Exhibit 10(6)
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into and effective this _____ day of
________________, 1996, by and between Citizens National Bank (the "Bank") and
▇▇▇▇▇▇ ▇▇▇▇▇ (the "Employee"). The parties agree, however, that the "Effective
Date" of this Agreement shall be January 1, 1996.
WHEREAS, the Employee has heretofore been employed by the Bank as its
President and has performed valuable services for the Bank; and
WHEREAS, the Board of Directors of the Bank believes it is in the best
interests of the Bank to enter into this Agreement with the Employee in order to
assure continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his assigned duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Bank and the Employee.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed as the President of the Bank. The
Employee shall render such administrative and management services for the Bank
as are currently rendered and as are customarily performed by persons situated
in a similar executive capacity. The Employee shall also promote, by
entertainment or otherwise, as and to the extent permitted by law, the business
of the Bank. The Employee's other duties shall be such as the Board of Directors
(the "Board") of the Bank may from time to time reasonably direct, including
normal duties as an officer of the Bank.
2. Base Compensation. The Bank agrees to pay the Employee during the term
of this Agreement a salary at the rate of $100,000.00 per annum, payable in cash
not less frequently than monthly, and shall be effective and calculated
commencing January 1, 1996. The salary shall be reviewed annually by the Board
of Directors of the Bank in February of each year commencing February of 1997
and any adjustment in the future on salary shall be effective on February 1st of
each year.
3. Bonuses. The Employee shall participate in any year end bonus granted to
other employees by the Board. The Employee shall further participate in an
equitable manner with all other senior management employees of the Bank in
discretionary bonuses that the Board may award from time to time to the Bank's
senior management employees. No other compensation provided for in this
Agreement shall be deemed a substitute for the Employee's right to participate
in such discretionary bonuses.
4. (a) Participation in Retirement, Medical and Other Plans. During the
term of this Agreement, the Employee shall be eligible to participate in the
following benefit plans: group hospitalization, disability, health, dental, sick
leave, retirement, pension, and/or other present or future qualified plans
provided by the Bank, generally, which benefits, taken as a whole, must be at
least as favorable as those in effect on the Effective Date, unless the
continued
operation of such plans would adversely affect the Bank's operating results or
financial condition in a material way, the Bank's Board of Directors concludes
that modifications to such plans are necessary to avoid such adverse effects and
such modifications apply consistently to all employees of the Bank.
(b) Employee Benefits; Expenses. The Employee shall be eligible to
participate in any fringe benefits which are or may become available to the
Bank's senior management employees, including, for example, any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement, upon substantiation of such expenses in accordance with the
policies of the Bank.
(c) The Bank shall provide and maintain an appropriate automobile at
its expense for Employee's use.
5. Term. The Bank hereby employs the Employee, and the Employee hereby
accepts such employment under this Agreement, for the period commencing on
January 1, 1996 and ending thirty six months thereafter (or such earlier date as
is determined in accordance with Section 9). Additionally, on each annual
anniversary date from the Effective Date, the Employee's term of employment
shall be extended for an additional one-year period beyond the then effective
expiration date, provided the Board determines in a duly adopted resolution that
the performance of the Employee has met the Board's requirements and standards,
and that this Agreement shall be extended. Only those members of the Board of
Directors who have no personal interest in this Employment Agreement shall
discuss and vote on the approval and subsequent review of this Agreement.
6. Loyalty; Noncompetition.
(a) During the period of his employment hereunder and except for
illnesses, reasonable vacation periods, and reasonable leaves of absence, the
Employee shall devote all his full business time, attention, skill, and efforts
to the faithful performance of his duties hereunder; provided, however, from
time to time, the Employee may serve on the Boards of Directors of, and hold any
other offices or positions in, companies or organizations, which will not
present any conflict of interest with the Bank or any of its subsidiaries or
affiliates, or unfavorably affect the performance of Employee's duties pursuant
to this Agreement, or will not violate any applicable statute or regulation.
"Full business time" is hereby defined as that amount of time usually devoted to
like companies by similarly situated executive officers. During the term of his
employment under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the Bank, or be
gainfully employed in any other position or job other than as provided above.
(b) Nothing contained in this Paragraph 6 shall be deemed to prevent or
limit the Employee's right to invest in the capital stock or other securities of
any business dissimilar from that of the Bank, or, solely as a passive or
minority investor, in any business.
(c) While Employee is employed by the Bank and for a period of three
years after termination of Employee's employment by the Bank or by the Employee
for reasons other than
2
those set forth in Section 9 (d) hereof, the Employee shall not directly or
indirectly, engage in any bank or bank-related business which competes with the
business of the Bank as conducted during Employee's employment by the Bank for
any financial institution, including but not limited to banks, savings and loan
associations, and credit unions within a thirty-five mile radius of Madison,
Indiana.
7. Standards. The Employee shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may establish from time
to time. The Bank will provide Employee with the working facilities and staff
customary for similar executives and necessary for him to perform his duties.
8. Vacation, Sick Leave and Disability. The Employee shall be entitled to
___________ days vacation annually and shall be entitled to the same sick leave
and disability leave as other employees of the Bank.
The Employee shall not receive any additional compensation from the
Bank on account of his failure to take a vacation or sick leave, and the
Employee shall not accumulate unused vacation or sick leave from one fiscal year
to the next, except in either case to the extent authorized by the Board;
provided, however, that unused sick leave shall be accumulated from one fiscal
year to the next and awarded to the Employee until such time as the Employee
begins receiving payments under the Bank's disability plan.
In addition to the aforesaid paid vacations, the Employee 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 may in its discretion
determine. Further, the Board may grant to the Employee a leave or leaves of
absence, with or without pay, at such time or times and upon such terms and
conditions as such Board in its discretion may determine.
9. Termination and Termination Pay. Subject to Section 11 hereof, the
Employee's employment hereunder may be terminated under the following
circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.
(b) Disability.
(1) The Bank may terminate the Employee's employment, should
the Employee become disabled, in a manner consistent with the Bank's
and the Employee's rights and obligations under the Americans With
Disabilities Act or other applicable state and federal laws concerning
disability. For the purpose of this Agreement, "Disability" means a
physical or mental condition which substantially limits the employee's
ability to perform the essential functions of his position, as
established by this Agreement, and which results in the Employee
becoming eligible for long-term disability benefits under the Bank's
long-term disability plan.
3
(2) During any period that the Employee shall receive
disability benefits and to the extent that the Employee shall be
physically and mentally able to do so, he shall furnish such
information, assistance and documents so as to assist in the continued
ongoing business of the Bank and, if able, shall make himself available
to the Bank to undertake reasonable assignments consistent with his
prior position and his physical and mental health. The Bank shall pay
all reasonable expenses incident to the performance of any assignment
given to the Employee during the disability period.
(c) Just Cause. The Board may, by written notice to the Employee,
immediately terminate his employment at any time, for Just Cause. The Employee
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 because of, in the good faith determination of the Board, the
Employee'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. Notwithstanding the foregoing, in the
event of termination for Just Cause there shall be delivered to the Employee a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to the Employee and an
opportunity for the Employee, together with the Employee's counsel, to be heard
before the Board), such meeting and the opportunity to be heard to be held prior
to, or as soon as reasonably practicable following, termination, but in no event
later than 60 days following such termination, finding that in the good faith
opinion of the Board the Employee was guilty of conduct set forth above in the
second sentence of this Subsection (c) and specifying the particulars thereof in
detail. If, following such meeting, the Employee is reinstated, he shall be
entitled to receive back pay for the period following termination and continuing
through reinstatement.
(d) Without Just Cause; Constructive Discharge.
(1) The Board may, by written notice to the Employee,
immediately terminate his employment at any time for a reason other
than Just Cause, in which event the Employee shall be entitled to
receive the following compensation and benefits (unless such
termination occurs within the time period set forth in Section 11(b)
hereof, in which event the benefits and compensation provided for in
Section 11 shall apply): (i) the salary provided pursuant to Section 2
hereof, up to the date of termination of the term as provided in
Section 5 hereof (including any renewal term) of this Agreement (the
"Expiration Date"), plus said salary for an additional 12-month period,
and (ii) at the Employee's election, either (A) cash in an amount equal
to the cost to the Employee of obtaining all health, life, disability
and other benefits (excluding stock options) which the Employee would
have been eligible to participate in through the Expiration Date, based
upon the benefit levels substantially equal to those that the Bank
provided for the Employee at the date of termination of employment, or
(B) continued participation under such Bank benefit plans through the
Expiration Date, but only to the extent the Employee continues to
qualify for participation therein. All amounts payable to the Employee
shall be paid, at the option of the Employee, either (I) in periodic
payments through the Expiration Date, or (II) in one lump sum within
ten (10) days of such termination.
4
(2) The Employee may voluntarily terminate his employment
under this Agreement, and the Employee shall thereupon be entitled to
receive the compensation and benefits payable under Section 9(d)(1)
hereof, within ninety (90) days following the occurrence of any of the
following events, which has not been consented to in advance by the
Employee in writing (unless such voluntary termination occurs within
the time period set forth in Section 11(b) hereof, in which event the
benefits and compensation provided for in Section 11 shall apply): (i)
the requirement that the Employee move his personal residence, or
perform his principal executive functions, more than thirty (30) miles
from his primary office; (ii) a material reduction in the Employee's
base compensation, unless part of an institution-wide reduction; (iii)
the failure by the Bank to continue to provide the Employee with
compensation and benefits provided for under this Agreement, as the
same may be increased from time to time, or with benefits substantially
similar to those provided to him under any of the employee benefit
plans in which the Employee now or hereafter becomes a participant, or
the taking of any action by the Bank which would directly or indirectly
reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him, unless part of an institution-wide
reduction; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated
with his position as referenced in Section 1; (v) a failure to elect or
re-elect the Employee to the Board of Directors of the Bank; or (vi) a
material diminution or reduction in the Employee's responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Bank.
(3) Notwithstanding the foregoing, but only to the extent
required under federal banking law, the amount payable under clause
(d)(1)(i) hereof shall be reduced to the extent that on the date of the
Employee's termination of employment, the present value of the benefits
payable under clauses (d)(1)(i) and (ii) hereof exceeds any limitation
on severance benefits that is imposed by the Office of the Comptroller
of the Currency (the "OCC") on such benefits. In the event that Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"),
becomes applicable to payments made under this Section 9(d), and the
payments exceed the "Maximum Amount" as defined in Section 11(a)(1)
hereof, the payments shall be reduced as provided by Section 11(a)(2)
of this Agreement.
(e) Termination or Suspension Under Federal Law.
(1) If the Employee 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 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
5
effective date of the order, but vested rights of the parties shall not
be affected.
(2) 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; however, this Paragraph shall not affect the
vested rights of the parties.
(3) All obligations under this Agreement shall terminate,
except to the extent determined that continuation of this Agreement is
necessary for the continued operation of the Bank; (i) by the OCC or
its designee, at the time that the Federal Deposit Insurance
Corporation ("FDIC") enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c)
of FDIA; or (ii) by the OCC, or its designee, at the time that the OCC
or its designee approves a supervisory merger to resolve problems
related to operation of the Bank or when the Bank is determined by the
OCC to be in an unsafe or unsound condition. Such action shall not
affect any vested rights of the parties.
(4) If a notice served under Section 8(e)(3) or (g)(1) of the
FDIA (12 U.S.C. 1818(e)(3) or (g)(1) suspends and/or temporarily
prohibits the Employee from participating in the conduct of the Bank's
affairs, the Bank's obligations under this Agreement shall be suspended
as of the date of such service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may
in its discretion (i) pay the Employee all or part of the compensation
withheld while its contract obligations were suspended, and (ii)
reinstate (in whole or in part) any of its obligations which were
suspended.
(f) Voluntary Termination by Employee. Subject to Section 11 hereof,
the Employee may voluntarily terminate employment with the Bank during the term
of this Agreement, upon at least ninety (90) days' prior written notice to the
Board of Directors, in which case the Employee shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination (unless such termination occurs pursuant to Section 9(d)(2) hereof,
in which event the benefits and compensation provided for in section 9(d) shall
apply).
10. No Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
11. Change in Control.
(a) Change in Control; Involuntary Termination.
(1) Notwithstanding any provision herein to the contrary, if
the Employee's employment under this Agreement is terminated by the
Bank, without the Employee's prior written consent and for a reason
other than Just Cause, in connection with or within twelve (12) months
after any Change in Control of the Bank, the Employee shall, subject to
paragraph (2) of this Section 11(a), be paid an amount equal to the
difference between (i) the product of 2.99 times his "base amount" as
defined in Section 280G(b)(3) of the Code and regulations promulgated
thereunder (the "Maximum Amount"), and (ii) the sum
6
of any other parachute payments (as defined under Section 280G(b)(2) of
the Code) that the Employee receives on account of the Change in
Control. Said sum shall be paid in one lump sum within ten (10) days of
such termination. This paragraph would not apply to a termination of
employment due to death, disability or voluntary termination by the
Employee.
(2) In the event that the Employee and the Bank jointly
determine and agree that the total parachute payments receivable under
clauses (i) and (ii) of Section 11(a)(1) hereof exceed the Maximum
Amount, notwithstanding the payment procedure set forth in Section
11(a)(1) hereof, the Employee shall determine which and how much, if
any, of the parachute payments to which he is entitled shall be
eliminated or reduced so that the total parachute payments to be
received by the Employee do not exceed the Maximum Amount. If the
Employee does not make his determination within ten business days after
receiving a written request from the Bank, the Bank may make such
determination, and shall notify the Employee promptly thereof. Within
five business days of the earlier of the Bank's receipt of the
Employee's determination pursuant to this paragraph or the Bank's
determination in lieu of a determination by the Employee, the Bank
shall pay to or distribute to or for the benefit of the Employee such
amounts as are then due the Employee under this Agreement.
(3) As a result of uncertainty in application of Section 280G
of the Code at the time of payment hereunder, it is possible that such
payments will have been made by the Bank which should not have been
made ("Overpayment") or that additional payments will not have been
made by the Bank which should have been made ("Underpayment"), in each
case, consistent with the calculations required to be made under
Section 11(a)(1) hereof. In the event that the Employee, based upon the
assertion by the Internal Revenue Service against the Employee of a
deficiency which the Employee believes has a high probability of
success, determines that an Overpayment has been made, any such
Overpayment paid or distributed by the Bank to or for the benefit of
Employee shall be treated for all purposes as a loan ab initio which
the Employee shall repay to the Bank together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the
Code; provided, however, that no such loan shall be deemed to have been
made and no amount shall be payable by the Employee to the Bank if and
to the extent such deemed loan and payment would not either reduce the
amount on which the Employee is subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes. In the
event that the Employee and the Bank determine, based upon controlling
precedent or other substantial authority, that an Underpayment has
occurred, any such Underpayment shall be promptly paid by the Bank to
or for the benefit of the Employee together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the
Code.
(4) "Change in Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any
initial public offering, tender offer or exchange offer,
merger or other business combination, sale of assets or
contested election, any combination of the foregoing
transactions, or any similar transaction, the persons who were
non-employee directors of the Bank or a holding company
controlling the Bank before such transaction cease to
constitute a
8
majority of the Board of Directors of the Bank or such holding
company or any successor thereto;
(ii) the Bank or a holding company controlling the
Bank transfers substantially all of its assets to another
corporation which is not a wholly owned subsidiary of the Bank
or such holding company;
(iii) the Bank or a holding company controlling the
Bank sells substantially all of the assets of a subsidiary or
affiliate which, at the time of such sale, is the principal
employer of the Employee; or
(iv) the Bank or a holding company controlling the
Bank is merged or consolidated with another corporation and,
as a result of the merger or consolidation, less than fifty
one percent (51%) of the outstanding voting securities of the
surviving or resulting corporation is owned in the aggregate
by the former stockholders of the Bank or of such holding
company controlling the Bank.
Notwithstanding the foregoing, but only to the extent required under
federal banking law, the amount payable under Subsection(a) of this Section 11
shall be reduced to the extent that on the date of the Employee's termination of
employment, the amount payable under Subsection(a) of this Section 11 exceeds
any limitation on severance benefits that is imposed by the OCC.
(b) Change in Control; Voluntary Termination. Notwithstanding any other
provision of this Agreement to the contrary, but subject to Section 11(a)(2)
hereof, the Employee may voluntarily terminate his employment under this
Agreement within twelve (12) months following a Change in Control of the Bank,
as defined in paragraph (a)(4) of this Section 11, and the Employee shall
thereupon be entitled to receive the payment described in Section 11(a)(1) of
this Agreement, within ninety (90) days following the occurrence of any of the
following events, which has not been consented to in advance by the Employee in
writing; (i) the requirement that the Employee perform his principal executive
functions more than thirty (30) miles from his primary office as of the date of
the Change in Control; (ii) a material reduction in the Employee's base
compensation as in effect on the date of the Change in Control or as the same
may be changed by mutual agreement from time to time, unless part of an
institution-wide reduction; (iii) the failure by the Bank to continue to provide
the Employee with compensation and benefits provided for under this Agreement,
as the same may be increased from time to time, or with benefits substantially
similar to those provided to him under any employee benefit in which the
Employee is a participant at the time of the Change in Control, or the taking of
any action which would materially reduce any of such benefits or deprive the
Employee of any material fringe benefit enjoyed by him at the time of the Change
in Control, unless part of an institution-wide reduction; (iv) the assignment to
the Employee of duties and responsibilities materially different from those
normally associated with his position as referenced at Section 1; (v) a failure
to elect or re-elect the Employee to the Board of Directors of the Bank, if the
Employee is serving on the Board on the date of the Change in Control; or (vi) a
material diminution or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with his employment with
the Bank; or (vii) a material reduction in the secretarial or other
administrative support of the Employee.
9
(c) Compliance with 12 U.S.C. Section 1828(k). Any payments made to the
Employee pursuant to this Agreement, or otherwise, are subject to and
conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.
(d) Trust. (1) Within five business days before or after a Change in
Control as defined in Section 11(a) of this Agreement which was not approved in
advance by a resolution of a majority of the Continuing Directors of the Bank,
the Bank shall (i) deposit, or cause to be deposited, in a grantor trust (the
"Trust"), designed to conform with Revenue Procedure 93-64 (or any successor)
and having a trustee independent of the Bank, an amount equal to 2.99 times the
Employee's "base amount" as defined in Section 280G(b)(3) of the Code, and (ii)
provide the trustee of the Trust with a written direction to hold said amount
and any investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of such amounts from the Trust.
(2) During the twelve (12) consecutive month period following the date
on which the Bank makes the deposit referred to in the preceding paragraph, the
Employee may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Employee an amount designated in the notice as being
payable pursuant to Section 11(a) or (b). Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail, return receipt requested. On the
tenth (10th) business day after mailing said notice to the association, the
trustee of the Trust shall pay the Employee the amount designated therein in
immediately available funds, unless prior thereto the Bank provides the trustee
with a written notice directing the trustee to withhold such payment. In the
latter event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to Section 11(a) or (b) hereof, and the party responsible for the payment of the
costs of such arbitration (which may include any reasonable legal fees and
expenses incurred by the Employee) shall be determined by the arbitrator. The
trustee shall choose the arbitrator to settle the dispute, and such arbitrator
shall be bound by the rules of the American Arbitration Association in making
his or her determination. The parties and the trustee shall be bound by the
results of the arbitration and, within 3 days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be paid
to the Employee and/or the Bank, and in no event shall the trustee be liable to
either party for making the payments as determined by the arbitrator.
(3) Upon the earlier of (i) any payment from the Trust to the Employee,
or (ii) the date twelve (12) months after the date on which the Bank makes the
deposit referred to in the first paragraph of this subsection (d)(1), the
trustee of the Trust shall pay to the Bank the entire balance remaining in the
segregated account maintained for the benefit of the Employee. The Employee
shall thereafter have no further interest in the Trust pursuant to this
Agreement.
(e) In the event that any dispute arises between the Employee
and the Bank as to the terms or interpretation of this Agreement,
including this Section 11, whether instituted by formal legal
proceedings or otherwise, including any action that the Employee takes
to enforce the terms of this Section 11 or to defend against any action
taken by the Bank, the Employee shall be reimbursed for all costs and
expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that the Employee shall
obtain a final judgment by a court of competent jurisdiction in favor
of the Employee. Such reimbursement shall be paid within ten (10) days
of
10
Employee's furnishing to the Bank written evidence, which may be in the
form, among other things, of a canceled check or receipt, of any costs
or expenses incurred by the Employee.
Should the Employee fail to obtain a final judgment in favor of the
Employee and a final judgment is entered in favor of the Bank, then the Bank
shall be reimbursed for all costs and expenses, including reasonable Attorneys'
fees arising from such dispute, proceedings or actions. Such reimbursement shall
be paid within ten (10) days of the Bank furnishing to the Employee written
evidence, which may be in the form, among other things, of a canceled check or
receipt, of any costs or expenses incurred by the Bank.
12. 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 9(d) or 11(a),
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 stock option plan then in effect to the extent the options
are vested 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 shares in the over-the-counter market as reported on the NASDAQ
system or other exchange 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 shares acquired in connection
with the Change of Control by any person or group acquiring such control.
13. Federal Income Tax Withholding. The Bank may withhold all federal and
state income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or ruling.
14. Successors and Assigns.
(a) Bank. This Agreement shall not be assignable by the Bank,
provided that this Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Bank which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Bank.
(b) Employee. Since the Bank is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his right or duties hereunder without first
obtaining the written consent of the Bank; provided, however, that
nothing in this paragraph shall preclude (i) the Employee from
11
designating a beneficiary to receive any benefit payable hereunder upon
his death, or (ii) the executors, administrators, or other legal
representatives of the Employee or his estate from assigning any rights
hereunder to the person or persons entitled thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge,
or hypothecation or to exclusion, attachment, levy or similar process
or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no
effect.
15. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
16. Applicable Law. Except to the extent preempted by federal law, the laws
of the State of Indiana shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.
17. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
18. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto and supersedes any other
agreement between the parties hereto relating to the employment of the Employee.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST:
------------------------------------ ------------------------------------
Secretary Chairman of the Board
WITNESS:
------------------------------------ ------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
12
The undersigned, River Valley Bancorp, sole shareholder of Bank, agrees
that if it shall be determined for any reason that any obligation on the part of
Bank to continue to make any payments due under this Agreement to Employee is
unenforceable for any reason, River Valley Bancorp agrees to honor the terms of
this Agreement and continue to make any such payments due hereunder to Employee
or to satisfy any such obligation pursuant to the terms of this Agreement, as
though it were the Bank hereunder.
RIVER VALLEY BANCORP
By:
--------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President and
Chief Executive Officer
13
