EMPLOYMENT AGREEMENT
This Agreement, made and dated as of January 16, 2001, by and between
Lincoln Federal Savings Bank, a federal savings bank ("Employer"), and Xxxxxxx
X. Xxxxxx, a resident of Xxxxxxxxx County, Indiana ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by Employer as its Retail Sales Manager
and has made valuable contributions to the profitability and financial strength
of Employer;
WHEREAS, Employer desires to encourage Employee to continue 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 her 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 Lincoln Bancorp (the "Holding Company"), the
Indiana corporation which owns all of the issued and outstanding capital stock
of Employer;
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 her 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 her 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 Retail Sales Manager, Employer and Employee, each
intending to be legally bound, covenant and agree as follows:
-1-
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's Retail Sales Manager, and
Employee accepts such employment.
2. Employee agrees to serve as Employer's Retail Sales Manager and to
perform such duties in that office as may reasonably be assigned to her by
Employer's Board of Directors; provided, however, that such duties shall be
performed in or from the offices of Employer currently located at Plainfield,
Indiana, and shall be of the same character as those previously performed by
Employee 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 Employer's
primary office. Employee shall render services to Employer as Retail Sales
Manager in substantially the same manner and to substantially the same extent as
Employee rendered her services to Employer before the date hereof. While
employed by Employer, Employee shall devote substantially all her business time
and efforts to Employer's business during regular business hours and shall not
engage in any other related business.
3. The term of this Agreement shall begin on the date set forth above
(the "Effective Date") and shall end on the date which is two years following
such date; provided, however, that such term shall be extended automatically for
an additional year on each anniversary of the Effective Date if Employer's Board
of Directors determines by resolution that the performance of the Employee has
met the Board's requirements and standards and that this Agreement should be
extended prior to such anniversary of the Effective Date, unless either party
hereto gives written notice to the other party not to so extend within ninety
(90) days prior to such anniversary, in which case no further automatic
extension shall occur and the term of this Agreement shall end one year
subsequent to the anniversary as of which the notice not to extend for an
additional year is given (such term, including any extension thereof shall
herein be referred to as the "Term").
4. Employee shall receive an annual salary of $85,000 ("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 her Base Compensation. Prior to a Change of Control, 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
December 31, 1997, and Employer makes similar decreases in the salary it pays to
other executive officers of Employer. After a Change in Control, 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.
-2-
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, she shall be included as a participant in all present and future
employee benefit, retirement, and compensation plans generally available to
employees of Employer, consistent with her Base Compensation and her position as
Retail Sales Manager of Employer, including, without limitation, Employer's or
the Holding Company's pension plan, 401(k) plan, Stock Option Plan, Recognition
and Retention Plan and Trust, Employee Stock Ownership Plan, and
hospitalization, disability 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
December 31, 1997, and unless (either before or after a Change of Control)
changes in the accounting, legal, 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 her employment by Employer, upon
submission to Employer of written vouchers and statements for reimbursement. 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 her point of view than those written vacation
policies in effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be entitled to office space
and working conditions no less favorable than were in effect for her 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
provision of this Agreement.
-3-
(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 her
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 Retail Sales
Manager 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 to materially limit, increase, or modify
Employee's duties and/or authority as Retail Sales Manager 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 her 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 her 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 her 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, 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.
-4-
(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, 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 her Base
Compensation at the rates in effect at the time of termination (1)
for three additional l2-month periods 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 periods, 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 her 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 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 she 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). Notwithstanding anything to the contrary in the
foregoing, any benefits payable under this subsection 8(B) shall be
subject to the limitations on severance benefits set forth in
Regulatory Bulletin 27a of the Office of Thrift Supervision, as in
effect on the Effective Date.
(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, 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(E). 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 her personal representative(s) or
heirs, during a period of three months following Employee's
termination of employment by
-5-
Employer for the reasons set forth in subsections 7(B) or (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 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 (C) of this Agreement,
Employee shall not divulge or furnish any trade secrets (as defined
in IND. CODEss. 24-2-3-2) of Employer or any confidential
information acquired by her 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 three years after termination of Employee's
employment by Employer for reasons other than those set forth in
subsections 7(B) or (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 while
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 (C) of this
Agreement, Employee shall not, directly or
-6-
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 which competes with
the business of Employer as conducted during Employee's employment
by Employer within a radius of twenty-five (25) miles of Employer's
main office.
(D) If Employee's employment by Employer is terminated hereunder 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 (C) of this Agreement,
Employee shall have no obligations to Employer with respect to noncompetition
under this section 9.
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) or (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.
-7-
14. All obligations under this Agreement shall 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 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
parties.
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
and Employee obtains a final judgment in her favor in a court of competent
jurisdiction or her claim is settled by Employer prior to the rendering of a
judgment by such a court, 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 her claim shall be paid by Employer, to the extent permitted by law.
17. Should Employee die after termination of her employment with
Employer while any amounts are payable to her 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 her 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: Xxxxxxx X. Xxxxxx
-8-
If to Employer: Lincoln Federal Savings Bank
0000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
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. The validity, interpretation, and performance of this Agreement
shall be governed by the laws of the State of Indiana, except 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 her
employment with Employer pursuant to subsection 7(C) hereof. As used in this
Agreement, "Employer" shall mean Employer as hereinbefore 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 her will or by the
laws of descent or
-9-
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.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed and delivered as of the day and year first above set forth.
LINCOLN FEDERAL SAVINGS BANK
By:/s/ T. Xxx Xxxxx
-----------------------------------
T. Xxx Xxxxx, President
"Employer"
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxx
"Employee"
The undersigned, Lincoln Bancorp, sole shareholder of Employer, agrees
that if it shall be determined for any reason that any obligations on the part
of Employer to continue to make any payments due under this Agreement to
Employee is unenforceable for any reason, Lincoln Bancorp, 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.
LINCOLN BANCORP
By: /s/ T. Xxx Xxxxx
-----------------------------------
T. Xxx Xxxxx, President
-10-
