Exhibit 10(7)
EMPLOYMENT AGREEMENT
This Agreement, made and dated as of July 1, 2001, by and between Union
Federal Savings and Loan Association, a federal savings and loan association
("Employer"), and Xxxx X. Xxxxxxx, a resident of Xxxxxxxxxx County, Indiana
("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by Employer as its Executive Vice President
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 Union Community 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 Executive Vice President, 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 Executive Vice President, and
Employee accepts such employment.
2. Employee agrees to serve as Employer's Executive Vice President 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
Crawfordsville, 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 Executive Vice
President 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 July 1, 2001 (the "Effective
Date") and shall end on the date which is three years following such date,
subject to earlier termination as provided herein. Beginning on the first
anniversary of the Effective Date, and on each anniversary thereafter, the term
of this Agreement shall be extended for a period of one year in addition to the
then-remaining term provided that (1) Employer has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and (2) prior to such anniversary,
the Board of Directors of Employer explicitly reviews and approves the extension
(such term, including any extension thereof, shall herein be referred to as the
"Term").
4. Employee shall receive an annual salary of ("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,
2000, 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.
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 Executive
Vice President of Employer, including, without limitation, Employer's or the
Holding Company's pension plan, thrift 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,
2000, 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. Employee shall
attend, upon the prior approval of Employer's Board of Directors, those
professional meetings, conventions, and/or similar functions that he deems
appropriate and useful for purposes of keeping abreast of current developments
in the industry and/or promoting the interests of Employer. 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:
(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.
(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 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 Executive Vice President 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 Executive Vice President 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 his 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 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.
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.
(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 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.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 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.
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. 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.
(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 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 for reasons other
than those set forth in subsections 7(B) or (C) of this Agreement,
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 trade secrets,
confidential information or 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.
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 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:
If to Employee: Xxxx X. Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxxxxxxx, Xxxxxxx 00000
If to Employer: Union Federal Savings and Loan Association
000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxxxxxx, Xxxxxxx 00000
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 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 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.
IN WITNESS WHEREOF, the parties have caused the Agreement to be executed
and delivered as of the day and year first above set forth.
UNION FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx, President
"Employer"
/s/ Xxxx X. Xxxxxxx
----------------------------------------------
Xxxx X. Xxxxxxx
"Employee"
The undersigned, Union Community 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, Union Community 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.
UNION COMMUNITY BANCORP
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx, President
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This FIRST AMENDMENT TO EMPLOYMENT AGREEMENT is by and between Union
Federal Savings and Loan Association, a federal savings and loan association
("Employer") and Xxxx X. Xxxxxxx, a resident of Xxxxxxxxxx County, Indiana
("Employee").
W I T N E S S E T H:
WHEREAS, Employer and Employee entered into an Employment Agreement dated
as of July 1, 2001 (the "Employment Agreement");
WHEREAS, the parties desire to make certain changes to the Employment
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, the parties agree that the Employment Agreement shall be, and
it hereby is, amended as follows:
1. All references to Employee's title as Executive Vice President in the
Employment Agreement shall be changed to Chief Executive Officer.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed and delivered as of the 17th day of April, 2002.
"EMPLOYER"
UNION FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxxx, President
"EMPLOYEE"
/s/ Xxxx X. Xxxxxxx
-----------------------------------------------------
Xxxx X. Xxxxxxx
