Control (whether under
the terms of this Agreement or any benefit plan or arrangement with
First Financial Corporation or the Bank) shall be treated as
“parachute payments” within the meaning of Code Section 280G(b)(2),
and all “excess parachute payments” within the meaning of Code
Section 280G(b)(1) shall be treated as subject to the Excise Tax,
unless in the opinion of the nationally-recognized certified public
accounting firm, retained by the Bank or First Financial Corporation
as of the date immediately before the Change in Control (the
“Accounting Firm”), such payments or benefits do not
constitute, in whole or in part, parachute payments, or such excess
parachute payments represent, in whole or in part, reasonable
compensation for services actually rendered within the
meaning of Code Section 280G(b)(4) or are otherwise not subject
to the Excise Tax.
15
(B) Calculation of Benefits Subject to Excise Tax. The
amount of the Total Benefits that shall be treated as subject to the
Excise Tax shall be equal to the lesser of (1) the total amount of
the Total Benefits reduced by the amount of such Total Benefits that
in the opinion of the Accounting Firm are not parachute payments, or
(2) the amount of excess parachute payments within the meaning of
Code Section 280G(b)(1) (after applying clause (A), above).
(C) Value of Non-cash Benefits and Deferred Payment.
The value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Accounting Firm in accordance with the
principles of Code Sections 280G(d)(3) and (4).
(iii) Assumed Marginal Income Tax Rate. For purposes of
determining the amount of the Gross-Up Payments, the Employee shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar years in which the Gross-Up Payments are to
be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Employee’s residence on the date
on which such gross up payments are to be made, net of the reduction in
federal income taxes that can be obtained from deduction of such state and
local taxes (calculated by assuming that any reduction under Code Section 68
in the amount of itemized deductions allowable to the Employee applies first
to reduce the amount of such state and local income taxes that would
otherwise be deductible by the Employee, and applicable federal FICA and
Medicare withholding taxes.)
(iv) The Accounting Firm Shall Determine Whether a Gross-Up Payment
is Required. Subject to paragraphs (i) through (iii) above, all
determinations required to be made under paragraphs (i) through (viii),
including whether and when a Gross-Up Payment is required, the amount of the
Gross-Up Payment and the assumptions to be used to arrive at the
determination (collectively, the “Determination”), shall be made by the
Accounting Firm. The Accounting Firm shall provide detailed supporting
calculations both to the Bank or First Financial Corporation and to the
Employee within 15 business days after the Determination has been made, or
such earlier time as is requested by the Bank, First Financial Corporation
or the Employee.
(v) Fees and Expenses of the Accounting Firm and Agreement with the
Accounting Firm. All fees and expenses of the Accounting Firm shall be
borne solely by the Bank or First Financial Corporation.
16
(vi) Accounting Firm’s Opinion. If the Accounting Firm
determines that no Excise Tax is payable by the Employee, the Accounting
Firm shall furnish the Employee with a written opinion to that effect, and
to the effect that failure to report Excise Tax, if any, on the Employee’s
applicable federal income tax return will not result in the imposition of a
negligence or similar penalty.
(vii) Accounting Firm’s Determination is Binding. The
Determination by the Accounting Firm shall be binding on the Bank, First
Financial Corporation and the Employee.
(viii) Underpayment and Overpayment. Because of the
uncertainty in determining whether any of the Total Benefits will be subject
to the Excise Tax at the time of the Determination, it is possible that
Gross-Up Payments that should have been made will not have been made by the
Bank or First Financial Corporation (“Underpayment”), or that Gross-Up
Payments will be made that should not have been made by the Bank or First
Financial Corporation (“Overpayment”).
If, after a Determination by the Accounting Firm, the Employee is
required to make a payment of additional Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred. The
Underpayment (together with any interest and penalties imposed by the
Internal Revenue Service shall be paid promptly by the Bank or First
Financial Corporation to or for the benefit of the Employee.
If the amount of the Gross-Up Payments exceeds the amount necessary to
reimburse the Employee for his Excise Tax, the Accounting Firm shall
determine the amount of the Overpayment that has been made. The Overpayment
shall be repaid promptly by the Employee. Provided that his expenses are
reimbursed by the Bank or First Financial Corporation, the Employee shall
cooperate with any reasonable requests by the Bank or First Financial
Corporation in any contests or disputes with the Internal Revenue Service
relating to the Excise Tax.
(ix) Accounting Firm Conflict of Interest. If the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Employee may appoint another nationally
recognized certified public accounting firm to make the Determinations
required hereunder (in which case the term “Accounting Firm” as used herein
shall be deemed to refer to the accounting firm appointed by the Employee
under this paragraph). The Bank or First Financial Corporation shall pay
all fees and expenses of the Accounting Firm appointed by the Employee.
17
(4) “Change in Control” shall be deemed to have occurred if one of the
following events takes place:
(i) Change in Ownership. A change in the ownership of the Bank
or First Financial Corporation occurs on the date that any person, or group
of persons, as defined below, acquires ownership of stock of the Bank or
First Financial Corporation that, together with stock held by the person or
group, constitutes more than 50 percent of the total fair market value or
total voting power of the stock of the Bank or First Financial Corporation.
However, if any person or group is considered to own more than 50 percent of
the total fair market value or total voting power of the stock, the
acquisition of additional stock by the same person or group is not
considered to cause a change in the ownership of the Bank or First Financial
Corporation (or to cause a change in the effective control of the Bank or
First Financial Corporation as defined in subsection 10(a)(4)(ii)). An
increase in the percentage of stock owned by any person or group, as a
result of a transaction in which the Bank or First Financial Corporation
acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this subsection. This subsection only
applies when there is a transfer of stock of the Bank or First Financial
Corporation (or issuance of stock of a corporation) and stock in the Bank or
First Financial Corporation remains outstanding after the transaction.
For purposes of subsections 10(a)(4)(i) and (ii), persons will not be
considered to be acting as a group solely because they purchase or own stock
of the Bank or First Financial Corporation at the same time, or as a result
of the same public offering. However, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of stock or similar business
transaction with the Bank or First Financial Corporation. If a person,
including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock or similar
transaction, such shareholder is considered to be acting as a group with
other shareholders only with respect to the ownership in that corporation
before the transaction giving rise to the change and not with respect to the
ownership interest in the other corporation.
(ii) Change in the Effective Control. A change in the
effective control of the Bank or First Financial Corporation will occur
when: (i) any person or group (as defined in subsection 10(a)(4)(i))
acquires, or has acquired during the 12-month period ending on the date of
the most recent acquisition by such person(s), ownership of stock of the
Bank or First Financial Corporation possessing 30 percent or more of the
total voting power; or (ii) a majority of members of the Board is replaced
during any 12-month period by Directors whose appointment or election is not
endorsed by a majority of the members of the Bank’s or First Financial
Corporation’s Board prior to the date of the appointment or election.
However, if any person or group is considered to effectively control the
Bank or First Financial Corporation, the acquisition of additional control
of the Bank or First Financial Corporation by the same person(s) is not
considered to cause a change in the effective control.
18
(iii) Change in the Ownership of a Substantial Portion of the
Bank’s or First Financial Corporation’s Assets. A change in the
ownership of a substantial portion of the Bank’s or First Financial
Corporation’s assets occurs on the date that any person or group acquires,
or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person(s), assets from the Bank or First
Financial Corporation that have a total gross fair market value equal to or
more than 40 percent of the total gross fair market value of all of the
assets of the Bank or First Financial Corporation immediately prior to such
acquisition(s). Gross fair market value means the value of the assets of
the Bank or First Financial Corporation, or the value of the assets being
disposed of, determined without regard to any liabilities associated with
such assets.
However, there is no Change in Control under this subsection when there is a
transfer to an entity that is controlled by the shareholders of the Bank or
First Financial Corporation immediately after the transfer. A transfer of
assets by the Bank or First Financial Corporation is not treated as a change
in the ownership of such assets if the assets are transferred to: (i) a
shareholder of the Bank or First Financial Corporation (immediately before
the asset transfer) in exchange for or with respect to its stock; (ii) an
entity, 50 percent or more of the total value or voting power of which is
owned, directly or indirectly, by the Bank or First Financial Corporation;
(iii) a person, or group of persons, that owns, directly or indirectly, 50
percent or more of the total value or voting power of all the outstanding
stock of the Bank or First Financial Corporation or (iv) an entity, at least
50 percent of the total value or voting power of which is owned, directly or
indirectly, by a person described in (iii). For purposes of this
subsection, except as otherwise provided, a person’s status is determined
immediately after the transfer of the assets. For example, a transfer to a
company in which the Bank or First Financial Corporation has no ownership
interest before the transaction, but which is a majority-owned subsidiary of
the Bank or First Financial Corporation after the transaction, is not
treated as a change in the ownership of the assets of the transferor Bank or
First Financial Corporation.
For purposes of this subsection 10(a)(4)(iii), persons will not be
considered to be acting as a group solely because they purchase assets of
the Bank or First Financial Corporation at the same time. However, persons
will be considered to be acting as a group if they are owners of a
corporation that enters into a merger, consolidation, purchase or
acquisition of assets, or similar business transaction with the Bank or
First Financial Corporation. If a person, including an entity shareholder,
owns stock in both corporations that enter into a merger, consolidation,
purchase
or acquisition of assets, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a corporation
only to the extent of the ownership in that corporation before the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.
19
Notwithstanding the foregoing, the acquisition of Bank or First Financial Corporation
stock by any retirement plan sponsored by the Bank or an affiliate of the Bank will not
constitute a Change in Control. Additionally, notwithstanding the foregoing, but only to
the extent required under federal banking law, the amount payable under subsection 10(a)
shall be reduced to the extent that on the date of the Employee’s termination of employment,
the amount payable under subsection 10(a) exceeds any limitation on severance benefits that
is imposed by the OCC.
(b) Change in Control; Voluntary Termination. Notwithstanding any other
provision of this Agreement to the contrary, the Employee may voluntarily terminate his
employment under this Agreement within 12 months following a Change in Control of the Bank
or First Financial Corporation, as defined in subsection 10(a)(4), and the Employee shall
thereupon be entitled to receive the payment described in subsections 10(a)(1), (2) and (3)
of this Agreement, within 30 days following the occurrence of any of the following events,
which has not been consented to in advance by the Employee in writing. During such 30-day
period, the Bank shall not allow the Employee’s participation in any Employee Benefits to
lapse and shall continue to provide the Employee with the Automobile Benefits described in
subsection 4(d), reimbursement or payment of professional and club dues, and the cost of the
Employee’s continuing legal education requirements as described in subsection 4(c). In the
event subsection 8(h) applies at the time of the Employee’s termination, the six-month
suspension period shall not prevent the Employee from continuing to receive reimbursement of
health insurance premiums for himself, his spouse and child living in the Employee’s
household, Medicare supplement insurance and life insurance (all as described in subsection
4(b)) immediately following his termination of employment, without regard to the six-month
suspension applicable to cash payments and other benefit amounts.
(i) The requirement that the Employee perform his principal executive functions
more than 30 miles from his Terre Haute, Indiana office.
(ii) A reduction of ten percent or more in the Employee’s base salary as in
effect on the date of the Change in Control or as the same may be changed by mutual
agreement from time to time, unless part of an institution-wide reduction and
similar to the reduction in the base salary of all other executive officers of the
Bank;
(iii) The removal of the Employee from participation in any incentive
(including, but not limited to, the LTIP) or performance-based compensation plans or
bonus plans unless the Bank terminates participation in the plan or plans with
respect to all other executive officers of the Bank;
20
(iv) The failure by the Bank to continue to provide the Employee with the base
salary, bonuses or benefits provided for under subsections 4(a), (c), (d) and (e) of
this Agreement, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under those subsections or under any
benefit plan or program in which the Employee now or hereafter becomes eligible to
participate, or the taking of any action by the Bank which would directly or
indirectly reduce any such benefits or deprive the Employee of any such benefit
enjoyed by him, unless part of an institution-wide reduction and applied similarly
to all other executive officers of the Bank;
(v) The assignment to the Employee of duties and responsibilities materially
different from those normally associated with his position as referenced in Section
1;
(vi) A failure to elect or re-elect the Employee to the Board or a failure on
the part of First Financial Corporation or its successor to honor any obligation to
nominate Employee to the Board of Directors of First Financial Corporation or its
successor;
(vii) A material diminution or reduction in the Employee’s responsibilities or
authority (including reporting responsibilities) in connection with his employment
with the Bank; or
(viii) A material reduction in the secretarial or administrative support of the
Employee.
(c) Compliance with 12 U.S.C. Section 1828(k). Any payments made to the
Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(d) Trust.
(1) Within five business days before or after a Change in Control which was not
approved in advance by a resolution of a majority of the Directors of First
Financial Corporation, the Bank or First Financial Corporation shall (i) deposit, or
cause to be deposited, in a grantor trust (the “Trust”), designed to conform with
Revenue Procedure 93-64 (or any successor) and having a trustee independent of the
Bank, an amount equal to the amounts which would be payable in a lump sum under
subsections 10(a)(1), (2) and (3) hereof if those payment provisions become
applicable, and (ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment return thereon in a segregated account for the
benefit of the Employee, and to follow the procedures set forth in the next
paragraph as to the payment of such amounts from the Trust.
21
(2) During the 12 consecutive month period following the date on which the Bank
makes the deposit referred to in the preceding paragraph, the Employee may provide
the trustee of the Trust with a written notice requesting that the trustee pay to
the Employee, in a single sum, the amount designated in the notice as being payable
pursuant to subsections 10(a)(1), (2) and (3). Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice to
the Bank via overnight and registered mail, return receipt requested. On the tenth
business day after mailing said notice to the Bank, the trustee of the Trust shall
pay the Employee the amount designated therein in immediately available funds,
unless prior thereto the Bank provides the trustee with a written notice directing
the trustee to withhold such payment. In the latter event, the trustee shall submit
the dispute, within ten days of receipt of the notice from the Bank, to
non-appealable binding arbitration for a determination of the amount payable to the
Employee pursuant to subsections 10(a)(1), (2) and (3), and the party responsible
for the payment of the costs of such arbitration (which may include any reasonable
legal fees and expenses incurred by the Employee) shall be determined by the
arbitrator. The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association in
making his or her determination. The Employee, the Bank and the trustee shall be
bound by the results of the arbitration and, within three days of the determination
by the arbitrator, the trustee shall pay from the Trust the amounts required to be
paid to the Employee and/or the Bank, and in no event shall the trustee be liable to
either party for making the payments as determined by the arbitrator.
(3) Upon the earlier of (i) any payment from the Trust to the Employee, or (ii)
the date twelve months after the date on which the Bank makes the deposit referred
to in the first paragraph of this subsection 10(d)(1), the trustee of the Trust
shall pay to the Bank the entire balance remaining in the segregated account
maintained for the benefit of the Employee, if any. The Employee shall thereafter
have no further interest in the Trust pursuant to this Agreement. However, the
termination of the Trust shall not operate as a forfeiture or relinquishment of any
of the Employee’s rights under the terms of this Agreement. Furthermore, in the
event of a dispute under subsection 10(d)(2), the trustee of the Trust shall
continue to hold, in trust, the deposit referred to in subsection 10(b)(1) until a
final decision is rendered by the arbitrator pursuant to subsection 10(b)(2).
(e) In the event that any dispute arises between the Employee and the Bank as to the
terms or interpretation of this Agreement or the obligations thereunder, including this
Section, whether instituted by formal legal proceedings or submitted to arbitration pursuant
to subsection 10(d)(2), including any action that the Employee takes to enforce the terms of
this Section or to defend against any action taken by the Bank, the Employee shall be
reimbursed for all costs and expenses, including reasonable attorneys’ fees, arising from
such dispute, proceedings or actions, provided that the Employee shall obtain a final
judgment by a court of competent jurisdiction in favor of the Employee or, in the event of
arbitration pursuant to subsection 10(d)(2), a determination is made by the
arbitrator that the expenses should be paid by the Bank. Such reimbursement shall be
paid within ten days of Employee’s furnishing to the Bank written evidence, which may be in
the form, among other things, of a canceled check or receipt, of any costs or expenses
incurred by the Employee.
22
Should the Employee fail to obtain a final judgment in favor of the Employee and a
final judgment or arbitration decision is entered in favor of the Bank and if decided by
arbitration, the arbitrator, pursuant to subsection 10(d)(2), determines the Employee to be
responsible for the Bank’s expenses, then the Bank shall be reimbursed for all costs and
expenses, including reasonable attorneys’ fees arising from such dispute, proceedings or
actions. Such reimbursement shall be paid within ten days of the Bank furnishing to the
Employee written evidence, which may be in the form, among other things, of a canceled check
or receipt, of any costs or expenses incurred by the Bank.
11. Stock Options. First Financial Corporation will permit the Employee or his
personal representative(s) or heirs, during a period of three months following Employee’s
termination of employment by the Bank for the reasons set forth in subsections 8(d), 8(e), 10(a) or
10(b), to require First Financial Corporation, upon written request, to purchase all outstanding,
unexpired stock options previously granted to the Employee under any stock option plan then in
effect to the extent the options are vested 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 (a) the average of the highest asked prices for shares in the over-the-counter
market as reported on the NASDAQ system or other exchange if the shares are traded on such system
for the 30 business days preceding such termination, or (b) the average per share price actually
paid for the most highly priced one percent of the shares acquired in connection with the Change of
Control by any person or group acquiring such control.
12. Federal Income Tax Withholding. The Bank may withhold all federal and state
income or other taxes from any benefit payable under this Agreement as shall be required pursuant
to any law or governmental regulation or ruling.
13. Successors and Assigns.
(a) Bank. This Agreement shall not be assignable by the Bank or First Financial
Corporation, provided that this Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Bank or First Financial Corporation which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all
of the assets or stock of the Bank or First Financial Corporation.
(b) Employee. Because the Bank is contracting for the unique and personal skills of
the Employee, the Employee shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank; provided, however, that nothing
in this paragraph shall preclude (i) the Employee from designating a beneficiary to receive any
benefit payable hereunder upon his death, or (ii) the executors, administrators, or other legal
representatives of the Employee or his estate from assigning any rights hereunder to the person or
persons entitled thereunto.
23
(c) Attachment. 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 exclusion, attachment, levy or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be
null, void and of no effect.
14. Amendments. No amendments or additions to this Agreement shall be binding unless
made in writing and signed by the Bank, First Financial Corporation and the Employee, except as
herein otherwise specifically provided.
15. Applicable Law. Except to the extent preempted by federal law, the laws of the
State of Indiana, without regard to that State’s choice of law principles, shall govern this
Agreement in all respects, whether as to its validity, construction, capacity, performance or
otherwise.
16. Severability. 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. Should any particular covenant, provision or clause of this Agreement
be held unreasonable or unenforceable for any reason, including without limitation, the time
period, geographic area and/or scope of activity covered by such covenant, provision or clause, the
Bank and Employee acknowledge and agree that such covenant, provision or clause shall be given
effect and enforced to whatever extent would be reasonable and enforceable under applicable law.
17. Entire Agreement. This Agreement: (a) supersedes all other understandings and
agreements, oral or written, between the parties with respect to the subject matter of this
Agreement; and (b) constitutes the sole agreement between the parties with respect to this subject
matter.
18. Construction. The rule of construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
19. Headings. The headings in this Agreement have been inserted solely for ease of
reference and shall not be considered in the interpretation, construction or enforcement of this
Agreement.
24
20. Notices. 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 (a) if hand
delivered, upon delivery to the party, or (b) if mailed, two days following deposit of the notice
or communication with the United States Postal Service by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
| If to the Employee: | Xxxxxx X. Xxxxxx 00 Xxxxxxxxx Xxxxx Xxxxx, Xxxxxxx 00000 |
|||
| If to the Bank: | First Financial Bank, N.A. Attn: Chief Financial Officer One First Financial Xxxxx X.X. Xxx 000 Xxxxx Xxxxx, Xxxxxxx 00000-0000 |
|||
| If to First Financial Corporation: | First Financial Corporation Attn: President One First Financial Xxxxx X.X. Xxx 000 Xxxxx Xxxxx, Xxxxxxx 00000-0000 |
or to such other 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.
21. Waiver. The waiver by either party of a breach of any provision of this
Agreement, or failure to insist upon strict compliance with the terms of this Agreement, shall not
be deemed a waiver of any subsequent breach or relinquishment of any right or power under this
Agreement.
22. Review and Consultation. Employee acknowledges and agrees he (a) has read this
Agreement in its entirety prior to executing it, (b) understands the provisions and effects of this
Agreement and (c) has consulted with such attorneys, accountants and financial or other advisors as
he has deemed
appropriate in connection with the execution of this Agreement. Employee understands,
acknowledges and agrees that he has not received any advice, counsel or recommendation with respect
to this Agreement from Employer’s attorneys.
* * *
25
IN WITNESS WHEREOF, the parties have executed this Agreement on this 14th day of April, 2008.
| ATTEST | FIRST FINANCIAL BANK, N.A. | |||||||
| (s) Xxxxxxx X. Xxxxxx | (s) Xxxxxxx X. Xxxxx | |||||||
| Xx. Executive Assistant |
Xxxxxxx X. Xxxxx, Secretary/Treasurer | |||||||
Title: |
||||||||
| EMPLOYEE | ||||||||
| (s) Xxxxxx X. Xxxxxx | ||||||||
| Xxxxxx X. Xxxxxx | ||||||||
The undersigned, First Financial Corporation, sole shareholder of the Bank, agrees that if it
shall be determined for any reason that any obligation on the part of the Bank is unenforceable for
any reason or if the Bank fails to perform, First Financial Corporation 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. The undersigned further agrees to
nominate Employee to the Board of Directors of First Financial Corporation during the term of this
Agreement.
| ATTEST | FIRST FINANCIAL CORPORATION | |||||||
| (s) Xxxxxxx X. Xxxxx | (s) Xxxxxx X. Xxxxx | |||||||
| Xxxxxx X. Xxxxx, President | ||||||||
Title:
|
Secretary | |||||||
26
