Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT
is made and entered into as of this 21st day of September, 2016 by and between MutualBank (hereinafter referred to as the "Bank"),
MutualFirst Financial, Inc. (the "Company") and Xxxxxxx X. Xxxxx (the "Employee").
WHEREAS, the Employee is currently serving
as President of the Bank and Executive Vice President of the Company; and
WHEREAS, the Employee, the Bank and the
Company have previously executed an employment agreement; and
WHEREAS, the Boards of Directors of the
Bank and the Company believe it is in the best interests of the Bank to enter into this Amended and Restated Agreement (the “Agreement”)
with the Employee in order to ensure compliance with Section 409A of the Code; and
WHEREAS, the Board of Directors of the Company
has approved and authorized the execution of this Agreement for the purpose of the Company making the guarantee set forth in Section
19; and
WHEREAS, the Board of Directors of the Bank
has approved and authorized the execution of this Agreement with the Employee to take effect as stated in Section 2 hereof.
NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The
term "Change in Control" includes any of the following events: (1) any person or persons acting as a group (within the
meaning of Section 409A of the Code) acquires (or has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company or the Bank possessing 30% or more of the total voting
power of the outstanding stock of the Company or the Bank; (2) individuals who are members of the board of directors of the Company
on the date hereof (the "Incumbent Board") cease for any reason during any 12-month period to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at
least a majority of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s stockholders
was approved by the nominating committee serving under an Incumbent Board, shall be considered a member of the Incumbent Board;
(3) any person or persons acting as a group (within the meaning of Section 409A of the Code) acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition by such person or persons) assets of the Company or the Bank
that have a gross fair market value of 40% or more of the total gross fair market value of all of the assets of the Company or
the Bank immediately before such acquisition or acquisitions; or (4) any other event which is not covered by the foregoing subsections
but which the Board of Directors determines to affect control of the Company or the Bank and with respect to which the Board of
Directors adopts a resolution that the event constitutes a Change in Control for purposes of the Agreement; provided that with
respect to each of the events covered by clauses (1) through (4) above, the event must also be deemed to be either a change in
the ownership of the Company or the Bank, a change in the effective control of the Company or the Bank or a change in the ownership
of a substantial portion of the assets of the Company or the Bank within the meaning of Section 409A of the Code. The term "Change
in Control" shall not include an acquisition of securities by an employee benefit plan of the Bank or the Company.
(b) The
term "Commencement Date" means October 1, 2016.
(c) The
term "Date of Termination" means the date upon which the Employee ceases to serve as an employee of the Bank.
(d) The
term "Involuntary Termination" means a termination of the employment of the Employee without the Employee’s express
written consent, and shall include a termination by the Employee as a result of any of the following: (1) a material diminution
of or interference with the Employee’s duties, titles, responsibilities and benefits as President of the Bank and Executive
Vice President of the Company, (2) a change in the principal workplace of the Employee to a location outside of a 30 mile radius
from the Bank’s headquarters office as of the date hereof, (3) a material reduction in the number or seniority of other Bank
personnel reporting to the Employee or a material reduction in the frequency with which, or in the nature of the matters with respect
to which, such personnel are to report to the Employee, other than as part of a Bank-or Company-wide reduction in staff, (4) a
material reduction in the Employee’s salary or a material adverse change in the Employee’s perquisites, benefits, contingent
benefits or vacation, other than as part of an overall program applied uniformly and with equitable effect to all members of the
senior management of the Bank or the Company, or (5) a material permanent increase in the required hours of work or the workload
of the Employee; provided in each case that Involuntary Termination shall mean a cessation or reduction in the Employee’s
services for the Bank and the Company (and any other affiliated entities that are deemed to constitute a “service recipient”
as defined in Treasury Regulation §1.409A-1(h)(3) that constitutes a “Separation from Service” as determined under
Section 409A of the Code, taking into account all of the facts, circumstances, rules and presumptions set forth in Treasury Regulation
§1.409A-1(h) and that also constitutes an involuntary Separation from Service under Treasury Regulation §1.409A-1(n).
In addition, before the Employee terminates his employment pursuant to clauses (1) through (5) of the preceding sentence, the Employee
must first provide written notice to the Company and the Bank within ninety (90) days of the initial existence of the condition,
describing the existence of such condition, and the Company and the Bank shall thereafter have the right to remedy the condition
within thirty (30) days of the date they received the written notice from the Employee. If the Company and the Bank remedy the
condition within such thirty (30) day cure period, then the Employee shall not have the right to terminate his employment as the
result of such event. If the Company and the Bank do not remedy the condition within such thirty (30) day cure period, then the
Employee may terminate his employment as the result of such event at any time within sixty (60) days following the expiration of
such cure period. The term "Involuntary Termination" does not include Termination for Cause or termination of employment
due to retirement, death, disability or suspension or temporary or permanent prohibition from participation in the conduct of the
Bank’s affairs under Section 8 of the Federal Deposit Insurance Act ("FDIA").
(e) The
terms "Termination for Cause" and "Terminated For Cause" mean termination of the employment of the Employee
because of the Employee's personal dishonesty, incompetence, willful misconduct, breach of a fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order, or material breach of any provision of this Agreement. No act or failure
to act by the Employee shall be considered willful unless the Employee acted or failed to act with an absence of good faith and
without a reasonable belief that his action or failure to act was in the best interest of the Company or the Bank. The Employee
shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to the Employee a copy of
a resolution, duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors
of the Bank at a meeting of the Board called and held for such purpose (after reasonable notice to the Employee and an opportunity
for the Employee, together with the Employee's counsel, to be heard before the Board), stating that in the good faith opinion of
the Board the Employee has engaged in conduct described in the preceding sentence and specifying the particulars thereof in detail.
(f) The
term “Code” means the Internal Revenue Code of 1986, as amended, or any successor code thereto.
(g) The
term “Section 409A” means Section 409A of the Code and the regulations and guidance of general applicability issued
thereunder.
2. Term.
The term of this Agreement shall be a period of three years beginning on the Commencement Date, subject to earlier termination
as provided herein. Beginning on the first anniversary of the Commencement 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) the
Bank 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 the Bank explicitly reviews and approves
the extension. Reference herein to the term of this Agreement shall refer to both such initial term and such extended terms.
3. Employment.
The Employee is employed as President of the Bank and Executive Vice President of the Company as of the Commencement Date. As such,
the Employee shall render administrative and management services as are customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties of an officer of the Bank and the Company as the Board of Directors may
prescribe from time to time.
4. Compensation.
(a) Salary.
The Bank agrees to pay the Employee during the term of this Agreement, not less frequently than monthly, the salary established
by the Board of Directors, which shall be at least $315,000 annually. The amount of the Employee's salary shall be reviewed by
the Board of Directors, beginning not later than the first anniversary of the Commencement Date. Adjustments in salary or other
compensation shall not limit or reduce any other obligation of the Bank or of the Company under this Agreement. The Employee's
salary in effect from time to time during the term of this Agreement shall not thereafter be reduced.
(b) Discretionary
Bonuses. The Employee shall be entitled to participate in an equitable manner with all other executive officers of the Bank
in discretionary bonuses as authorized and declared by the Board of Directors to its executive employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the Employee's right to participate in such bonuses when and as
declared by the Board of Directors. Any discretionary bonus shall be paid not later than 2½ months after the year in which
the Employee obtains a legally binding right to the bonus. If the discretionary bonus cannot be paid by that date, then it shall
be paid on the next following April 15, or such other date during the year as permitted under Section 409A.
(c) Expenses.
The Employee shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies and procedures applicable to the executive officers of the Bank,
provided that the Employee accounts for such expenses as required under such policies and procedures.
5. Benefits.
(a) Participation
in Retirement and Employee Benefit Plans. The Employee shall be entitled to participate in all plans relating to pension, thrift,
profit-sharing, group life and disability insurance, medical and dental coverage, education, cash bonuses, and other retirement
or employee benefits or combinations thereof, in which the Bank's executive officers participate.
(b) Fringe
Benefits. The Employee shall be eligible to participate in, and receive benefits under, any fringe benefit plans which are
or may become applicable to the Bank's executive officers, including, without limitation, the Company's Stock Option Plan and any
restricted stock plan.
6. Vacations;
Leave. The Employee shall be entitled to annual paid vacation in accordance with the policies established by the Board of Directors
for executive employees and to voluntary leave of absence, with or without pay, from time to time at such times and upon such conditions
as the Board of Directors may determine in its discretion.
7. Termination
of Employment.
(a) Involuntary
Termination. The Board of Directors may terminate the Employee’s employment at any time, but, except in the case of Termination
for Cause, termination of employment shall not prejudice the Employee’s right to compensation or other benefits under this
Agreement. In the event of Involuntary Termination other than concurrently with or within twelve (12) months after a Change in
Control, (1) the Bank shall pay to the Employee during the remaining term of this Agreement, the Employee’s salary at the
rate in effect immediately prior to the Involuntary Termination, payable in such manner and at such times as such salary would
have been payable to the Employee under Section 4 if the Employee had continued to be employed by the Bank, and (2) the Bank shall
provide to the Employee during the remaining term of this Agreement substantially the same benefits as the Bank maintained for
its executive officers immediately prior to the Involuntary Termination, including Bank-paid dependent medical and dental coverage,
provided that if either the Bank is unable to provide such insurance coverage in-kind or the continuation of such insurance coverage
would trigger excise taxes under Section 4980D of the Code, then the Bank shall make a lump sum cash payment to the Employee equal
to the projected cost of providing such insurance coverage for the remaining term of this Agreement, with the projected cost to
be based on the costs being incurred immediately prior to the Involuntary Termination as increased by 10% on each scheduled renewal
date. If the Employee is a “Specified Employee” (as defined in Section 409A of the Code) at the time of his Separation
from Service, then payments under this Section 7(a) which are not considered paid on account of an involuntary separation from
service (as defined in Treasury Regulation §1.409A-1(b)(9)(iii)), and as such constitute deferred compensation under Section
409A of the Code, shall not be paid until the 185th day following the Employee’s Separation from Service, or his earlier
death (the “Delayed Distribution Date”). Any payments deferred on account of the preceding sentence shall be accumulated
without interest and paid with the first payment that is payable in accordance with the preceding sentence and Section 409A of
the Code. To the extent permitted by Section 409A of the Code, amounts payable under this Section 7(a) which are considered deferred
compensation shall be treated as payable after amounts which are not considered deferred compensation.
(b) Termination
for Cause. In the event of Termination for Cause, the Bank shall pay the Employee the Employee's salary and benefits through
the Date of Termination, and the Bank shall have no further obligation to the Employee under this Agreement.
(c) Voluntary
Termination. The Employee's employment may be voluntarily terminated by the Employee at any time upon 90 days written notice
to the Bank or upon such shorter period as may be agreed upon between the Employee and the Board of Directors. In the event of
such voluntary termination, the Bank shall be obligated to continue to pay to the Employee the Employee's salary and benefits only
through the Date of Termination, at the time such payments are due, and the Bank shall have no further obligation to the Employee
under this Agreement.
(d) Change
in Control. In the event of Involuntary Termination of the Employee concurrently with or within 12 months after a Change in
Control, the Bank shall, subject to Section 8 of this Agreement and in lieu of the amount set forth in Section 7(a) of this Agreement,
(1) pay to the Employee in a lump sum in cash within 25 business days after the Involuntary Termination an amount equal to 299%
of the Employee’s "base amount" as defined in Section 280G of the Code; and (2) provide to the Employee during
the remaining term of this Agreement substantially the same health benefits as the Bank maintained for its executive officers immediately
prior to the Change in Control, provided that if either the Bank is unable to provide such insurance coverage in-kind or the continuation
of such insurance coverage would trigger excise taxes under Section 4980D of the Code, then the Bank shall make a lump sum cash
payment to the Employee equal to the projected cost of providing such insurance coverage for the remaining term of this Agreement,
with the projected cost to be based on the costs being incurred immediately prior to the Involuntary Termination as increased by
10% on each scheduled renewal date.
(e) Death;
Disability. In the event of the death of the Employee while employed under this Agreement and prior to any termination of employment,
the Employee's estate, or such person as the Employee may have previously designated in writing, shall be entitled to receive from
the Bank the salary and benefits of the Employee through the last day of the calendar month in which the Employee died. If the
Employee becomes disabled as defined in the Bank's then current disability plan, if any, or if the employee is otherwise unable
to serve in his current capacity, this Agreement shall continue in full force and effect, except that the salary paid to the Employee
shall be reduced by any disability insurance payments made to Employee on policies of insurance maintained by the Bank at its expense.
(f) Temporary
Suspension or Prohibition. If the Employee is suspended and/or temporarily prohibited from participating in the conduct of
the Bank's affairs by a notice served under Section 8(e)(3) or (g)(1) of the FDIA, 12 U.S.C. § 1818(e)(3) and (g)(1), the
Bank'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, the Bank may in its discretion (i) pay the 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.
(g) Permanent
Suspension or Prohibition. If the Employee is removed and/or permanently prohibited from participating in the conduct of the
Bank's affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. § 1818(e)(4) and (g)(1), all obligations
of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties
shall not be affected.
(h) Default
of the Bank. If the Bank is in default (as defined in Section 3(x)(1) of the FDIA), all obligations under this Agreement shall
terminate as of the date of default, but this provision shall not affect any vested rights of the contracting parties.
(i) Termination
by Regulators. All obligations of the Bank under this Agreement shall be terminated, except to the extent determined that continuation
of this Agreement is necessary for the continued operation of the Bank: (1) by the Board of Directors of the Federal Deposit Insurance
Corporation (the "FDIC Board") or its designee, at the time the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the FDIA; or (2)
by the FDIC Board or its designee, at the time the FDIC Board or its designee approves a supervisory merger to resolve problems
related to operation of the Bank or when the Bank is determined by the FDIC Board to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not be affected by any such action.
(j) Notwithstanding
any other provision contained in this Agreement, if either (i) the time period for making any cash payment under this Section 7
commences in one calendar year and ends in the succeeding calendar year or (ii) in the event any payment under this Section 7 is
made contingent upon the execution of a general release and the time period that the Employee has to consider the terms of such
general release (including any revocation period under such release) commences in one calendar year and ends in the succeeding
calendar year, then the payment shall not be paid until the succeeding calendar year.
8. Certain
Reduction of Payments by the Bank.
(a) Notwithstanding
any other provision of this Agreement, if payments under this Agreement, together with any other payments received or to be received
by the Employee in connection with a Change in Control would cause any amount to be nondeductible for federal income tax purposes
pursuant to Section 280G of the Code, then benefits under this Agreement shall be reduced (not less than zero) to the extent necessary
so as to maximize payments to the Employee without causing any amount to become nondeductible. If the payments and benefits to
the Employee are required to be reduced pursuant to this Section 8(a), then the cash severance payable pursuant to Section 7(d)
of this Agreement shall be reduced first.
(b) Any
payments made to the Employee pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with
12 U.S.C. § 1828(k) and any regulations promulgated thereunder.
9. No
Mitigation. The Employee shall not be required to mitigate the amount of any salary or other payment or benefit provided for
in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this
Agreement be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement
benefits after the Date of Termination or otherwise.
10. Attorneys
Fees. In the event the Bank exercises its right of Termination for Cause, but it is determined by a court of competent jurisdiction
or by an arbitrator pursuant to Section 18 that cause did not exist for such termination, or if in any event it is determined by
any such court or arbitrator that the Bank has failed to make timely payment of any amounts owed to the Employee under this Agreement,
the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred in challenging such
termination or collecting such amounts. Such reimbursement shall be in addition to all rights to which the Employee is otherwise
entitled under this Agreement.
11. Non-Solicitation.
During the three year period next following the Date of Termination, the Employee shall not directly or indirectly solicit, encourage,
or induce any depositor or customer of the Company or the Bank or any affiliates of either the Company or the Bank, to leave the
Company, the Bank or any affiliate, or directly or indirectly induce or attempt to persuade any then current employee of the Company,
the Bank or any affiliate to terminate their employment.
12. No
Assignments.
(a) This
Agreement is personal to each of the parties hereto, and no party may assign or delegate any of its rights or obligations hereunder
without first obtaining the written consent of the other party; provided, however, that the Bank shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Bank, by an assumption agreement in form and substance satisfactory to the Employee, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such
succession or assignment had taken place. Failure of the Bank to obtain such an assumption agreement prior to the effectiveness
of any such succession or assignment shall be a breach of this Agreement and shall entitle the Employee to compensation from the
Bank in the same amount and on the same terms as the compensation pursuant to Section 7(d) hereof. For purposes of implementing
the provisions of this Section 12(a), the date on which any such succession becomes effective shall be deemed the Date of Termination.
(b) This
Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee's personal
and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts would still be payable to the Employee hereunder if the Employee had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee
or other designee or if there is no such designee, to the Employee's estate.
13. Notice.
For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage
prepaid, to the Bank or Company at its home office, to the attention of the Board of Directors with a copy to the Secretary, or,
if to the Employee, to such home or other address as the Employee has most recently provided in writing to the Bank.
14. Amendments.
No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties, except as herein otherwise
provided.
15. Headings.
The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
16. Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof.
17. Governing
Law. This Agreement shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of
the State of Indiana.
18. Arbitration.
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any
court having jurisdiction.
19. Company
Guarantee. The Company hereby guarantees the obligations of the Bank to the Employee under this Agreement. This guarantee shall
be subject to the provisions of 12 U.S.C. Section 1828(k) and regulations thereunder.
20. Supersedes
Prior Agreements. This Agreement supersedes any and all prior employment agreements entered into by and between the Employee,
the Bank or the Company.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
| Attest: |
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MUTUALBANK |
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| Secretary |
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By: |
Xxxxx X. Xxxxxx |
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Its: |
Chief Executive Officer |
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MUTUALFIRST FINANCIAL, INC. |
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| Secretary |
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By: |
Xxxxx X. Xxxxxx |
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Its: |
President and CEO |
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EMPLOYEE |
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Xxxxxxx X. Xxxxx |
