EMPLOYMENT AGREEMENT
This Agreement, made and dated as of March 31, 1997, by and between MFB
Financial (formerly Mishawaka Federal Savings), a federal savings bank
("Employer"), and Xxxxxxx X. Xxxxxx, a resident of St. Xxxxxx County, Indiana
("Employee").
W I T N E S S E T H
WHEREAS, Employee is hereby employed by Employer as its President and
chief executive officer and is expected to make valuable contributions to the
profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee 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 of MFB Corp., the Indiana corporation which owns
all of the issued and outstanding capital stock of Employer (the "Holding
Company");
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 and chief executive officer, Employer and
Employee, each intending to be legally bound, covenant and agree as follows:
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1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's President and chief executive
officer, and Employee accepts such employment.
2. Employee agrees to serve as Employer's President and chief
executive officer 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 Mishawaka, Indiana, and shall be of the same character as those previously
performed by Employee's predecessor 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 his principal residence. Employee shall render services to Employer
as President and chief executive officer in substantially the same manner and to
substantially the same extent as Employee's predecessor rendered his services to
Employer before the date hereof. Although while employed by Employer, Employee
shall devote substantially all his business time and efforts to Employer's
business and shall not engage in any other related business, Employee may use
his discretion in fixing his hours and schedule of work consistent with the
proper discharge of his duties. 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 April 1, 1997 (the
"Effective Date") and shall end on the date which is three years following such
date; provided, however, that such term shall be extended for an additional
month on the first day of each month succeeding April 1, 1997, so as to continue
to maintain a three-year term and shall continue to be so extended if Employer's
Board of Directors determines by resolution to extend this Agreement prior to
each anniversary of the Effective Date. If either party hereto gives written
notice to the other party not to extend this Agreement in any given month or if
the Board does not determine to extend the Agreement prior to each anniversary
of the Effective Date, no further extension shall occur and the term of this
Agreement shall end three years subsequent to the first day of the month in
which such notice not to extend is given or three years subsequent to the
anniversary as of which the Board does not elect to continue extending this
Agreement (such term, including any extension thereof shall herein be referred
to as the "Term"). Notwithstanding the foregoing, this Agreement shall
automatically terminate (and the Term of this Agreement shall thereupon end)
without notice when Employee attains 65 years of age.
4. Employee shall receive an annual salary of $130,000 ("Base
Compensation") payable at regular intervals in accordance with Employer's normal
payroll practices now or hereafter in effect. Employer may consider and declare
from time to time increases in the salary it pays Employee and thereby increases
in his Base Compensation. During the Term of this Agreement, but only until such
time as a Change of Control occurs, 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 September 30, 1995, and
Employer makes similar decreases in the salary it pays to other executive
officers of Employer. After a Change in Control, no such decreases in Base
Compensation
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may be made, and Employer shall consider and declare salary increases based upon
the following standards:
Inflation;
Adjustments to the salaries of other senior management personnel; and
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 and subject to any waiting period requirements in such plans, he shall
be included as a participant in all present and future employee benefit,
retirement, and compensation plans generally available to employees of Employer
(other than Employee's recognition and retention plan and trust), consistent
with his Base Compensation and his position as President and chief executive
officer of Employer, including, without limitation, Employer's or the Holding
Company's pension plan, stock option plan, employee stock ownership plan, and
hospitalization, major medical, disability, dental 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 September 30, 1995, and unless (either before or after a
Change of Control) changes in the accounting 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, at his discretion, 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 from his
point of view than were in effect for his predecessor immediately
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prior to the date hereof. So long as Employee is employed by Employer pursuant
to this Agreement, Employee shall be entitled to the use of a company car
provided by the Employer.
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:
(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 term, condition or
covenant of this Agreement.
(B) Employee, by written notice to Employer, may terminate his
employment with Employer immediately for cause. For purposes
of this subsection 7(B), "cause" shall be defined as (i) any
action by Employer's Board of Directors to remove the Employee
as President and chief executive officer 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 and chief executive
officer of Employer (including his authority, subject to
corporate controls no more restrictive than those in effect on
the date hereof, to hire and discharge employees who are not
bona fide officers 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.
(C) Employee, upon sixty (60) days written notice to Employer, may
terminate his employment with Employer without cause.
(D) 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.
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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:
(A) In the event of termination pursuant to subsection 7(A) or
7(C) (provided that in the case of Section 7(C) such
termination does not occur within 12 months following a Change
of Control), 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
termination by Employee pursuant to subsection 7(C) within a
period which begins with a Change of Control and ends 12
months thereafter, 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 12-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
period, Employer will maintain in full force and effect for
the continued benefit of Employee each employee welfare
benefit plan (as such term is 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
of Employer or applicable laws 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 X.X.X.xx. 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).
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(C) In the event of termination pursuant to subsection 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, (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(D). 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), 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 or have terminated 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 reasons
other than those set forth in subsections 7(B) of this
Agreement, 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.
(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) of this Agreement,
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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 during the
last three years (or such shorter period) he was 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) 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 or venture
which competes with the business of Employer as conducted
during Employee's employment by Employer within St. Xxxxxx
County or within a radius of 25 miles of any other office of
Employer where Employee was employed for more than six months
in the three years next preceding termination.
(D) If Employee's employment by Employer is terminated for reasons
other than those set forth in subsections 7(B) of this
Agreement, 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) of this Agreement, Employee
shall have no obligations to Employer with respect to trade secrets,
confidential information or 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(B) or 7(D) 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) and (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
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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.
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 may 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 or Resolution Trust 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
payments.
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
said dispute shall be resolved by binding arbitration determined in accordance
with the rules of the American Arbitration Association and if Employee obtains a
final award in his favor or his claim is settled by Employer prior to the
rendering of an award by such arbitration, 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.
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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: Xxxxxxx X. Xxxxxx
00000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
If to Employer: Mishawaka Federal Savings
000 Xxxxx Xxxxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, 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, exist 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(B) hereof. As used in this
Agreement, "Employer" shall mean Employer as hereinbefore defined and any
successor to its business or assets as aforesaid.
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.
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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.
25. If any of the provisions in this Agreement shall conflict with 12
C.F.R. ss. 563.39(b), as it may be amended from time to time, the requirements
of such regulation shall supersede any contrary provisions herein and shall
prevail.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed and delivered as of the day and year first above set forth.
MFB FINANCIAL
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title:Vice President and Controller
"Employer"
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
"Employee"
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The undersigned, MFB Corp., sole shareholder of Employer, agrees that
if it shall be determined for any reason that any obligation on the part of
Employer to continue to make any payments due under this Agreement to Employee
is unenforceable for any reason, MFB 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.
MFB CORP.
By:/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Controller
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