EXHIBIT 10(5)
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EMPLOYMENT AGREEMENT
This Agreement, made and dated as of July 1, 2001, by and between
Union Federal Savings and Loan Association, a federal savings and loan
association ("Employer"), and Xxxxxx X. Xxxxxxx, a resident of Xxxxxxxxxx
County, Indiana ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by Employer as its President and has
made valuable contributions to the profitability and financial strength of
Employer;
WHEREAS, Employer desires to encourage Employee to continue 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 Union Community Bancorp (the "Holding Company"),
the Indiana corporation which owns all of the issued and outstanding capital
stock of Employer;
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, Employer and Employee, each intending to
be legally bound, covenant and agree as follows:
1. Upon the terms and subject to the conditions set forth in this
Agreement, Employer employs Employee as Employer's President, and Employee
accepts such employment.
2. Employee agrees to serve as Employer's President 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 Crawfordsville, Indiana, and
shall be of the same character as those previously performed by Employee 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 Employer's primary
office. Employee shall render services to Employer as President in substantially
the same manner and to substantially the same extent as Employee rendered his
services to Employer before the date hereof. While employed by Employer,
Employee shall devote substantially all his business time and efforts to
Employer's business during regular business hours and shall not engage in any
other related business. 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 on July 1, 2001 (the
"Effective Date") and shall end on the date which is three years following such
date, subject to earlier termination as provided herein. Beginning on the first
anniversary of the Effective Date, and on each anniversary thereafter, the term
of this Agreement shall be extended for a period of one year in addition to the
then-remaining term provided that (1) Employer has not given notice to the
Employee in writing at least 90 days prior to such anniversary that the term of
this Agreement shall not be extended further, and (2) prior to such anniversary,
the Board of Directors of Employer explicitly reviews and approves the extension
(such term, including any extension thereof, shall herein be referred to as the
"Term").
4. Employee shall receive an annual salary of ______________________
("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. Prior to a Change of Control, 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 December 31, 2000, and Employer makes similar decreases in the salary it
pays to other executive officers of Employer. After a Change in Control,
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, he shall be included as a participant in all present and future
employee benefit, retirement, and compensation plans generally available to
employees of Employer, consistent with his Base Compensation and his position as
President of Employer, including, without limitation, Employer's or the Holding
Company's pension plan, thrift plan, Stock Option Plan, Recognition and
Retention Plan and Trust, Employee Stock Ownership Plan, and hospitalization,
disability 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 December 31,
2000, and unless (either before or after a Change of Control) changes in the
accounting, legal, 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, upon the prior approval of Employer's Board of Directors,
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 than were in effect for him on the date hereof.
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
provision of this Agreement.
(B) Employer, by action of its Board of Directors may terminate
Employee's employment with Employer without cause at any
time; provided, however, that the "date of termination" for
purposes of determining benefits payable to Employee under
subsection 8(B) hereof shall be the date which is 60 days
after Employee receives written notice of such termination.
(C) Employee, by written notice to Employer, may terminate his
employment with Employer immediately for cause. For purposes
of this subsection 7(C), "cause" shall be defined as (i) any
action by Employer's Board of Directors to remove the
Employee as President 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 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.
(D) Employee, upon sixty (60) days written notice to Employer,
may terminate his employment with Employer without cause.
(E) 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.
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(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, 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
7(C), 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 l2-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 periods, Employer will maintain in
full force and effect for the continued benefit of Employee
each employee welfare benefit plan and each employee pension
benefit plan (as such terms are 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 or employee pension benefit
plan of Employer 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 C.F.R.ss.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). Notwithstanding
anything to the contrary in the foregoing, any benefits
payable under this subsection 8(B) shall be subject to the
limitations on severance benefits set forth in Regulatory
Bulletin 27a of the Office of Thrift Supervision, as in
effect on the Effective Date.
(C) In the event of termination pursuant to subsection 7(E),
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(E). 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) or (C), 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 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) or (C) 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) or (C) of this Agreement, 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 while 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) or (C) 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 which competes with the
business of Employer as conducted during Employee's
employment by Employer within a radius of twenty-five (25)
miles of Employer's main office.
(D) If Employee's employment by Employer is terminated for
reasons other than those set forth in subsections 7(B) or
(C) 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) or (C) 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(C) or 7(E) 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) or (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 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 shall 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 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
parties.
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
and Employee obtains a final judgment in his favor in a court of competent
jurisdiction or his claim is settled by Employer prior to the rendering of a
judgment by such a court, 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.
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: Xxxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxxxx, Xxxxxxx 00000
If to Employer: Union Federal Savings and Loan Association
000 X. Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxxxxxxx, 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, except 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(C) 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.
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.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed and delivered as of the day and year first above set forth.
UNION FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Executive Vice President
"Employer"
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
"Employee"
The undersigned, Union Community Bancorp, sole shareholder of
Employer, agrees that if it shall be determined for any reason that any
obligations on the part of Employer to continue to make any payments due under
this Agreement to Employee is unenforceable for any reason, Union Community
Bancorp, 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.
UNION COMMUNITY BANCORP
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Vice President
