Exhibit 10.11 - Employment Agreement with Xxxx X. Xxxxxxx
AGREEMENT
THIS AGREEMENT is made by and between Community Bank Shares of Indiana,
Inc. an Indiana corporation, (a "Corporation", and collectively the "Employer"),
and Xxxx X. Xxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, in order to induce the Executive to serve as (i) Chief Financial
Officer of Community Bank Shares of Indiana, Inc., the Employer and the
Executive desire to enter into this Agreement to specify the terms of the
Executive's employment.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. DEFINTIONS. The following words and terms shall have the meanings set
forth below for the purpose of this Agreement.
(a) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(b) Cause. Termination of the Executive's employment for "Cause"
shall mean termination because of personal dishonesty, incompetence (as defined
hereinbelow), willfull misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or a material breach of any provision of this
Agreement by the Executive. For purposes of this subsection (1)(b), the term
"incompetence" shall be defined as neglect of duties, lack of effort, or
substandard performance arising from the Executive's level of commitment, and
not solely from a general worsening of the economy.
(c) Change in Control of the Corporation. (A) "Change in Control of
the Corporation" shall be deemed to have occurred if (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
("Exchange Act") is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; and (ii) during any period of two (2)
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for election,
by stockholders of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(f) Disability. Termination by the Employer of the Executive's
employment based on "Disability" shall mean termination at any time after the
date of hire because of any physical or mental impairment which qualifies the
Executive for disability benefits under the applicable longterm disability plan
maintained by the
--------------------------------------------------------------------------------
66
Employer or any subsidiary or, if no such plan applies, which would qualify the
Executive for disability benefits under the Federal Social Security System.
(g) IRS. IRS shall mean the Internal Revenue Service.
(h) Notice of Termination. Any purported termination of the
Executive's employment by the Employer for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, shall be communicated by written "Notice of Termination" to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a dated notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, (iii) specifies a Date of
Termination, which shall be not less than thirty (30) nor more than ninety (90)
days after such Notice of Termination is given, except in the case of the
Employer's termination of Executive's employment for Cause, which shall be
effective immediately; and (iv) is given in the manner specified in Section 11
hereof.
(i) Retirement. Termination by the Employer of the Executive's
employment based on "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including early
retirement, generally applicable to their salaried employees.
2. TERM OF EMPLOYMENT.
(a) The Employer hereby employs the Executive as (i) Chief Financial
Officer of Community Bank Shares of Indiana, Inc., and Executive hereby accepted
said employment to commence no later than April 21, 1997, and agrees to render
such services to the Employer on the terms and conditions set forth in this
Agreement. The initial term of employment under this Agreement shall be for two
(2) years, commencing on the date of this Agreement and shall extend each year
for an additional year on each annual anniversary of the date of this Agreement
such that at any time the remaining term of this Agreement shall be from one to
two years, unless either party shall notify the other of its intention to stop
such extensions. If the Board of Directors or the Executive elects not to extend
the term, it shall give written notice of such decision to the other party not
less than thirty (30) days prior to any such annual extension date. If any party
gives timely notice that the term will not be extended as of any annual
extension date, then this Agreement shall terminate at the conclusion of its
remaining term. References herein to the term of this Agreement shall refer both
to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Employer as may be consistent with his titles
and from time to time assigned to him by the Chief Executive Officer of
Community Bank Shares of Indiana, Inc.; provided, however, such executive
services shall not be materially changed from the Executive's present duties as
Chief Financial Officer of Community Bank Shares of Indiana, Inc., without the
Executive's express written consent, which consent may be withheld in the sole
discretion of the Executive. Executive shall not be required to report to any
supervisor other than the Chief Executive Officer of Community Bank Shares of
Indiana, Inc., without his express written consent, which consent may be
withheld in the sole discretion of the Executive. Notwithstanding the above,
Executive's duties shall include, but not be limited to, directing the
establishment and maintenance of proper accounting and financial systems and
controls; oversees management and external reporting; assists and directs
development of budgets and planning, directs capital investment activities and
serves as a liaison with auditors and regulatory bodies, in addition to such
other duties as the Chief Executive Officer of Community Bank Shares of Indiana,
Inc., may in his discretion assign from time to time.
3. COMPENSATION AND BENEFITS
--------------------------------------------------------------------------------
67
(a) The Employer shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $92,000.00 (Ninety
Two Thousand Dollars) per year ("Base Salary"), which may be increased from time
to time in such amounts as may be determined by the Board of Directors of the
Employer.
(b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employer, including life, medical, dental and disability insurance coverage, to
the extent commensurate with his then duties and responsibilities, and in the
same manner and scope as such benefits are provided to other officers of the
Employer with similar responsibilities and results obtained, as fixed from
time-to-time by the Board of Directors of the Employer; provided, however, the
Employer shall provide health insurance for the benefit of the Executive
commencing upon the date of this Agreement in the same scope and extent that
Employer presently provides health insurance benefits to other similarly
situated executives. The Employer shall not make any changes in such plans,
benefits or privileges which would adversely affect Executive's rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all executive officers of the Employer. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the salary payable to Executive pursuant to Section 3(a)
hereof Notwithstanding the foregoing, nothing contained in this Agreement shall
require the Executive to participate in any tax qualified or non-qualified
benefit plan of the Employer.
(c) During the term of this Agreement, the Employer shall provide
the Executive with coverage for supplemental long-term disability insurance to
the extent that such coverage is then provided as a benefit to other employees.
(d) During the term of this Agreement, the Executive shall be
entitled to four (4) weeks of paid annual vacation. The Executive shall not be
entitled to receive any additional compensation from the Employer for failure to
take a vacation, nor shall the Executive be able to accumulate unused vacation
from one year to the next, except to the extent authorized in writing by the
Board of Directors of the Employer.
(e) In the event that Employer subsequently adopts a stock grant
program, Executive shall be entitled to participate in such program in the
manner and extent subsequently determined by the Board of Directors, without
diminution of Executive's rights under Section 3(f) above.
4. EXPENSES. The Employer shall reimburse Executive or otherwise provide
for or pay for all reasonable expenses incurred by Executive in furtherance of,
or in connection with the business of the Employer, including, but not by way of
limitation, traveling expenses and all reasonable entertainment expenses
(whether incurred at the Executive's residence, while traveling, or otherwise),
subject to such reasonable documentation and other limitations as may be
established by the Board of Directors of the Employer for all similarly situated
executives employed by Employer. If such expenses are paid in the first instance
by Executive, the Employer shall reimburse the Executive therefore.
5. TERMINATION.
(a) The Employer shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including termination for Cause, Disability or Retirement, and Executive
shall have the right, upon prior Notice of Termination, to terminate his
employment hereunder for any
--------------------------------------------------------------------------------
68
reason.
(b) In the event that (i) Executive's employment is terminated by
the Employer for Cause, Disability or Retirement or in the event of the
Executive's death, or (ii) Executive terminates his employment hereunder other
than following a Change in Control of the Corporation or a material breach of
this Agreement by the Employer which has not been cured in accordance with the
terms of this Agreement, Executive shall have no right pursuant to this
Agreement to compensation or to any non-vested stock options granted to the
Executive, which shall be governed by the terms of the option grant and the
Employer's stock option plan that such options were granted under.
(c) In the event that Executive's employment is terminated by the
Employer for other than Cause, Disability, Retirement or the Executive's death,
or such employment is terminated by the Executive due to a material breach of
this Agreement by the Employer which has not been cured within fifteen (15) days
after a written notice of non-compliance has been given by the Executive to the
Employer, and as of Executive's date of Termination no Change in Control of the
Corporation has occurred, no written agreement which contemplates a Change in
Control of the Corporation and which still is in effect has been entered into by
the Employer and no discussions and/or negotiations are being conducted which
relate to the same, then the Employer shall, subject to the provisions of
Section 6 hereof, if applicable:
(1) pay to the Executive, in equal monthly installments,
beginning with the first business day of the month following the Date of
Termination, a cash severance amount equal to the Base Salary which the
Executive would have earned over the remaining term of this Agreement as of his
Date of Termination; and,
(2) maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of the Executive's employment which
remained immediately prior to the Executive's Date of Termination, or (ii) the
date of the Executive's full-time employment by another employer (provided that
the Executive is entitled under the terms of such employment to benefits
substantially similar to those described in this subparagraph (2), at no cost to
the Executive, the Executive's Continued participation in all group insurance,
life insurance, health and accident and disability plans in which the Executive
was entitled to participate immediately prior to the Date of Termination,
provided that in the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (2) is prohibited by the
terms of the plan or by the Employer for legal or other bona fide reasons, or
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced for all employees, the Employer shall
arrange to provide the Executive with benefits substantially similar to those
which the Executive would have received had his employment continued throughout
such period to the extent such benefits can be provided at a commercially
reasonable cost. In the event such benefits cannot be provided at a commercially
reasonable cost, the Employer shall pay the Executive that portion of the
premiums or other costs of such plans allocable to the Executive in that year
prior to the Date of Termination for the period set forth in this subparagraph
(2). Nothing provided for in this subparagraph (2) shall be construed as to
provide for continued participation by the Executive in any stock option or
restricted stock plan or any cash incentive or bonus plan of the Employer or
adversely effect any rights the Executive has with regard to any vested stock
options granted to the Executive, which shall be governed by the terms of the
option grant and the Employer's stock option plan that such options were granted
under.
6. CHANGE IN CONTROL OF THE CORPORATION. In the event of a Change in
Control of the Corporation, then the Employer shall, subject to the provisions
of Section 7 hereof, if applicable:
(a) immediately pay to the Executive, in a single lump sum payment,
a cash amount equal to two (2) times each of (i) the Executive's Base Salary,
(ii) the Executive's average yearly bonus compensation paid during the
--------------------------------------------------------------------------------
69
prior two (2) years, which amount shall be calculated as of the date of the
Change in Control of the Corporation; and,
(b) maintain and provide for a period ending at the earlier of (i)
the expiration of twenty-four (24) months from the date a Change in Control of
the Corporation has occurred or (ii) the date of the Executive's full time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (b), at no cost to the Executive, the Executive's
continued participation in all group insurance, life insurance, health and
accident, and disability plans in which the Executive was entitled to
participate immediately prior to the date of the occurrence of the Change in
Control of the Corporation, provided that in the event that the Executive's
participation in any plan, program or arrangement as provided in this
subparagraph (b) is prohibited by the terms of the plan or by the Employer for
legal or other bona fide reasons, or during such period any such plan, program
or arrangement is discontinued or the benefits thereunder are materially reduced
for all employees, the Employer shall arrange to provide the Executive with
benefits substantially similar to those which the Executive would have received
had his employment continued throughout such period to the extent such benefits
can be provided at a commercially reasonable cost. In the event such benefits
cannot be provided at a commercially reasonable cost, the Employer shall pay the
Executive that portion of the premiums or other costs of such plans allocable to
the Executive in the year prior to the Date of Termination for the period set
forth in this subparagraph (b). Nothing provided for in this subparagraph (b)
shall be construed as to provide for continued participation by the Executive in
any stock option or restricted stock plan or any cash incentive or bonus plan of
the Employer.
7. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES.
If the payments and benefits pursuant to Section hereof, either alone or
together with other payments and benefits which Executive has the right to
receive from the Employer, would constitute a "parachute payment" under Section
2800 of the Code, the payments and benefits pursuant to section 6 hereof shall
be reduced, in the manner determined by the executive, by the amount, if any,
which is the minimum necessary to result in no portion of the payments and
benefits under Section 6 being non-deductible to the Employer pursuant to
Section 2800 of the Code and subject to the excise tax imposed under Section
4999 of the Code. The determination of any reduction in the payments and
benefits to be made pursuant to Section 6 shall be based upon the opinion of
independent tax counsel selected by the Employers' independent public
accountants and paid by the Employer. Such counsel shall be reasonable
acceptable to the Employer and the Executive; shall promptly prepare the
foregoing opinion, but in no event later than thirty (30) days from the Date of
Termination; and may use such actuaries as such counsel deems necessary or
advisable for the purpose. In the event that the Employer and/or the Executive
do not agree with the opinion of such counsel,
(i) Employer shall pay to the Executive the maximum amount of payments and
benefits pursuant to Section 5, as selected by the Executive, which such opinion
indicates that there is a high probability do not result in any of such payments
and benefits being no-deductible to the Employer and subject to the imposition
of the excise tax imposed under Section 4999 of the Code and (ii) the Employer
may request, and Executive shall have the right to demand that the Employer
request, a ruling from the IRS as to whether the disputed payments and benefits
pursuant to section 6 hereof have such consequences. Any such request for a
ruling from the IRS shall be promptly prepared and filed by the Employer, but in
no event later than thirty (30) days from the date of the opinion of counsel
referred to above, and shall be subject to Executive's approval prior to filing,
which shall not be unreasonably withheld. The Employer and Executive agree to be
bound by any ruling received from the IRS and to make appropriate payments to
each other to reflect any such rulings, together with interest at the applicable
federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained
herein shall result in a reduction of any payments or benefits to which the
Executive may be entitled upon termination of employment under any circumstances
other than as specified in this Section 7, or a reduction in the payments and
benefits specified in Section 6 below zero.
--------------------------------------------------------------------------------
70
8. MITIGATION; COVENANT NOT TO COMPETE, EXCLUSIVELY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of
any benefits hereunder by seeking other employment or otherwise nor, except as
otherwise provided elsewhere in this Agreement, shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise.
(b) The Executive hereby agrees that, following the termination of
his employment under this Agreement for any reason, other than following a
Change in Control of the Corporation, he will not, for a period of time equal to
what would have been the then remaining term of this Agreement absent his
termination of employment, directly or indirectly and in any way, whether as
principal or as director, officer, employee, consultant, agent, partner or
stockholder to another entity (other than by the ownership of a passive
investment interest of not more than five percent (5%) in a company with
publicly traded equity securities), (i) own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
management, operation or control of any business located within 75 miles of the
Corporation's main office and prior to a Change in Control of the Corporation
that competes with any business of the Employer; (ii) interfere with, solicit on
behalf of another or attempt to entice away from the Employer any project, loan
arrangement, agreement, financing or customer of the Employer or any contract,
agreement or arrangement that the Employer is actively negotiating with any
other party, or any prospective business opportunity that the Employer has
identified; or, (iii) for himself or another, hire, attempt to hire, or assist
in or facilitate in any way the hiring of any employee of the Employer.
(c) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.
9. WITHHOLDING. All payments required to be made by the Employer hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Employer may reasonably
determine should be withheld pursuant to any applicable law or regulation.
10. ASSIGNABILIIY. Subject to the provisions of Section 6 above, the
Employer may assign this Agreement and their rights and obligations hereunder in
whole, but not in part, to any corporation, bank or other entity with or into
which the Employer may hereafter merge or consolidate or to which the Employer
may transfer all or substantially all of their assets, if in any such case said
Corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employer hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or their rights and obligations hereunder. The Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.
11. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employer: Xxxxx X. Xxxxxxx
President & CEO
--------------------------------------------------------------------------------
71
Community Bank Shares of Indiana, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxx 00000
To the Executive: Xxxx X. Xxxxxxx
0000 Xxxxx Xxxxx.
Xxxxxxxxxxx, XX 00000
12. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer to sign on
their behalf. No waiver by any party hereto at any time of any breach by any
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
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of Indiana.
14. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Employer to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employer.
15. HEADING. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. VALIDITY. 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.
17. COUNTEPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. ss.1828(k))
and any regulations promulgated thereunder.
19. EMPLOYER'S REPRESENTATION REGARDING REGULATORY MATTERS. Employer
represents, and Executive acknowledges, that Community Bank of Southern
Indiana., presently operates under a resolution of its Board of Directors by
which it reports certain matters on a quarterly basis to the Department of
Financial Institutions of the State of Indiana. Employer further represents that
to the best of its knowledge and belief Community Bank Shares of Indiana, Inc.,
is presently in conformance with all applicable laws, rules, and regulations,
and that no pending or threatened enforcement actions regarding any purported
regulatory violations exist.
[Signature Page Follows]
--------------------------------------------------------------------------------
72
IN WITNESS WHEREOF this Agreement has been executed and is made effective
as of this ______ day of ________________, 2003.
For "EMPLOYER"
COMMUNITY BANK SHARES OF INDIANA, INC.
By: ____________________________________ Attest: ______________________________
XXXXX X. XXXXXXX, President Xxxxxx X. Xxxxxx, Secretary
For "EXECUTIVE
Xxxx X. Xxxxxxx
XXXX X. XXXXXXX
--------------------------------------------------------------------------------
73
