EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
June, 1998 by and between MIDAMERICA BANCORP, INC., a Kentucky
corporation and BANK OF LOUISVILLE, a Kentucky Combined Bank and
Trust Company, (together with their successors and assigns
permitted under this Agreement, the "Companies), and XXXXXX X.
SMALL (the "Executive").
W I T N E S S E T H:
WHEREAS, the Companies and the Executive are parties to an
Agreement dated as of March 1, 1996, covering the employment
relationship of Executive with Companies, and
WHEREAS, the Parties desire to cancel that Agreement and
replace it in its entirety with this Employment Agreement (this
"Agreement").
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Companies and the Executive (individually a "Party" and together
the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly
controls, is controlled by, or is under common control
with the person or other entity specified.
(b) Except as provided otherwise in Section 8 hereof, "Base
Salary" shall mean the salary provided for in Section 5
below or any increased salary granted to the Executive
pursuant to Section 5.
(c) "Board" shall mean the Boards of Directors of the
Companies.
(d) "Cause" shall mean:
(i) The Executive is convicted of a felony; or
(ii) The Executive is guilty of willful gross neglect or
willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in
material economic harm to the Companies, unless the
Executive believed in good faith that such act or
nonact was in the best interests of such Company.
(e) A "Change of Control" shall mean the occurrence of any
one of the following events:
(i) Any "person," as such term is used in Sections
3(a)(9) and 13(d)of the Securities Exchange Act of
1923, becomes a "beneficial owner,"as such term is
used in Rule 13d-3 promulgated under that Act, of
20% or more of the Voting Stock of the Companies;
(ii) The majority of either Board consists of individuals
other than Incumbent Directors, which term means
the members of the Board on the date of this
Agreement; provided that any person becoming a
director subsequent to such date whose election or
nomination for election was supported by two-thirds
of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent
Director;
(iii) The Companies adopt any plan of liquidation
providing for the distribution of all or
substantially all of its assets;
(iv) All or substantially all of the assets or business
of the Companies is disposed of pursuant to a
merger, consolidation or other transaction (unless
the shareholders of such Company immediately prior
to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they owned the
Voting Stock of such Company, all of the Voting
Stock or other ownership interests of the entity
or entities, if any, that succeed to the business
of such Company); or
(v) The Companies combine with another company and is
the surviving corporation but, immediately after
the combination, the shareholders of such Company
immediately prior to the combination hold, directly
or indirectly, 50% or less of the Voting Stock of
the combined company (there being excluded from the
number of shares held by such shareholders, but not
from the Voting Stock of the combined company, any
shares received by Affiliates of such other company
in exchange for stock of such other company).
(f) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his
initiative as provided in Section 8 below following the
occurrence, without the Executive's prior written
consent, of one or more of the following events (except
in consequence of a prior termination):
(i) A reduction in the Executive's then current Base
Salary or the termination or material reduction of
any employee benefit or perquisite enjoyed by him;
(ii) The failure to elect or reelect the Executive to any
of the positions described in Section 4 below or
removal of him from any such position;
(iii) A material diminution in the Executive's duties
or the assignment to the Executive of duties which
are materially inconsistent with his duties or
which materially impair the Executive's ability to
function as the Executive Vice President and Chief
Financial Officer or any other office to which he
may be elected or appointed:
(iv) The failure to continue the Executive's
participation in any incentive compensation plan
unless a plan providing a substantially similar
opportunity is substituted;
(v) The relocation of a Companies' principal office, or
the Executive's own office location as assigned to
him by the Companies, to a location outside of the
metropolitan area of Louisville, Kentucky; or
(vi) The failure of the Companies to obtain the
assumption in writing of its obligation to perform
this Agreement by any successor to all or
substantially all of the assets of such Company
within 45 days after a merger, consolidation, sale
or similar transaction.
(g) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities
under this Agreement for a period of 180 consecutive
days.
(h) "Term of Employment" shall mean the period specified in
Section 3 below.
2. Cancellation of Old Agreement.
The Agreement between the Parties entered into as of March 1,
1996, is hereby revoked and canceled in its entirety.
3. Term of Employment.
The employment of the Executive will continue to the last day
of the month in which the Executive turns 55 years of age or until
the earlier termination of his employment in accordance with the
terms of this Agreement.
4. Position. Duties and Responsibilities.
(a) During the term of Employment, the Executive shall
continue to be employed as Executive Vice President and
Chief Financial Officer of the Companies with executive
duties commensurate with that position, including S.E.C.
reporting, internal financial reporting, financial
reporting to the Board of Directors, interest rate risk
management, deposit pricing, loan review, internal audit,
investment management, budgeting and forecasting, and
various operations functions. The Executive, in carrying
out his duties under this Agreement, shall report to the
Chairman of the Board.
(b) Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other
corporations (except Executive will not serve on the
board of any other financial institution) or the boards
of a reasonable number of trade associations and/or
charitable organizations, (ii) engaging in charitable
activities and community affairs, and (iii) managing his
personal investments and affairs, provided that such
activities do not materially interfere with the proper
performance of his duties and responsibilities as the
Companies' Executive Vice President and Chief Financial
Officer or any other office to which he may be elected or
appointed.
5. Base Salary.
The Executive shall be paid an annualized Base Salary, payable
in accordance with the regular payroll practices of the Companies,
of $184,000.00. The Base Salary shall be reviewed no less
frequently than annually for increase at the sole discretion of the
Board and its Nominating and Executive Compensation Committee.
6. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled
to participate in all employee incentive, pension and welfare
benefit plans and programs made available to the Companies' senior
level executives or to its employees generally, as such plans or
programs may be in effect from time to time, including without
limitation, annual stock option grant, ESOP, bonus, pension, profit
sharing, savings and other retirement plans or programs, medical,
dental, hospitalization, short-term and long-term disability and
life insurance plans, accidental death and dismemberment
protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee incentive
compensation plan, employee welfare benefit plans or programs that
may be sponsored by the Companies from time to time, including any
plans that supplement the above-listed types of plans or programs,
whether funded or unfunded.
7. Reimbursement of Business and Other Expenses.
The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this agreement
and the Companies shall promptly reimburse him for all business
expenses incurred in connection with carrying out the business of
the Companies, subject to documentation in accordance with the
Companies' policy.
8. Termination of Employment.
(a) Termination for Cause. In the event the Companies
terminate the Executive's employment for Cause, he shall
be entitled to:
(i) The Base Salary through the date of the termination
of his employment for Cause;
(ii) Any incentive awards earned (but not yet paid);
(iii) Any pension benefit that may become due
pursuant to Section 6 above, determined as of the
date of such termination;
(iv) Other or additional benefits in accordance with
applicable plans or programs of the Companies to
the date of termination.
(b) Termination Without Cause. If the Executive's employment
is terminated without Cause other than due to Disability
or death, or there is a Constructive Termination without
Cause, the Executive shall be entitled to:
(i) The Base Salary through the date of termination of
the Executive's employment;
(ii) The Base Salary, at the annualized rate in effect on
the date of termination of the Executive's
employment for the unexpired term of this
Employment Agreement following such termination,
paid in installments in accordance with the regular
pay practices of the Companies; provided that at
the Executive's option the Companies shall pay him
the present value of such salary continuation
payments in a lump sum (using as the discount rate
the applicable Federal Rate for short term
Treasury obligations as published by the Internal
Revenue Service for the month in which such
termination occurs). For purposes of this
subsection (ii) Base Salary shall include an
annual bonus calculated by taking the highest bonus
of the three years preceding the year of
termination;
(iii) The balance of any incentive awards earned (but
not yet paid);
(iv) The right to exercise any stock option in full,
whether or not such right is vested or exercisable
pursuant to the terms of the grant.
(v) Any pension benefit that may become due pursuant to
Section 6 above;
(vi) Continued accrual of credited service for the
purpose of the pension benefit provided under
Section 6 above until his attainment of age 55;
(vii) Continued participation in all medical, dental,
hospitalization and life insurance coverage and in
other employee benefit plans or programs in which
he was participating on the date of the termination
of his employment until the earlier of:
(A) The end of the period during which he is
receiving salary continuation payments (or in
respect of which a lump-sum severance payment
is made);
(B) The date, or dates, he receives equivalent
coverage and benefits under the plans and
programs of a subsequent employer (such
coverages and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit,
basis); provided that (x) if the Executive is
precluded from continuing his participation in
any employee benefit plan or program as
provided in this clause (vii) of this Section
8(b), he shall be provided with the after-tax
economic equivalent of the benefit provided
under the plan or program in which he is
unable to participate for the period specified
in this clause (vii) of this Section 8(b), (y)
the economic equivalent of any benefit
foregone shall be deemed to be the lowest cost
that would be incurred by the Executive in
obtaining such benefit himself on an
individual basis, and (z) payment of such
after-tax economic equivalent shall be made
quarterly in advance; and
(viii) Immediate vesting of the Companies
contribution to his Employee Stock Option Plan
(ix) Other or additional benefits in accordance with
applicable plans and programs of the Companies to
the date of termination.
(c) Termination of Employment Following a Change in Control.
If following a Change in Control, the Executive's
employment is terminated without Cause or there is a
Constructive Termination Without Cause, the Executive
shall be entitled to the payments and benefits provided
in Section 8(b), provided that the salary continuation
payments shall be paid in a lump sum without any
discount. Also, immediately following a Change in
Control, all amounts, entitlements or benefits in which
he is not yet vested shall become fully vested. In
addition, if the Executive has completed less than
fifteen (15) years of service at the time of such
termination, the Executive will be entitled to a
supplemental pension benefit paid directly by the
Companies (and not as a part of the Pension Plan of the
Companies) equal to the benefit otherwise payable under
said Pension Plan based upon the completion of fifteen
(15) years of service, minus any amounts payable pursuant
to the said Pension Plan. This supplemental pension
benefit is an unfunded liability of the Companies, the
successors and assigns, and not part of any established
Plan of the Companies. In addition, if Executive
continues in the employ of the Companies for a period of
two years following the effective date of the Change of
Control, he may then voluntarily terminate his employment
and in such a case would receive, in addition to the
benefits provided for in Section 8(b), a lump sum equal
to three times Base Salary. A voluntary termination
under this Section 8(c) shall be effective upon 30 days
prior notice to the Companies and shall not be deemed a
breach of this Agreement. For purposes of this Section
8(c) Base Salary shall include an annual bonus
calculated by taking the highest bonus of the three years
preceding the year of termination;
(d) Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other
than a termination pursuant to Section 8(b) above, death
or Disability, or a Constructive Termination without
Cause, the Executive shall have the same entitlements as
provided in Section 8(a) for a Termination for Cause.
(e) Effect of Internal Revenue Code Provisions on Payments
Following Change in Control. In the event that the
termination of the Executive's employment is covered by
Section 8(c) hereof, and all or any part of the payments
or benefits made or provided to the Executive under such
Section 8(c) above and any other plans and programs of
the Companies are determined to constitute a Parachute
Payment, as such term is defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended, (1) the
obligation of the Companies to make such payments and
provide such benefits to the Executive shall not be
altered or diminished in any way, whether such payments
or benefits are deductible by Companies or not, and (2)
the Companies shall pay to Executive an amount sufficient
to cover any excise tax levied against Executive in
respect of such payments or benefits.
(f) Upon termination pursuant to Section 8(b) or (c), the
Executive will have the option of purchasing his Company
car for the value of such car on the books of the Company
at the time of termination, adjusted for value of the
Executives cash contribution to the purchase of the car.
(g) No Mitigation - No Offset. In the event of any
termination of employment under this Section 8, the
Executive shall be under no obligation to seek other
employment and there shall be no offset against amounts
due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment
that he may obtain except as specifically provided in
this Section 8.
(h) Nature of Payments. Any amounts due under this Section 8
are in the nature of severance payments considered to be
reasonable by the Companies and are not in the nature of
a penalty.
9. Indemnification.
(a) The Companies agree that if the Executive is made a
party, or is threatened to be made a party, to any
action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer
or employee of the Companies or is or was serving at the
request of the Companies as a director, officer, member,
employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, including
service with respect to employee benefit plans, whether
or not the basis of such Proceeding is the Executive's
alleged action in an official capacity while serving as
a director, officer, member, employee or agent, the
Executive shall be indemnified and held harmless by the
Companies to the fullest extent permitted or authorized
by the Companies' certificates of incorporation or bylaws
or, if greater, by the laws of the State of Kentucky,
against all cost, expense, liability and loss (including,
without limitation, reasonable attorney's fees,
judgments, fines, ERISA fines, excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Executive in connection
therewith, and such indemnification shall continue as to
the Executive even if he has ceased to be a director,
member, employee or agent of the Companies or other
entity and shall inure to the benefit of the Executive's
heirs, executors and administrators. The Companies shall
advance to the Executive all reasonable costs and
expenses incurred by him in connection with a Proceeding
within 20 days after receipt by the Companies of a
written request for such advance. Such request shall
include an undertaking by the Executive to repay the
amount of such advance if it shall ultimately be
determined that he is not entitled to be indemnified
against such costs and expenses.
(b) Neither the failure of the Companies (including its board
of directors, independent legal counsel or stockholders)
to have made a determination prior to the commencement of
any proceeding concerning payment of amounts claimed by
the Executive under Section 10(a) that indemnification of
the Executive is proper because he has met the applicable
standard of conduct, nor a determination by the Companies
(including its board of directors, independent legal
counsel or stockholders) that the Executive has not met
such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable
standard of conduct.
(c) The Companies agree to continue and maintain a directors'
and officers' liability insurance policy covering the
Executive to the extent either Company provides such
coverage for its other executive officers.
10. Representation.
The Companies represent and warrant that they are fully
authorized and empowered to enter into this Agreement and that the
performance of their obligations under this Agreement will not
violate any agreement between it and any other person, form or
organization.
11. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
12. Amendment or Waiver.
No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by the Executive and
an authorized officer of the Companies. No waiver by either Party
of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized
officer of the Companies, as the case may be.
13. Severability.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason,
in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
14. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of the Executive's employment to the
extent necessary to the intended preservation of such rights and
obligations.
15. Resolution of Disputes.
Any disputes arising under or in connection with this
Agreement shall, at the election of the Executive or the Companies,
be resolved by binding arbitration, to be held in Kentucky in
accordance with the rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. Costs of the arbitration or litigation, including, without
limitation, attorneys' fees of both Parties, shall be borne by the
Companies, provided that if the arbitrator(s) determine that the
claims or defenses of the Executive were without any reasonable
basis, each Party shall bear his or its own costs.
16. Notices.
Any notice given to a party shall be in writing and shall be
deemed to have been given when delivered personally or sent by
certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may
subsequently give such notice of:
If to the Companies: MidAmerica Bancorp, Inc.
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
If to the Executive: XXXXXX X. SMALL
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
MIDAMERICA BANCORP, INC.
By:/s/ Xxxxxxx X. Xxxxx
Title:Chairman
BANK OF LOUISVILLE
By:/s/ X. X. Xxxxxxxxx
Title:Chief Executive Officer
/s/ Xxxxxx X. Small
XXXXXX X. SMALL
