EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Agreement, made and dated as of January 11, 2006, by and between Lincoln Bank,
a
federal savings bank (“Employer”), and Xxxxxxxx X. Xxxxxxxxx, a resident of
Monroe County, Indiana (“Employee”).
W
I T N E
S S E T H
WHEREAS,
Employee is employed by Employer as the Senior Vice President, Credit
Administration, 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 his services over a defined term;
WHEREAS,
Employer desires to assure the continued services of Employee on behalf of
Employer on an objective and impartial basis and without distraction or conflict
of interest in the event of an attempt by any person to obtain control of
Employer or 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 his own
situation;
WHEREAS,
Employer desires to provide fair and reasonable benefits to Employee on the
terms and subject to the conditions set forth in this Agreement;
WHEREAS,
Employer desires reasonable protection of its confidential business and customer
information which it has developed over the years at substantial expense and
assurance that Employee will not compete with Employer for a reasonable period
of time after termination of his employment with Employer, except as otherwise
provided herein.
NOW,
THEREFORE, in consideration of these premises, the mutual covenants and
undertakings herein contained and the continued employment of Employee by
Employer as its Senior Vice President, Credit Administration, Employer and
Employee, each intending to be legally bound, covenant and agree as
follows:
1. Upon
the
terms and subject to the conditions set forth in this Agreement, Employer
employs Employee as Employer’s Senior Vice President, Credit Administration, and
Employee accepts such employment.
2. Employee
agrees to serve as one of Employer’s Senior Vice Presidents and to perform such
duties in that office as may reasonably be assigned to him by Employer’s Board
of Directors; provided, however, that such duties shall be performed in or
from
the offices of Employer currently located at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxx, 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 Senior Vice
President, Credit Administration in substantially the same manner and to
substantially the same extent as Employee rendered his services to Employer
before the date hereof. While employed by Employer, Employee shall devote
substantially all his 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 with respect to each such annual extension that the
performance of the Employee has met the Board’s requirements and standards and
that this Agreement should be extended for another year. Notwithstanding the
foregoing, if either party hereto gives written notice to the other party not
to
so extend within ninety (90) days prior to such anniversary, or if the
Employer’s Board of Directors does not adopt the resolution authorizing annual
extension of the contract with respect to any annual period during the term
of
this Agreement, 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 or failure to extend for an additional year occurs (such
term, including any extension thereof shall herein be referred to as the
“Term”). Notwithstanding the foregoing, the Term may end earlier upon the
occurrence of any event described in Section 7.
4. Employee
shall receive an annual salary of $132,313.00 (“Base Compensation”) payable at
regular intervals in accordance with Employer’s normal payroll practices now or
hereafter in effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increases in his Base
Compensation. 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,
2005, 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.
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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, he 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 his Base Compensation and his position as Senior Vice President,
Credit Administration, of Employer, including, without limitation, Employer’s or
the Holding Company’s 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, 2005, 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 his 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 his 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 him 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:
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(A)
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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.
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(B)
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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.
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(C)
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Employee,
by written notice to Employer, may terminate his employment with
Employer
immediately for cause. For purposes of this subsection 7(C), “cause” shall
be defined as (i) any action by Employer’s Board of Directors to remove
the Employee as Senior Vice President, Credit Administration, of
Employer,
except for promotions, if any, and 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 Senior Vice President, Credit Administration,
except
for changes commensurate with promotions, if any, 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.
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(D)
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Employee,
upon sixty (60) days written notice to Employer, may terminate his
employment with Employer without
cause.
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(E)
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Employee’s
employment with Employer shall terminate in the event of Employee’s death
or disability. For purposes hereof, “disability” shall be defined as
Employee’s inability by reason of illness or other physical or mental
incapacity to perform the duties required by his employment for any
consecutive One Hundred Eighty (180) day period, provided that notice
of
any termination by Employer because of Employee’s “disability” shall have
been given to Employee prior to the full resumption by him of the
performance of such duties.
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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:
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(A)
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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.
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(B)
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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
his 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 his termination, unless
an
essentially equivalent and no less favorable benefit is provided
by a
subsequent employer of Employee. If the terms of any employee welfare
benefit plan or employee pension benefit plan of Employer do not
permit
continued participation by Employee, Employer will arrange to provide
to
Employee a benefit substantially similar to, and no less favorable
than,
the benefit he was entitled to receive under such plan at the end
of the
period of coverage. For purposes of this Agreement, a “Change of Control”
shall mean an acquisition of “control” of the Holding Company or of
Employer within the meaning of 12 C.F.R. §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 Section
310
of the OTS Thrift Activities Bulletin, as in effect on the Effective
Date.
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(C)
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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.
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(D)
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Employer
will permit Employee or his personal representative(s) or heirs,
during a
period of three months following Employee’s termination of employment by
Employer for the reasons set forth in subsections 7(B) or (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.
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9. In
order
to induce Employer to enter into this Agreement, Employee hereby agrees as
follows:
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(A)
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While
Employee is employed by Employer and for a period of three years
after
termination of such employment, Employee shall not divulge or furnish
any
trade secrets (as defined in IND. CODE § 24-2-3-2) of Employer or any
confidential information acquired by him while employed by Employer
concerning the policies, plans, procedures or customers of Employer
to any
person, firm or corporation, other than Employer or upon its written
request, or use any such trade secret or confidential information
directly
or indirectly for Employee’s own benefit or for the benefit of any person,
firm or corporation other than Employer, since such trade secrets
and
confidential information are confidential and shall at all times
remain
the property of Employer.
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(B)
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For
a period of two years after termination of Employee’s employment by
Employer for reasons other than those set forth in subsections 7(B)
or (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.
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(C)
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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 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 or within a twenty-five (25) mile radius of
Employer’s Greenwood office.
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(D)
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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.
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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 the
noncompetition provisions 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. § 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. § 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.
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13. If
Employer is in default (as defined in section 3(x)(1) of the Federal Deposit
Insurance Act), all obligations under this Agreement shall terminate as of
the
date of default, but this provision shall not affect any vested rights of
Employer or Employee.
14. All
obligations under this Agreement 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. §1828(k) and
FDIC regulation 12 C.F.R. Part 359 (Golden Parachute and Indemnification
Payments) and any other 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 his favor in a court of competent jurisdiction
or
his 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 his claim shall
be
paid by Employer, to the extent permitted by law.
17. Should
Employee die after termination of his employment with Employer while any amounts
are payable to him hereunder, this Agreement shall inure to the benefit of
and
be enforceable by Employee’s executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall be paid in
accordance with the terms of this Agreement to Employee’s devisee, legatee or
other designee or, if there is no such designee, to his estate.
18. For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been given when delivered
or mailed by United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
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If
to Employee:
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Xxxxxxxx
X. Xxxxxxxxx
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If
to Employer:
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Lincoln
Bank
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000
Xxxxxxxxxx Xxxxx
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X.X.
Xxx 000
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Xxxxxxxxxx,
Xxxxxxx 00000-0000
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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 his 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 representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
22. The
invalidity or unenforceability of any provisions of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement
which shall remain in full force and effect.
23. This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together shall constitute one and the same
agreement.
24. This
Agreement is personal in nature and neither party hereto shall, without consent
of the other, assign or transfer this Agreement or any rights or obligations
hereunder except as provided in section 17 and section 20 above. Without
limiting the foregoing, Employee’s right to receive compensation hereunder shall
not be assignable or transferable, whether by pledge, creation of a security
interest or otherwise, other than a transfer by his will or by the laws of
descent or distribution as set forth in section 17 hereof, and in the event
of
any attempted assignment or transfer contrary to this paragraph, Employer shall
have no liability to pay any amounts so attempted to be assigned or
transferred.
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IN
WITNESS WHEREOF, the parties have caused the Agreement to be executed and
delivered as of the day and year first above set forth.
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LINCOLN
BANK
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By:
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/s/ Xxxxx X. Xxxxx | |
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Xxxxx
X. Xxxxx, President
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“Employer”
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| /s/ Xxxxxxxx X. Xxxxxxxxx | ||
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Xxxxxxxx
X. Xxxxxxxxx
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“Employee”
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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.
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LINCOLN
BANCORP
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By:
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/s/ Xxxxx X. Xxxxx | |
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Xxxxx
X. Xxxxx, President
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