Exhibit 10(7)
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EMPLOYMENT AGREEMENT
This Agreement, made and dated as of November 1, 2001 by and between MFB
Financial, a federal savings bank ("Employer"), and Xxxxxx X. Xxxxxxxx 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 Vice President and
Chief Financial 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 Vice President and Chief Financial Officer, 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 Vice President and Chief
Financial Officer, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Vice President and Chief
Financial 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. 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.
3. The term of this Agreement shall begin November 1, 2001 (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 the Effective Date, 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 $102,000 ("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. Employer may also declare incentive bonuses from time
to time to be paid to Employee in addition to his annual salary. 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, 2001, and Employer makes similar decreases
in the salary it pays to other executive officers of Employer. In addition,
immediately following the first twelve months of the term of this Agreement,
Employer may make a one-time reduction in Employee's Base Compensation if
Employer chooses to substitute incentive compensation for a portion of the
Employee's previously established Base Compensation. After a Change in Control,
no such decreases in Base Compensation 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 Employer's recognition and retention plan and trust), consistent
with his Base Compensation and his position as Vice President and Chief
Financial 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, 2001, 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.
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) 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(B), "cause" shall be defined as (i) any action by Employer's Board
of Directors to remove the Employee as Vice President and Chief
Financial 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 which Employee reasonably believes
materially limits, increases, or modifies Employee's duties and/or
authority as Vice President and Chief Financial 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.
(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, incentive bonus, 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, incentive bonus, 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 rate in effect at the time of termination, plus
any incentive bonus he received for the tax year preceding the date 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; provided, however, that for any termination of employee
pursuant to subsection 7(B) or 7(C) during his first twelve months of
employment not following a Change of Control, the maximum amount
payable to Employee under this paragraph shall be six months of his
Base Compensation. In addition, during such period, 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 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).
(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, incentive bonus, 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) or 7(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 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) or 7(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 7(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 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) or 7(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 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 any reason,
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 7(C) of this Agreement,
Employee shall have no obligations to Employer with respect to noncompetition
under sections 9(A) through (C) hereof.
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) 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 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.
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. Xxxxxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
If to Employer: MFB Financial
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. This Agreement supersedes and replaces any pre-existing employment
agreement between the Employer and the Employee. 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(C) hereof. As used in this Agreement,
"Employer" shall mean Employer as herein before 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.
25. If any of the provisions in this Agreement shall conflict with 12
X.X.X.xx. 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
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Name: Xxxxxxx X. Xxxxxx
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Title: President
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"Employer"
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
"Employee"
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
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Name: Xxxxxxx X. Xxxxxx
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Title: President
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