EMPLOYMENT AGREEMENT
THIS AGREEMENT, made effective as of February 26, 2001 by and between
AMERIANA BANK & TRUST OF INDIANA ("Ameriana" or the "Bank"), with its principal
office in New Castle, Indiana, and Xxxxxxx X. Xxxxxxx ("Executive"), an
individual residing in the State of Indiana.
WHEREAS, the Bank wishes to assure itself of the services of Executive for
the period provided in this Agreement, and Executive is willing to serve in the
employ of the Bank on a full-time basis for said period; and
WHEREAS, the Board of Directors of the Bank has determined that the best
interests of the Bank would be served by providing the Executive with protection
and special benefits following any change of control of the Bank;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Employment. The Bank agrees to continue Executive in its employ, and
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Executive agrees to remain in the employ of the Bank, for the period
stated in paragraph 3 hereof and upon the other terms and conditions
herein provided.
2. Position and Responsibilities. The Bank employs Executive and
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Executive agrees to serve as Senior Vice President-Treasurer of the
Bank for the term and on the conditions hereinafter set forth.
Executive agrees to perform such services not inconsistent with his
position as shall from time to time be assigned to him by the Bank's
Board of Directors.
3. Term and Duties.
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(a) Term of Employment. The term of this Agreement shall be for a
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period of thirty-six (36) months and any extensions. During each
calendar year hereafter, the Board of Directors of the Bank
("Board") shall review the performance of the Executive, and such
Board shall determine whether to extend the term of the Agreement
beyond its expiration date.
(b) Duties. During the period of his employment hereunder and except
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for illnesses, reasonable vacation periods, and reasonable leaves
of absence, Executive shall devote his business time, attention,
skill, and efforts to the faithful performance of his duties
hereunder; provided, however, that with the approval of the Board
of Directors of the Bank, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any
other offices or positions in companies or organizations, which,
in such Board's judgment, will not present any material conflict
of interest with the Bank or any of its subsidiaries or
affiliates or divisions, or
unfavorably affect the performance of Executive's duties pursuant
to this Agreement, or will not violate any applicable statute or
regulation.
4. Compensation and Reimbursement of Expenses.
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(a) Compensation. The Bank agrees to pay the Executive during the
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term of this Agreement a salary at the rate of $109,000 per
annum; provided, that the rate of such salary shall be reviewed
by the Board of Directors of the Bank not less often than
annually. Such rate of salary, or increased rate of salary, if
any, as the case may be, may be further increased (but not
decreased) from time to time in such amount as the Board in its
discretion may decide. Such salary shall be payable in accordance
with the customary payroll practices of the Bank, but in no event
less frequently than monthly, and any bonus shall be payable in
the manner specified by such committee or such Board of Directors
at the time any such bonus is awarded.
(b) Reimbursement of Expenses. The Bank shall pay or reimburse
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Executive for all reasonable travel and other expenses incurred
by Executive in the performance of his obligations under this
Agreement in accordance with the Bank's policy on the date of
this Agreement or as approved by the Board of Directors.
5. Participation in Benefit Plans. The payments provided in paragraphs 4,
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7, and 8 hereof are in addition to any benefits to which Executive may
be, or may become, entitled under any group hospitalization, health,
dental care, or sick leave plan, life or other insurance or death
benefit plan, travel or accident insurance, or executive contingent
compensation plan, including, without limitation, capital accumulation
and termination pay programs, restricted or stock purchase plan, stock
option plan, retirement income, qualified pension plan, supplemental
pension plan (excess benefit plan), executive supplemental retirement
plan, or other present or future group employee benefit plan or
program of the Bank for which executives are or shall become eligible,
and Executive shall be eligible to receive during the period of his
employment under this Agreement, and during any subsequent period for
which he shall be entitled to receive payments from the Bank under
paragraph 7 or paragraph 8 all benefits and emoluments for which
executives are eligible under every such plan or program to the extent
permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof.
6. Vacation and Sick Leave. At such reasonable times as the Board of
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Directors shall in its discretion permit, Executive shall be entitled,
without loss of pay, to absent himself voluntarily from the
performance of his employment under this Agreement, all such voluntary
absences to count as vacation time; provided that:
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(a) Executive shall be entitled to an annual vacation in accordance
with the policies as periodically established by the Board of
Directors for senior management officials of the Bank, which
shall in no event be less than four weeks per annum.
(b) The timing of vacations shall be scheduled in a reasonable manner
by the Board of Directors. Executive shall not be entitled to
receive any additional compensation from the Bank on account of
his failure to take a vacation; nor shall he be entitled to
accumulate unused vacation from one fiscal year to the next
except to the extent authorized by the Board of Directors for
senior management officials of the Bank.
(c) In addition to the aforesaid paid vacations, Executive shall be
entitled, without loss of pay, to absent himself voluntarily from
the performance of his employment with the Bank for such
additional periods of time and for such valid and legitimate
reasons as the Board of Directors in its discretion may
determine. Further, the Board of Directors shall be entitled to
grant to Executive a leave or leaves of absence with or without
pay at such time or times and upon such terms and conditions as
the Board of Directors in its discretion may determine.
(d) In addition, Executive shall be entitled to an annual sick leave
as established by the Board of Directors for senior management
officials of the Bank. In the event any sick leave time shall not
have been used during any year, such leave shall accrue to
subsequent years only to the extent authorized by the Board of
Directors. Upon termination of his employment, Executive shall
not be entitled to receive any additional compensation from the
Bank for unused sick leave.
7. Benefits Payable Upon Disability.
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(a) Primary Disability Benefits. In the event of the disability (as
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hereinafter defined) of Executive, the Bank shall continue to pay
Executive the monthly compensation provided in paragraph 4 hereof
during the period of his disability provided, however, that in
the event Executive is disabled for a continuous period exceeding
eighteen (18) calendar months, the Bank may, at its election,
terminate the Agreement, in which event Executive shall be
entitled to receive the benefits described in paragraph 7(b).
As used in this Agreement, the term "disability" shall mean the
complete inability of Executive to perform his duties under this
Agreement as determined by an independent physician selected with
the approval of the Bank and the Executive.
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(b) Secondary Disability Benefits. The Bank shall pay to the
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Executive a monthly disability benefit equal to sixty (60)
percent of his monthly salary at the time he became disabled.
Payment of such disability benefit shall commence on the last day
of the month following the month for which the final payment
under paragraph 7(a) was made and cease with the earlier of (i)
the payment for the month in which the Executive dies or (ii) the
payment for the month preceding the month in which occurs
Executive's normal retirement date under the Bank's pension plan.
(c) Disability Benefit Offset. Any amounts payable under paragraph
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7(a) or 7(b) shall be reduced by any amounts paid to the
Executive under any other disability program maintained by the
Bank.
(d) Services During Disability. During the period Executive is
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entitled to receive payments under paragraphs 7(a) and (b), the
Executive shall, to the extent that he is physically and mentally
able to do so, furnish information and assistance to the Bank,
and, in addition, upon reasonable request in writing on behalf of
the Board of Directors, or an executive officer designated by
such Board, from time to time, make himself available to the Bank
to undertake reasonable assignments consistent with the dignity,
importance, and scope of his prior position and his physical and
mental health. During such period of service, Executive shall be
responsible and report to, and be subject to the supervision of,
the Board of Directors of the Bank or an executive officer
designated by the Board, as to the method and manner in which he
shall perform such assignments, subject always to the provisions
of this paragraph 7(d), and shall keep such Board, or such
executive officer, appropriately informed of his progress in each
such assignment.
8. Payments to Executive Upon Termination of Employment.
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(a) Event of Termination. Upon the occurrence of an Event of
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Termination (as hereinafter defined) during the period of
Executive's employment under this Agreement, the provisions of
this paragraph 8 shall apply. As used in this Agreement, an
"Event of Termination" shall mean that termination by the Bank of
Executive's employment hereunder for any reason other than
"cause" or retirement at or after the normal retirement age under
a qualified pension plan maintained by the Bank or termination
pursuant to Paragraph 7. A termination for "cause" shall include
termination because of the Executive's personal dishonesty,
incompetence, willful misconduct, breach of 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. In the event of termination for cause the
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Executive shall have no right to receive compensation or other
benefits for any period after such termination.
(b) Event of Termination Without Change of Control. Upon the
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occurrence of an Event of Termination other than after a Change
of Control (as hereinafter defined), the Bank shall pay to the
Executive monthly, or in the event of his subsequent death, to
his designated beneficiary or beneficiaries, or to his estate, as
the case may be, as severance pay or liquidated damages, or both,
during the period below described a sum equal to the highest
monthly rate of salary paid to the Executive at any time under
this Agreement. Such payments shall commence on the last day of
the month following the date of said event of termination and
shall continue until the date this Agreement would have expired
but for said occurrence, with such occurrence being viewed as a
determination by the Bank not to extend the Agreement as provided
for in paragraph 3 of this Agreement. Notwithstanding the
foregoing, in no event shall all such payments made pursuant to
this subparagraph 8(b) exceed three times the final annual rate
of salary being paid to Executive as of the date of termination.
(c) Event of Termination In Connection with Change of Control. If
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either, (1) after a "Change of Control" (as hereinafter defined)
of the Bank or Parent (as hereinafter defined), either (A) the
Bank shall terminate the employment of the Executive during the
period of employment under this Agreement for any reason other
than "cause," as defined in Paragraph 8(a), retirement at or
after the normal retirement age under a qualified pension plan
maintained by the Bank or termination pursuant to Paragraph 7, or
otherwise change the present capacity or circumstances in which
the Executive is employed as set forth in Paragraph 2 of this
Agreement or cause a reduction in the Executive's
responsibilities or authority or compensation or other benefits
provided under this Agreement without the Executive's written
consent, or (B) the Executive voluntarily terminates his
employment hereunder for any reason within thirty (30) days
following a Change of Control of the Bank or Parent, or (2)
during the period that begins on the date six months before a
Change of Control and ends on the later of the first anniversary
of the Change of Control or the expiration date of this
Agreement, the Bank changes the present capacity or circumstances
in which the Executive is employed as set forth in Paragraph 2 of
this Agreement or causes a reduction in the Executive's
responsibilities or authority or compensation or other benefits
provided under this Agreement without the Executive's written
consent, then in the case of either (1) or (2), the Bank shall
pay to the Executive and provide the Executive, or his
beneficiaries, dependents and estate, as the case may be, with
the following:
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(i) The Bank shall promptly pay to the Executive a sum equal to
2.99 times the average annual compensation payable by the
Bank and includable by the Executive in gross income for the
most recent five taxable years ending before the date on
which the ownership or control of the Bank or Parent changed
or the portion of this period during which the Executive was
an employee of the Bank.
(ii) During a period of thirty-six (36) calendar months beginning
with the Event of Termination, the Executive, his
dependents, beneficiaries and estate shall continue to be
covered under all employee benefit plans of the Bank,
including without limitation the Bank's pension plan, as if
the Executive were still employed during such period under
this Agreement.
(iii) If and to the extent that benefits of service credit for
benefits provided by paragraph 8(c)(ii) shall not be payable
or provided under any such plans to the Executive, his
dependents, beneficiaries and estate, by reason of his no
longer being an employee of the Bank as a result of
termination of employment, the Bank shall itself pay or
provide for payment of such benefits and services credit for
benefits to the Executive, his dependents, beneficiaries and
estate. Any such payment relating to retirement shall
commence on a date selected by the Executive which must be a
date on which payments under the Bank's qualified pension
plan or successor plan may commence.
(iv) If the Executive elects to have benefits commence prior to
the normal retirement age under the qualified pension plan
or any successor plan maintained by the Bank and thereby
incurs an actuarial reduction in his monthly benefits under
such plan, the Bank shall itself pay or provide for payment
to the Executive the difference between the amount that
would have been paid if the benefits commenced at normal
retirement age and the actuarially reduced amount paid upon
the early commencement of benefits.
(v) The Bank shall pay all legal fees and expenses which the
Executive may incur as a result of a contest concerning the
validity or enforceability of this Agreement and the
Executive shall be entitled to receive interest thereon for
the period of any delay in payment from the date such
payment was due at the rate determined by adding two hundred
basis points to the six month Treasury Xxxx rate.
Notwithstanding anything herein to the contrary, in no event
shall the Bank be required to: (a) pay legal fees or
expenses incurred by Executive to enforce the Agreement
unless a court of competent jurisdiction renders a final
judgment in
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favor of the Executive; or (b) advance legal fees or
expenses incurred by Executive to enforce the contract
unless the Executive is terminated without Just Cause after
a change of control of Bank or its parent corporation,
Ameriana Bancorp ("Parent") not recommended by Parent's
board of directors. Provided further, that the Executive
shall be required to reimburse the Bank for the legal fees
and expenses advanced pursuant to this subparagraph if a
court of competent jurisdiction does not render a final
judgment in favor of the Executive.
(vi) The Executive 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 Executive offset
in any manner the obligations of the Bank hereunder.
(vii) Notwithstanding anything contained in this Section 8(c)
herein to the contrary, in no event shall payments and
benefits made pursuant to this Section 8(c) be made which
would result in such payments being classified as an "excess
parachute payment" as such term is defined under Section
280G of the Internal Revenue Code of 1986, as amended
("Code"). In the event that such payments and benefits, if
made, would be considered as an "excess parachute payment",
such payments shall be reduced by such dollar amount as is
required so that the total value of such payments and
benefits when made shall not be considered as an "excess
parachute payment".
(d) Change of Control. A "Change of Control" shall mean any one of
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the following events: (i) the acquisition of ownership, holding
or power to vote more than 25% of the Bank's or the Parent's
voting stock, (ii) the acquisition of the ability to control the
election of a majority of the Bank's or the Parent's directors,
(iii) the acquisition of a controlling influence over the
management or policies of the Bank or the Parent by any person or
by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), or (iv) during any
period of two consecutive years, individuals (the "Continuing
Directors") who at the beginning of such period constitute the
Board of Directors of the Bank or the Parent (the "Existing
Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or
nomination for election as a member of the Existing Board was
approved by a vote of at least two-thirds of the Continuing
Directors then in office shall be considered a Continuing
Director. Notwithstanding the foregoing, ownership or control of
the Bank by the Parent itself shall not constitute a Change of
Control. Further, "Change of Control" shall not include the
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acquisition of securities by an employee benefit plan of the Bank
or the Parent. For purposes of this paragraph only, the term
"person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
(e) Suspension and Special Regulatory Rules.
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(i) The Bank's board of directors may terminate the Executive's
employment at any time, but any termination by the Bank's
board of directors other than termination for "Just Cause",
shall not prejudice the Executive's right to compensation or
other benefits under the Agreement. The Executive shall have
no right to receive compensation or other benefits for any
period after termination for "Just Cause". Termination for
"Just Cause" shall mean termination for personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule,
regulation (other than a law, rule or regulation relating to
a traffic violation or similar offense), final
cease-and-desist order, or material breach of any provision
of this Agreement. Subject to the provisions of 8(c) and (d)
hereof, in the event this Agreement is terminated for Just
Cause, the Bank shall only be obligated to continue to pay
Executive his salary up to the date of termination, and the
vested rights of the parties shall not be affected.
(ii) If the Executive 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 Federal
Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)) the
Bank's obligations under this contract 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 Executive all or part
of the compensation withheld while its contract obligations
were suspended, and (ii) reinstate (in whole or in part) any
of its obligations which were suspended.
(iii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by
an order issued under Sections 8(e)(4) or 8(g)(1) of the
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Federal Deposit Insurance Act ("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 the vested rights of the parties shall not be
affected.
(iv) If the Bank is in default (as defined in Section 3(x)(1) of
FDIA), all obligations under this Agreement shall terminate
as of the date of default, but this subparagraph shall not
affect any vested rights of the parties.
(f) Power of the Board of Directors to Terminate the Executive. The
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Board of Directors of the Bank may terminate the Executive at any
time; in the event of such termination, the provisions of this
paragraph 8 shall fully apply.
(g) Any payments made to the employee pursuant to this agreement, or
otherwise, are subject to and conditioned upon their compliance
with 12 USC 1828(k) and any regulations promulgated thereunder.
(h) Post-termination Health Insurance. If the Executive's employment
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terminates with the Bank for any reason other than Just Cause,
the Executive shall be entitled to purchase from the Bank, at his
own expense which shall not exceed applicable COBRA rates, family
medical insurance under any group health plan that the Bank
maintains for its employees. This right shall be (i) in addition
to, and not in lieu of, any other rights that the Executive has
under this Agreement and (ii) shall continue until the Executive
first becomes eligible for participation in Medicare.
9. Source of Payments. All payments provided in paragraphs 4, 7, and 8
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shall be paid in cash from the general funds of the Bank, and no
special or separate fund shall be established and no other segregation
of assets shall be made to assure payment. Executive shall have no
right, title, or interest whatever in or to any investments which the
Bank may make to aid the Bank in meeting its obligations hereunder.
10. Noncompetition. The Executive hereby expressly covenants and agrees
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that during the term of this Agreement and for a period of one year
thereafter, he shall not, unless acting with the prior written consent
of the Bank, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, firm, corporation or entity, own,
manage, operate, join, control, finance or participate in the
ownership, management operation or control of, or be connected with as
a director, officer, employee, consultant, partner, stockholder (other
than to the extent he is a stockholder therein as of the date hereof),
and excepting any ownership, solely as an investment, so long as the
Executive is not a member of
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any control group (with the meaning of the rules and regulations
of the Securities and Exchange Commission, the Office of Thrift
Supervision or the Federal Reserve Board of any such issue), any
business engaged in the business of banking or that of owning or
managing or controlling a bank or banks (which term shall
include, but is not limited to, mortgage companies, savings and
loan associations and savings banks), in any county where the
Bank and its Parent or any other subsidiary of either, has an
office or branch and the contiguous counties thereto.
11. Confidential Information. Executive shall not, to the detriment of the
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Bank, knowingly disclose or reveal to any unauthorized person any
confidential information relating to the Bank, its subsidiaries or
affiliates, or to any of the businesses operated by them, and
Executive confirms that such information constitutes the exclusive
property of the Bank. Executive shall not otherwise knowingly act or
conduct himself (i) to the material detriment of the Bank, its
subsidiaries, or affiliates, or (ii) in a manner which is inimical or
contrary to the interests thereof.
12. Federal Income Tax Withholding. The Bank may withhold from any
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benefits payable under this Agreement all federal, state, city, or
other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
13. Effect of Prior Agreements. This Agreement contains the entire
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understanding between the parties hereto and supersedes any prior
employment agreement between the Bank or any predecessor of the Bank
and Executive.
14. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
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shall preclude the Bank from consolidating or merging into or with, or
transferring all or substantially all of its assets to another
corporation which assumes this Agreement and all obligations and
undertakings of the Bank hereunder. Upon such a consolidation, merger,
or transfer of assets or assumption, the term "the Bank" as used
herein, shall mean such other corporation and this Agreement shall
continue in full force and effect.
15. General Provisions.
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(a) Nonassignability. Neither this Agreement nor any right or
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interest hereunder shall be assignable by Executive, his
beneficiaries, or legal representatives without the Bank's prior
written consent; provided, however, that nothing in this
paragraph 14(a) shall preclude (i) Executive from designating a
beneficiary to receive any benefits payable hereunder upon his
death, or (ii) the executors, administrators, or other legal
representatives of Executive or his estate from assigning any
rights hereunder to the person or persons entitled thereto.
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(b) No Attachment. Except as required by law, no right to receive
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payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation or to execution, attachment, levy, or
similar process of assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action
shall be null, void, and of no effect.
(c) Binding Agreement. This Agreement shall be binding upon, and
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inure to the benefit of, Executive and the Bank and their
respective permitted successors and assigns.
16. Modification and Waiver.
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(a) Amendment of Agreement. This Agreement may not be modified or
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amended except by an instrument in writing signed by the parties
hereto.
(b) Waiver. No term or condition of this Agreement shall be deemed to
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have been waived, nor shall there be an estoppel against the
enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No
such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each waiver shall operate only
as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or
as to any act other than that specifically waived.
17. Severability. If, for any reason, any provision of this Agreement is
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held invalid, such invalidity shall not effect any other provision of
this Agreement not held so invalid, and each such other provision
shall to the full extent consistent with law continue in full force
and effect. If any provision of this Agreement shall be held invalid
in part, such invalidity shall in no way affect the rest of such
provision, which, together with all other provisions of this
Agreement, shall to the full extent consistent with law continue in
full force and effect. If this Agreement is held invalid or cannot be
enforced, then to the full extent permitted by law any prior agreement
between the Bank (or any predecessor thereof) and Executive shall be
deemed reinstated as if this Agreement has not been executed.
18. Headings. The headings of paragraphs herein are included solely for
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convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
19. Governing Law. This Agreement has been executed and delivered in the
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State of Indiana, and is validity, interpretation, performance, and
enforcement shall be governed by the laws of said State, except to the
extent Federal law is governing.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and its
seal to be affixed hereunto by its officers thereunto duly authorized, and
Executive has signed this Agreement, all as of the day and year first above
written.
AMERIANA BANK AND TRUST OF
INDIANA
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
Vice Chairman of the
Board of Directors
ATTEST:
/s/ Xxxxx X. Xxxxxx
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Senior Vice President-Treasurer
WITNESS:
/s/ Xxxxxxx X. Xxxxx
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