COMPANY EMPLOYMENT AGREEMENT
Exhibit 10.7
COMPANY EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as the “AGREEMENT”), is originally entered into on the 30th day of March, 2006, previously amended and restated in its entirety as of December 20, 2008 and hereby amended and restated as of July 1, 2014 by and between United Community Bancorp, an Indiana corporation, (hereinafter referred to as the “COMPANY”), and Xxxxx X. March (hereinafter referred to as the “EMPLOYEE”);
WHEREAS, as a result of the skill, knowledge and experience of the EMPLOYEE, the Board of Directors of the COMPANY desires to continue to retain the services of the EMPLOYEE as the Senior Vice President, Chief Financial Officer and Treasurer of the COMPANY; and
WHEREAS, the EMPLOYEE desires to continue to serve as the Senior Vice President, Chief Financial Officer and Treasurer of the COMPANY; and
WHEREAS, the EMPLOYEE and the COMPANY desire to enter into this Agreement to set forth the terms and conditions of the employment relationship between the COMPANY and the EMPLOYEE; and
WHEREAS, the parties desire to amend and restate this Agreement to bring it into compliance with changes in the regulatory structure governing financial institutions like the COMPANY; (ii) reflect the EMPLOYEE’S current job position with the COMPANY; and (iii) other ministerial matters.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the COMPANY and the EMPLOYEE hereby agree as follows:
(c) The board of directors of the COMPANY will review the AGREEMENT and the EMPLOYEE’S performance review annually for purposes of determining whether to extend the AGREEMENT TERM and will include the rationale and results of its review in the minutes of the meetings.
(d) Nothing in this AGREEMENT shall mandate or prohibit a continuation of the EMPLOYEE’S employment following the expiration of the TERM of this AGREEMENT, upon such terms and conditions as the COMPANY and the EMPLOYEE may mutually agree.
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(1) The assignment to the EMPLOYEE of duties that constitute a material diminution of her authority, duties, or responsibilities (including reporting requirements);
(2) A material diminution in the EMPLOYEE’s Base Salary;
(3) Relocation of the EMPLOYEE to a location outside a radius of 35 miles of the COMPANY’s executive office in Lawrenceburg, Indiana; or
(4) Any other action or inaction by the COMPANY that constitutes a material breach of this Agreement;
provided, that within ninety (90) days after the initial existence of such event, the COMPANY shall be given notice and an opportunity, not less than thirty (30) days, to effectuate a cure for such asserted “Good Reason” by the EMPLOYEE. The EMPLOYEE’s resignation hereunder for Good Reason shall not occur later than one hundred fifty (150) days following the initial date on which the event the EMPLOYEE claims constitutes Good Reason occurred.
The following subsections (A), (B) and (C) of this Section 4(a)(ii) shall govern the obligations of the COMPANY to the EMPLOYEE upon the occurrence of the events described in such subparagraphs:
(A) Termination for Cause. In the event that the COMPANY terminates the employment of the EMPLOYEE during the TERM because of the EMPLOYEE’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure or refusal to perform the duties and responsibilities assigned in this Agreement, willful violation of any law, rule or regulation (other than traffic violations or other minor offenses), or final cease-and-desist order or material breach of any provision of this Agreement (hereinafter collectively referred to as “Cause”), the EMPLOYEE shall not receive, and shall have no right to receive, any compensation or other benefits for any period after such termination.
(B) Termination in Connection with Change in Control. In the event that the employment of the EMPLOYEE is terminated by the COMPANY in connection with a Change in Control for any reason other than Cause or is terminated by the EMPLOYEE as provided in Section 4(a) above, then the following shall occur:
(I) The COMPANY shall promptly pay to the EMPLOYEE or to her beneficiaries, dependents or estate an amount equal to the product of 2.99 multiplied by the EMPLOYEE’s “base amount” as defined in Section 280G(b)(3) of the Code and the regulations promulgated thereunder (hereinafter collectively referred to as “Section 280G”);
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(II) The EMPLOYEE, her dependents, beneficiaries and estate shall continue to be covered at the COMPANY’s expense under all health, life, disability and other benefit plans of the COMPANY in which the EMPLOYEE was a participant prior to the effective date of the termination of her employment as if the EMPLOYEE were still employed under this Agreement until the earlier of the expiration of the Term or the date on which the EMPLOYEE is included in another employer’s benefit plans as a full-time EMPLOYEE; and
(III) The EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the COMPANY hereunder, except as specifically stated in subparagraph (II) above.
(C) Termination not in Connection with Change in Control. In the event that the employment of the EMPLOYEE is terminated before the expiration of the TERM for any reason other than death, termination for Cause or termination in connection with a Change in Control, then the following shall occur:
(I) The COMPANY shall be obligated to continue to pay to the EMPLOYEE, her designated beneficiaries or her estate, a lump sum amount, within ten (10) days of her termination, equal to the base salary that would have been paid to the EMPLOYEE through the expiration of the TERM, at the annual rate of salary in effect at the time of termination pursuant to Section 3(b) above, plus a cash bonus equal to the cash bonus, if any, paid to the EMPLOYEE in the twelve month period prior to the termination of employment;
(II) The COMPANY shall continue to provide to the EMPLOYEE, at its expense, health, life, disability and other benefits substantially equal to those being provided to the EMPLOYEE at the date of termination of her employment until the earliest to occur of the expiration of the TERM or the date on which the EMPLOYEE is included in another employer’s benefit plans as a full-time EMPLOYEE; and
(III) The EMPLOYEE shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall any amounts received from other employment or otherwise by the EMPLOYEE offset in any manner the obligations of the COMPANY hereunder, except as specifically stated in subparagraph (II) above.
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As a condition precedent to receiving the lump sum severance payment and benefits under this Section 4(a)(ii)(C), EMPLOYEE shall execute a release agreement in a form provided by the COMPANY or United Community Bank (“BANK”). In said release agreement, EMPLOYEE shall, among other provisions included at the discretion of the BANK and/or the COMPANY, agree to fully and forever discharge and release COMPANY, its past and present subsidiary and affiliated corporations or business entities and its and their past and present EMPLOYEEs, agents, representatives, officers, benefit plans, and directors from any and all actions, causes of action, claims, demands, damages, costs, expenses and compensation on account of, or in any way growing out of any and all damage that EMPLOYEE had, has, or may have against the COMPANY and/or the BANK as of the time the release agreement is executed by EMPLOYEE.
(c) “Golden Parachute” Provision. Notwithstanding any other provisions of this AGREEMENT, in the event that the aggregate payments or benefits to be made or afforded to the EMPLOYEE under this AGREEMENT or otherwise, which are deemed to be parachute payments as defined in SECTION 280G or any successor thereof (the “Termination Benefits”), would be deemed to include an “excess parachute payment” under SECTION 280G of the Code, then the Termination Benefits shall be reduced to a value which is one dollar ($1.00) less than an amount equal to three (3) times the EMPLOYEE’S “base amount,” as determined in accordance with Section 280G of the Code. The allocation of the reduction required hereby among the Termination Benefits shall first be made from any cash severance benefit due under Section 4 of this AGREEMENT. Nothing contained in this AGREEMENT shall result in a reduction of any payments or benefits to which the EMPLOYEE may be entitled upon termination of employment other than pursuant to Sections 4(a)(ii)(B)(I) and (II), or a reduction in the payments and benefits specified, below zero.
(I) | Merger: The COMPANY merges into or consolidates with another corporation, or merges another corporation into the COMPANY, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the COMPANY immediately before the merger or consolidation. |
(II) | Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the COMPANY’s voting securities, but this clause (II) shall not apply to beneficial ownership of COMPANY voting shares held in a fiduciary capacity by an entity of which the COMPANY directly or indirectly beneficially owns 50% or more of its outstanding voting securities. |
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(III) | Change in Board Composition: During any period of two consecutive years, individuals who constitute the COMPANY’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the COMPANY’s Board of Directors; provided, however, that for purposes of this clause (III), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of a least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or |
(IV) | Sale of Assets: The COMPANY sells to a third party all or substantially all of its assets. |
( e ) Termination by EMPLOYEE. If the EMPLOYEE terminates this Agreement without the written consent of the COMPANY, other than pursuant to Section 4(a)(ii) of this Agreement, the EMPLOYEE shall not engage in the financial institutions’ business as a director, officer, EMPLOYEE or consultant for any business or enterprise which “directly or indirectly” competes with the principal business of the COMPANY or any of its subsidiaries within Dearborn County, Indiana or within thirty (30) miles of the principal business location of COMPANY, for the unexpired TERM of this Agreement. This provision shall not apply in the event of the termination of the employment of the EMPLOYEE by the COMPANY prior to the expiration of the TERM or termination by the EMPLOYEE pursuant to Section 4(a)(ii) of this Agreement.
(1) The term “compete” means:
(i) providing financial products or services on behalf of any financial institution for any person residing in the territory;
(ii) assisting (other than through the performance of ministerial or clerical duties) any financial institution in providing financial products or services to any person residing in the territory; or
(iii) inducing or attempting to induce any person who was a customer of the COMPANY at the date of the EMPLOYEE’S employment termination to seek financial products or services from another financial institution.
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(2) The words “directly” or “indirectly” mean:
(i) acting as a consultant, officer, director, independent contractor, or EMPLOYEE of any financial institution in competition with the COMPANY or its affiliates in the territory, or
(ii) communicating to such financial institution the names or addresses or any financial information concerning any person who was a customer of the COMPANY or its affiliates when the EMPLOYEE’S employment terminated.
If any provision of this section (e) or any word, phrase, clause, sentence or other portion thereof (including, without limitation, the geographical and temporal restrictions contained therein) is held to be unenforceable or invalid for any reason, the unenforceable or invalid provision or portion shall be modified or deleted so that the provisions hereof, as modified, are legal and enforceable to the fullest extent permitted under applicable law. EMPLOYEE acknowledges that the COMPANY’S willingness to enter into this AGREEMENT and to make the payments contemplated by Section 4 of this AGREEMENT is conditioned on the EMPLOYEE’S acceptance of the covenants set forth in this Section 4(e) and that the COMPANY would not have entered into this AGREEMENT without such covenants in force.
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14. Governing Law. This Agreement has been executed and delivered in the State of Indiana and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of Indiana, except to the extent that federal law governs.
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16. Source of Payments. Notwithstanding any provision herein to the contrary, to the extent payments and benefits, as provided by this Agreement, are paid or received by EMPLOYEE under the Employment Agreement between EMPLOYEE and the BANK, such compensation payments and benefits paid by the BANK will be subtracted from any amount or benefit due simultaneously to EMPLOYEE under similar provisions of this AGREEMENT. Payments pursuant to this AGREEMENT will be allocated in proportion to the level of activity and time expended on such activities by EMPLOYEE, as determined by the COMPANY.
(a) This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on the EMPLOYEE under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with (b) below. In no event shall the EMPLOYEE, directly or indirectly, designate the calendar year of payment.
(b) If when separation from service occurs the EMPLOYEE is a “specified EMPLOYEE” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 4 would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the COMPANY will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 4 to the EMPLOYEE in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which the EMPLOYEE separates from service.
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(c) If under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 4 it is not possible to continue coverage for the EMPLOYEE and her dependents, or when a separation from service occurs the EMPLOYEE is a “specified EMPLOYEE” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 4 would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the COMPANY shall pay to the EMPLOYEE in a single lump sum an amount in cash equal to the present value of the COMPANY’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had the EMPLOYEE’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 17(b) applies, on the first payroll date that occurs after the date that is six (6) months after the date on which the EMPLOYEE separates from service.
(d) References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.
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Attest: | UNITED COMMUNITY BANCORP | ||
/s/ Xxxxx X. Xxxxxxxx | By: | /s/ E. G. XxXxxxxxxx | |
On behalf of the Board of Directors | |||
EMPLOYEE | |||
/s/ Xxxxx X. March | |||
Xxxxx X. March |
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