AGREEMENT
AGREEMENT, effective as July 26, 2000, between Community Bank Shares of
Indiana, Inc., an Indiana corporation (the "Corporation" or the "Employer"), and
Xxxxx X. Xxxxxxx (the "Executive").
WITNESSETH
WHEREAS, in order to induce the Executive to serve as the President and
Chief Executive Officer of the Corporation, 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
contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings set
forth below for the purposes 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, willfull misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willfull 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.
(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 1
3d-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
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 because of any physical or mental
impairment which qualifies the Executive for disability benefits under the
applicable long-term disability plan maintained by the 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, (li) 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, (lii) 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 President and Chief
Executive Officer and Executive hereby accepts said employment to commence no
later than August 15,2000 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 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 Employer's Board of Directors,
provided, however, such executive services shall not be
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materially changed from the Executive's present duties as President and Chief
Executive Officer without the Executive's express written consent, which consent
may be withheld in the sole discretion of the Executive.
3. Compensation and Benefits.
(a) The Employer shall compensate and pay Executive for his services during
the term of this Agreement at a minimum base salary of $185,000 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. In addition to his Base
Salary, the Executive shall receive a cash bonus of $10,000 payable upon the
commencement of employment by the Executive and an additional cash bonus of
$10,000 payable six months after the commencement of employment by the
Executive, subject to the Executive remaining in the employment as President and
Chief Executive Officer at such time.
(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, as fixed 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. 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 obtain and
maintain term life insurance for the Executive with a death benefit of at least
two (2) times the Executive's Base Salary, up to a maximum benefit of $500,000,
with such beneficiary as determined by the Executive.
(d) During the term of this Agreement, the Employer shall provide the
Executive with coverage for supplemental long-term disability insurance.
(e) During the term of this Agreement, the Executive shall be entitled to
four 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 time
from one year to the next, except to the extent authorized by the Board of
Directors of the Employer.
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(f) During the term of this Agreement, the Employer shall either provide
the Executive with the use of an automobile comparable to that customarily
provided for a chief executive officer by comparable financial institutions or a
monthly cash allowance for an automobile in an amount to be mutually agreed upon
by the Executive and the Employer.
(g) During the term of this Agreement, the Employer shall pay for or
reimburse the Executive's annual membership dues for his membership in the New
Albany Country Club, New Albany, Indiana and the Jefferson Club, Louisville,
Kentucky.
(h) Upon commencement of employment by the Executive, the Employer agrees
to grant the Executive stock options to purchase 12,000 shares of common stock
of the Corporation ("Common Stock") pursuant to the Employer's stock option
plan. Such options shall have an exercise price equal to the fair market value
of a share of Common Stock on the date of grant, shall be incentive stock
options under Section 422 of the Code and shall vest and become exercisable as
follows: thirty-three and one-third percent (33 1/3%), or options to purchase
4,000 shares of Common Stock, shall vest immediately on the date of grant and
the remaining options shall vest over two years at the rate of thirty-three and
one-third percent (33 1/3)%, or options to purchase 4,000 shares of Common
Stock, per year on the annual anniversary of the date of grant.
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, and 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. If such expenses are paid
in the first instance by Executive, the Employer shall reimburse the Executive
therefor.
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 without limitation termination for Cause, Disability or Retirement,
and Executive shall have the right, upon prior Notice of Termination, to
terminate his employment hereunder for any 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 other benefits for any period after the applicable Date of
Termination, except for rights 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.
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(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:
(A) 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
(B) 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 (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
Termination, 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 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.
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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 three (3) times the Executive's Base Salary 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 thirty-six (36) 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 6 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 280G 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 280G 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 reasonably 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
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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) the 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 non-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 filings, 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.
8. Mitigation; Covenant Not To Compete; Exclusivity 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 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.
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(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. Assignability. 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: C. Xxxxxx Xxxxx
Chairman of the Board of Directors
Community Bank Shares of Indiana, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxx Xxxxxx, Xxxxxxx 00000
To the Executive: Xxxxx X. Xxxxxxx
0000 Xxx Xxxxx Xxxxx.
Xxxxxx Xxxxx, Xxxxxxx 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.
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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 find 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. Headings. 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 provision 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. Counterparts. 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.
IN WITNESS WHEREOF, this Agreement has been executed and is effective as
July 26, 2000.
Attest: COMMUNITY BANK SHARES
OF INDIANA, INC.
/s/ M. Xxxxx Xxxxxx By: /s/ C. Xxxxxx Xxxxx
-------------------------- -----------------------------
M. Xxxxx Xxxxxx, Secretary C. Xxxxxx Xxxxx, Chairman
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Xxxxx X. Xxxxxxx
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