Contract
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10.2
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Form
of Letter Agreement Amending Employment Agreements of Xxxxx X. Xxxxxxx,
Xxxx X. Xxxxxxx, Xxxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxx X.
Xxxxxx
|
May
[___], 2009
[Senior
Executive Officer]
Community
Bank Shares of Indiana, Inc.
000 Xxxx
Xxxxxx Xxxxxx
Xxx
Xxxxxx, XX 00000
Dear
[Senior Executive Officer],
Community
Bank Shares of Indiana, Inc. (the “Company”) anticipates
entering into a Securities Purchase Agreement (the “Purchase Agreement”)
with the United States Department of Treasury (the “Treasury”) that
provides, among other things, for the Treasury’s purchase of Company securities.
This purchase is anticipated to occur as part of the Company’s participation in
the Treasury’s Troubled Asset Relief Program (“TARP”) - Capital
Purchase Program (the “CPP”). If
the Company does not participate or ceases at any time to participate in TARP,
this letter shall be of no further force and effect.
As
a condition to the closing of the investment contemplated by the Purchase
Agreement, the Company is required to take certain actions with respect to
compensation arrangements of some of its executive officers. For purposes of the
CPP, the Company has determined that you are or may be a Senior Executive
Officer (defined below) or one of the next 5 most highly-compensated employees
of the Company. To comply with the requirements of the CPP, and in
consideration of the benefits that you will receive because of the Company’s
participation in the CPP and for other good and valuable consideration, the
sufficiency of which you hereby acknowledge, you agree as follows:
(1) No Golden Parachute
(Severance) Payments. The Company may not pay and you will not be
entitled to receive from the Company any Golden Parachute Payment (as defined
below) during any Restricted Period (defined below).
(2) Recovery of Bonus and
Incentive Compensation. Any bonus, retention award or
incentive compensation paid to you during the Restricted Period or prior to the
Restricted Period is subject to recovery or “clawback” by the Company if the
payments were based on materially inaccurate statements of earnings, revenues,
gains or other criteria. In such an event, you will be required to
and shall return to the Company any bonus, retention award or incentive
compensation paid to you by the Company if such bonus, retention award or
incentive compensation was paid to you based on materially inaccurate statements
of earnings, revenues, gains or other criteria.
(3) Compensation Program
Amendments. Each of the Company’s compensation, bonus, incentive and
other benefit plans, arrangements and agreements, including your employment
agreement (the “Employment Agreement”), and compensation policies (all such
plans, arrangements and agreements, and policies, the “Compensation Plans”)
are hereby amended with respect to you to the extent necessary to give effect to
provisions (1) and (2) of this letter, and you agree to execute any further
amendments as may be necessary to implement the agreements contained in this
letter.
(4) Compensation Plan
Review. In addition, the Company is required to review its
Compensation Plans to ensure that the Compensation Plans do not (a) provide
incentives or otherwise encourage its Senior Executive Officers to take
unnecessary and excessive risks that threaten the value of the Company, (b)
encourage manipulation of the Company’s reported earnings to enhance
compensation of any employees or (c) commit the Company to make excessive or
luxury expenditures as identified under EESA (defined below). To the
extent any such review requires revisions to any Compensation Plan, you agree
that the Company may implement unilaterally such changes to the Compensation
Plans that the Company determines are necessary because of such review of its
Compensation Plans.
(5) Bonus
Restriction. If you are the most highly compensated employee
of the Company, to the extent required by Section 111 of EESA, you will not
receive or accrue during the Restricted Period any bonus, retention award or
incentive compensation except as described in the next sentence. This
prohibition does not apply to the award of long-term restricted stock in a year
that (i) does not fully vest during the Restricted Period, (ii) does not have a
value of greater than one-third of your total annual compensation amount for
such year and (iii) is subject to such other terms and conditions as the
Treasury may determine are in the public interest.
(6) Definitions and
Interpretation. This letter shall be interpreted as follows:
· “Company” includes any
entities treated as a single employer with the Company under EESA, including
Your Community Bank and The Xxxxx County State Bank. You are also
delivering a waiver pursuant to the Securities Purchase Agreement, and, as
between the Company and you, the term “employer” in that waiver will be deemed
to mean the Company as used in this letter.
· “EESA” means the Emergency
Economic Stabilization Act of 2008, as amended, and any future amendments
thereto and regulations and other authorized guidance issued
thereunder.
· “Golden Parachute Payment”
means any payment upon departure from employment for any reason, except for
payments for services performed or benefits accrued, pursuant to subsection
111(a)(2) of EESA.
· “Restricted Period” means any
period that the Investor under the Purchase Agreement owns any debt or equity
securities of the Company acquired pursuant to the Purchase Agreement or the
Warrants issued thereunder.
· “Senior Executive Officer”
means an individual who is 1 of the top 5 most highly paid executives of the
Company, whose compensation is required to be disclosed pursuant to the
Securities Exchange Act of 1934, and any regulations issued thereunder, pursuant
to subsection 111(a)(1) of EESA, as determined in accordance with
EESA.
· This
letter is intended to, and shall be interpreted, administered and construed to
comply with Section 111 of EESA (and, to the maximum extent consistent with the
preceding, to permit operation of the Compensation Plans in accordance with
their terms before giving effect to this letter).
(7) Payments following TARP
Participation. Once the Restricted Period has ended and
if applicable law permits, the Company will pay you all cash amounts, if any, it
would have paid to you as a result of any event(s) that occurred during the
Restricted Period that would have entitled you to cash payment rights under your
employment agreement with the Company. Any such payment amounts will
not accrue interest.
(8)
Termination of
Noncompetition Provisions in Employment Agreement. If, during
the Restricted Period, your employment is terminated by the Company under your
Employment Agreement for other than Cause, Disability, Retirement or Death, of
if, during the Restricted Period, your employment is terminated by you due to a
material breach of the Employment Agreement which has not been cured within
fifteen (15) days after a written notice of non-compliance has been given by you
to the Company, then the provisions in your Employment Agreement prohibiting you
from competing with or being employed by any company that competes with the
Company within a certain geographic region shall not apply to you, but the
provisions of the Employment Agreement prohibiting you from soliciting or
attempting to entice away any employees, customers, projects, loan arrangements
or prospective business opportunities of the Company shall continue in force and
shall be enforceable against you for a period of one year following your
termination of employment with the Company.
(9) Miscellaneous. To the
extent not subject to federal law, this letter will be governed by and construed
in accordance with the laws of the State of Indiana. This letter may be executed
in two or more counterparts, each of which will be deemed an original. A
signature transmitted by facsimile will be deemed an original
signature.
We
appreciate the concessions you are making and look forward to your continued
leadership during these financially turbulent times.
Sincerely,
Community Bank Shares of Indiana, Inc.
By: _________________________________
Name:
Title:
Intending
to be legally bound,
I agree
with and accept the foregoing
terms on
the date set forth below.
By:
____________________________
Name: [Senior
Executive Officer]
Title:
Date:
