EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement, made and dated as of April 10, 2001, by and between
Logansport Savings Bank, FSB, a federal savings bank ("Employer"), and Xxxxx X.
Xxxxxxxxx, a resident of Cass County, Indiana ("Employee").
W I T N E S S E T H
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WHEREAS, Employee is employed by Employer as its 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 Logansport Financial Corp. (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 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 President, and Employee
accepts such employment.
2. Employee agrees to serve as Employer's 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 Logansport, 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 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. Employer shall nominate the Employee to successive terms
as a member of Employer's Board of Directors and shall use its best efforts to
elect and re-elect Employee as a member of such Board.
3. The term of this Agreement shall begin on the date hereof (the
"Effective Date") and shall end on the date which is three years following such
date; provided, however, that such term shall be extended automatically for an
additional year on each anniversary of the Effective Date if Employer's Board of
Directors determines by resolution that the performance of the Employee has met
the Board's requirements and standards and that this Agreement should be
extended prior to such anniversary of the Effective Date, unless either party
hereto gives written notice to the other party not to so extend within ninety
(90) days prior to such anniversary, in which case no further automatic
extension shall occur and the term of this Agreement shall end two years
subsequent to the anniversary as of which the notice not to extend for an
additional year is given (such term, including any extension thereof shall
herein be referred to as the "Term").
4. Employee shall receive an annual salary of $150,000 ("Base
Compensation") payable at regular intervals in accordance with Employer's normal
payroll practices now or hereafter in effect, part of which may be deferred
pursuant to the agreement of Employer and Employee. 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, 1999, 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
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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
President of Employer, including, without limitation, Employer's or the Holding
Company's pension 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, 1999, 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:
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(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
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 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:
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(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.
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(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 any reason,
Employee shall not divulge or furnish any trade secrets (as
defined in IND. CODEss. 24-2-3-2) of Employer or any confidential
information acquired by 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) 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 any
reason, Employee will turn over immediately thereafter to
Employer all business correspondence, letters, papers, reports,
customers' lists, financial statements, credit reports or other
confidential information or documents of Employer or its
affiliates in the possession or control of Employee, all of which
writings are and will continue to be the sole and exclusive
property of Employer or its affiliates.
If Employee's employment by Employer is terminated during the Term of this
Agreement for reasons set forth in subsections 7(B) or (C) of this Agreement,
Employee shall have no obligations to Employer with respect to noncompetition
under this section 9.
10. Any termination of Employee's employment with Employer as
contemplated by section 7 hereof, except in the circumstances of Employee's
death, shall be communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of Termination"
pursuant to subsections 7(A), 7(C) or 7(E) shall indicate the specific
provisions of this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination.
11. If Employee is suspended and/or temporarily prohibited from
participating in the conduct of Employer's affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. ss.
1818(e)(3) or (g)(1)), Employer's obligations under this Agreement shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, Employer shall (i) pay Employee all
or part of the compensation withheld while its obligations under this Agreement
were suspended and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
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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.
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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: Xxxxx X. Xxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
If to Employer: Logansport Savings Bank, FSB
000 Xxxx Xxxxxxxx
X.X. Xxx 000
Xxxxxxxxxx, 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.
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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.
LOGANSPORT SAVINGS BANK, FSB
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Xxxxxxx X. Xxxxx, Senior Vice President
"Employer"
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxx X. Xxxxxxxxx
"Employee"
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The undersigned, Logansport Financial Corp., 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, Logansport Financial
Corp., 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.
LOGANSPORT FINANCIAL CORP.
By:/s/ Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxx, Vice President
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