EMPLOYMENT AGREEMENT
THIS AGREEMENT, made effective as of January 1, 2004 by and between
AMERIANA BANK AND TRUST, SB ("Ameriana" or the "Bank"), with its principal
office in New Castle, Indiana, and Bradley L. Smith ("Executive"), an individual
residing in the State of Indiana.
WHEREAS, the Bank wishes to assure itself of the services of Executive for
the period provided in this Agreement, and Executive is willing to serve in the
employ of the Bank on a full-time basis for said period; and
WHEREAS, the Board of Directors of the Bank has determined that the best
interests of the Bank would be served by providing the Executive with protection
and special benefits following any change of control of the Bank;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereby agree as follows:
1. Employment. The Bank agrees to continue Executive in its employ, and
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Executive agrees to remain in the employ of the Bank, for the period
stated in paragraph 3 hereof and upon the other terms and conditions
herein provided.
2. Position and Responsibilities. The Bank employs Executive and
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Executive agrees to serve as Chief Financial Officer of the Bank for
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the term and on the conditions hereinafter set forth. Executive agrees
to perform such services not inconsistent with his position as shall
from time to time be assigned to him by the Bank's Board of Directors.
3. Term and Duties.
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(a) Term of Employment. The term of this Agreement shall be for a
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period of thirty-six (36) months and any extensions. During each
calendar year hereafter, the Board of Directors of the Bank
("Board") shall review the performance of the Executive, and such
Board shall determine whether to extend the term of the Agreement
beyond its expiration date.
(b) Duties. During the period of his employment hereunder and except
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for illnesses, reasonable vacation periods, and reasonable leaves
of absence, Executive shall devote his business time, attention,
skill, and efforts to the faithful performance of his duties
hereunder; provided, however, that with the approval of the Board
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of Directors of the Bank, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any
other offices or positions in companies or organizations, which,
in such Board's judgment, will not present any material conflict
of interest with the Bank or any of its subsidiaries or
affiliates or divisions, or unfavorably affect the performance of
Executive's duties pursuant to this Agreement, or will not
violate any applicable statute or regulation.
4. Compensation and Reimbursement of Expenses.
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(a) Compensation. The Bank agrees to pay the Executive during
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the term of this Agreement a salary at the rate of
$119,000. per annum; provided, that the rate of such salary
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shall be reviewed by the Board of Directors of the Bank not
less often than annually. Such rate of salary, or increased
rate of salary, if any, as the case may be, may be further
increased (but not decreased) from time to time in such
amount as the Board in its discretion may decide. Such
salary shall be payable in accordance with the customary
payroll practices of the Bank, but in no event less
frequently than monthly, and any bonus shall be payable in
the manner specified by such committee or such Board of
Directors at the time any such bonus is awarded.
(b) Reimbursement of Expenses. The Bank shall pay or reimburse
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Executive for all reasonable travel and other expenses
incurred by Executive in the performance of his obligations
under this Agreement in accordance with the Bank's policy on
the date of this Agreement or as approved by the Board of
Directors. The Bank further agrees to provide the Executive
with the use of an automobile commensurate with his position
during his period of employment.
5. Participation in Benefit Plans. The payments provided in
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paragraphs 4, 7, and 8 hereof are in addition to any benefits to
which Executive may be, or may become, entitled under any group
hospitalization, health, dental care, or sick leave plan, life or
other insurance or death benefit plan, travel or accident
insurance, or executive contingent compensation plan, including,
without limitation, capital accumulation and termination pay
programs, restricted or stock purchase plan, stock option plan,
retirement income, qualified pension plan, supplemental pension
plan (excess benefit plan), executive supplemental retirement
plan, or other present or future group employee benefit plan or
program of the Bank for which
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executives are or shall become eligible, and Executive shall be
eligible to receive during the period of his employment under
this Agreement, and during any subsequent period for which he
shall be entitled to receive payments from the Bank under
paragraph 7 or paragraph 8 all benefits and emoluments for which
executives are eligible under every such plan or program to the
extent permissible under the general terms and provisions of such
plans or programs and in accordance with the provisions thereof.
6. Vacation and Sick Leave. At such reasonable times as the Board of
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Directors shall in its discretion permit, Executive shall be
entitled, without loss of pay, to absent himself voluntarily from
the performance of his employment under this Agreement, all such
voluntary absences to count as vacation time; provided that:
(a) Executive shall be entitled to an annual vacation in
accordance with the policies as periodically established by
the Board of Directors for senior management officials of
the Bank, which shall in no event be less than four weeks
per annum.
(b) The timing of vacations shall be scheduled in a reasonable
manner by the Board of Directors. Executive shall not be
entitled to receive any additional compensation from the
Bank on account of his failure to take a vacation; nor shall
he be entitled to accumulate unused vacation from one fiscal
year to the next except to the extent authorized by the
Board of Directors for senior management officials of the
Bank.
(c) In addition to the aforesaid paid vacations, Executive 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 of Directors in its
discretion may determine. Further, the Board of Directors
shall be entitled to grant to Executive a leave or leaves of
absence with or without pay at such time or times and upon
such terms and conditions as the Board of Directors in its
discretion may determine.
(d) In addition, Executive shall be entitled to an annual sick
leave as established by the Board of Directors for senior
management officials of the Bank. In the event any sick
leave time shall not have been used during any year, such
leave shall accrue to subsequent years only to the extent
authorized by the Board of Directors.
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Upon termination of his employment, Executive shall not be
entitled to receive any additional compensation from the
Bank for unused sick leave.
7. Benefits Payable Upon Disability.
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(a) Primary Disability Benefits. In the event of the
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disability (as hereinafter defined) of Executive, the
Bank shall continue to pay Executive the monthly
compensation provided in paragraph 4 hereof during the
period of his disability provided, however, that in the
event Executive is disabled for a continuous period
exceeding eighteen (18) calendar months, the Bank may,
at its election, terminate the Agreement, in which
event Executive shall be entitled to receive the
benefits described in paragraph 7(b).
As used in this Agreement, the term "disability" shall
mean the complete inability of Executive to perform his
duties under this Agreement as determined by an
independent physician selected with the approval of the
Bank and the Executive.
(b) Secondary Disability Benefits. The Bank shall pay to
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the Executive a monthly disability benefit equal to
sixty (60) percent of his monthly salary at the time he
became disabled. Payment of such disability benefit
shall commence on the last day of the month following
the month for which the final payment under paragraph
7(a) was made and cease with the earlier of (i) the
payment for the month in which the Executive dies or
(ii) the payment for the month preceding the month in
which occurs Executive's normal retirement date under
the Bank's pension plan.
(c) Disability Benefit Offset. Any amounts payable under
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paragraph 7(a) or 7(b) shall be reduced by any amounts
paid to the Executive under any other disability
program maintained by the Bank.
(d) Services During Disability. During the period Executive
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is entitled to receive payments under paragraphs 7(a)
and (b), the Executive shall, to the extent that he is
physically and mentally able to do so, furnish
information and assistance to the Bank, and, in
addition, upon reasonable request in writing on behalf
of the Board of Directors, or an executive officer
designated by such Board, from time to time, make
himself available to the Bank to undertake reasonable
assignments consistent with the dignity, importance,
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and scope of his prior position and his physical and
mental health. During such period of service, Executive
shall be responsible and report to, and be subject to
the supervision of, the Board of Directors of the Bank
or an executive officer designated by the Board, as to
the method and manner in which he shall perform such
assignments, subject always to the provisions of this
paragraph 7(d), and shall keep such Board, or such
executive officer, appropriately informed of his
progress in each such assignment.
8. Payments to Executive Upon Termination of Employment.
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(a) Event of Termination. Upon the occurrence of an Event
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of Termination (as hereinafter defined) during the
period of Executive's employment under this Agreement,
the provisions of this paragraph 8 shall apply. As used
in this Agreement, an "Event of Termination" shall mean
that termination by the Bank of Executive's employment
hereunder for any reason other than "cause" or
retirement at or after the normal retirement age under
a qualified pension plan maintained by the Bank or
termination pursuant to Paragraph 7. A termination for
"cause" shall include termination because of the
Executive'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. In the event of
termination for cause the Executive shall have no right
to receive compensation or other benefits for any
period after such termination.
(b) Event of Termination Without Change of Control. Upon
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the occurrence of an Event of Termination other than
after a Change of Control (as hereinafter defined), the
Bank shall pay to the Executive monthly, or in the
event of his subsequent death, to his designated
beneficiary or beneficiaries, or to his estate, as the
case may be, as severance pay or liquidated damages, or
both, during the period below described a sum equal to
the highest monthly rate of salary paid to the
Executive at any time under this Agreement. Such
payments shall commence on the last day of the month
following the date of said event of termination and
shall continue until the date this Agreement would have
expired but for said occurrence, with such occurrence
being viewed as a determination by the Bank not to
extend the
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Agreement as provided for in paragraph 3 of this
Agreement. Notwithstanding the foregoing, in no event
shall all such payments made pursuant to this
subparagraph 8(b) exceed three times the final
annual rate of salary being paid to Executive as of the
date of termination.
(c) Event of Termination in Connection with Change of
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Control. If either, (1) after a "Change of Control" (as
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hereinafter defined) of the Bank or Parent (as
hereinafter defined), either (A) the Bank shall
terminate the employment of the Executive during the
period of employment under this Agreement for any
reason other than "cause", as defined in Paragraph
8(a), retirement at or after the normal retirement age
under a qualified pension plan maintained by the Bank
or termination pursuant to Paragraph 7, or otherwise
change the present capacity or circumstances in which
the Executive is employed as set forth in Paragraph 2
of this Agreement or cause a reduction in the
Executive's responsibilities or authority or
compensation or other benefits provided under this
Agreement without the Executive's written consent, or
(B) the Executive voluntarily terminates his employment
hereunder for any reason within thirty (30) days
following a Change in Control of the Bank or Parent, or
(2) during the period that begins on the date six
months before a Change of Control and ends on the later
of the first anniversary of the Change of Control or
the expiration date of this Agreement, the Bank changes
the present capacity or circumstances in which the
Executive is employed as set forth in Paragraph 2 of
this Agreement or causes a reduction in the Executive's
responsibilities or authority or compensation or other
benefits provided under this Agreement without the
Executive's written consent, then in the case of either
(1) or (2), the Bank shall pay to the Executive and
provide the Executive, or his beneficiaries, dependents
and estate, as the case may be, with the following:
(i) The Bank shall promptly pay to the Executive a sum
equal to 2.99 times the average annual compensation
payable by the Bank and includable by the Executive
in gross income for the most recent five taxable
years ending before the date on which the
ownership or control of the Bank or Parent changed
or the portion of this period during which the
Executive was an employee of the Bank.
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(ii) During a period of thirty-six (36) calendar months
beginning with the Event of Termination, the Executive,
his dependents, beneficiaries and estate shall continue
to be covered under all employee benefit plans of the
Bank, including without limitation the Bank's pension
plan, as if the Executive were still employed during
such period under this Agreement.
(iii)If and to the extent that benefits of service credit
for benefits provided by paragraph 8(c)(ii) shall not
be payable or provided under any such plans to the
Executive, his dependents, beneficiaries and estate, by
reason of his no longer being an employee of the Bank
as a result of termination of employment, the Bank
shall itself pay or provide for payment of such
benefits and services credit for benefits to the
Executive, his dependents, beneficiaries and estate.
Any such payment relating to retirement shall commence
on a date selected by the Executive which must be a
date on which payments under the Bank's qualified
pension plan or successor plan may commence.
(iv) If the Executive elects to have benefits commence prior
to the normal retirement age under the qualified
pension plan or any successor plan maintained by the
Bank and thereby incurs an actuarial reduction in his
monthly benefits under such plan, the Bank shall itself
pay or provide for payment to the Executive the
difference between the amount that would have been paid
if the benefits commenced at normal retirement age and
the actuarially reduced amount paid upon the early
commencement of benefits.
(v) The Bank shall pay all legal fees and expenses which
the Executive may incur as a result of a contest
concerning the validity or enforceability of this
Agreement and the Executive shall be entitled to
receive interest thereon for the period of any delay in
payment from the date such payment was due at the rate
determined by adding two hundred basis points to the
six month Treasury Bill rate. Notwithstanding anything
herein to the contrary, in no event shall the Bank be
required to: (a) pay legal fees or expenses incurred by
Executive to enforce the Agreement
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unless a court of competent jurisdiction renders a final
judgment in favor of the Executive; or (b) advance legal
fees or expenses incurred by Executive to enforce the
contract unless the Executive is terminated without Just
Cause after a change of control of Bank or its parent
corporation, Ameriana Bancorp ("Parent") not recommended by
Parent's board of directors. Provided further, that the
Executive shall be required to reimburse the Bank for the
legal fees and expenses advanced pursuant to this
subparagraph if a court of competent jurisdiction does not
render a final judgment in favor of the Executive.
(vi) The Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking
other employment or otherwise nor shall any amounts received
from other employment or otherwise by the Executive offset
in any manner the obligations of the Bank hereunder.
(vii)Notwithstanding anything contained in this Section 8(c)
herein to the contrary, in no event shall payments and
benefits made pursuant to this Section 8(c) be made which
would result in such payments being classified as an "excess
parachute payment" as such term is defined under Section
280G of the Internal Revenue Code of 1986, as amended
("Code"). In the event that such payments and benefits, if
made, would be considered as an "excess parachute payment",
such payments shall be reduced by such dollar amount as is
required so that the total value of such payments and
benefits when made shall not be considered as an "excess
parachute payment".
(d) Change of Control. A "Change of Control" shall mean any one of
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the following events: (i) the acquisition of ownership, holding
or power to vote more than 25% of the Bank's or the Parent's
voting stock, (ii) the acquisition of the ability to control the
election of a majority of the Bank's or the Parent's directors,
(iii) the acquisition of a controlling influence over the
management or policies of the Bank or the Parent by any person or
by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), or (iv) during any
period of two consecutive years, individuals (the "Continuing
Directors") who at
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the beginning of such period constitute the Board of Directors of
the Bank or the Parent (the "Existing Board") cease for any
reason to constitute at least two-thirds thereof, provided that
any individual whose election or nomination for election as a
member of the Existing Board was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. Notwithstanding the foregoing,
ownership or control of the Bank by the Parent itself shall not
constitute a Change of Control. Further, "Change of Control"
shall not include the acquisition of securities by an employee
benefit plan of the Bank or the Parent. For purposes of this
paragraph only, the term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein.
(e) Suspension and Special Regulatory Rules.
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(i) The Bank's board of directors may terminate the Executive's
employment at any time, but any termination by the Bank's
board of directors other than termination for "Just Cause",
shall not prejudice the Executive's right to compensation or
other benefits under the Agreement. The Executive 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 for personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule,
regulation (other than a law, rule or regulation relating to
a traffic violation or similar offense), final
cease-and-desist order, or material breach of any provision
of this Agreement. Subject to the provisions of 8(c) and (d)
hereof, in the event this Agreement is terminated for Just
Cause, the Bank shall only be obligated to continue to pay
Executive his salary up to the date of termination, and the
vested rights of the parties shall not be affected.
(ii) If the Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a
notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit
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Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)) the Bank's
obligations under this contract shall be suspended as of the
date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Executive 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.
(iii)If the Executive 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 effective date of the
order, but the vested rights of the parties shall not be
affected.
(iv) 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, but this subparagraph shall not
affect any vested rights of the parties.
(f) Power of the Board of Directors to Terminate the Executive. The
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Board of Directors of the Bank may terminate the Executive at any
time; in the event of such termination, the provisions of this
paragraph 8 shall fully apply.
(g) Any payments made to the employee pursuant to this agreement, or
otherwise, are subject to and conditioned upon their compliance
with 12 USC 1828(k) and any regulations promulgated thereunder.
(h) Post-termination Health Insurance. If the Executive's employment
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terminates with the Bank for any reason other than Just Cause,
the Executive shall be entitled to purchase from the Bank, at his
own expense which shall not exceed applicable COBRA rates, family
medical insurance under any group health plan that the Bank
maintains for its employees. This right shall be (i) in addition
to, and not in lieu of, any other rights that the Executive has
under this Agreement and (ii) shall continue until the Executive
first becomes eligible for participation in Medicare.
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9. Source of Payments. All payments provided in paragraphs 4, 7, and 8
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shall be paid in cash from the general funds of the Bank, and no
special or separate fund shall be established and no other segregation
of assets shall be made to assure payment. Executive shall have no
right, title, or interest whatever in or to any investments which the
Bank may make to aid the Bank in meeting its obligations hereunder.
10. Noncompetition. The Executive hereby expressly covenants and agrees
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that during the term of this Agreement and for a period of one year
thereafter, he shall not, unless acting with the prior written consent
of the Bank, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, firm, corporation or entity, own,
manage, operate, join, control, finance or participate in the
ownership, management operation or control of, or be connected with as
a director, officer, employee, consultant, partner, stockholder (other
than to the extent he is a stockholder therein as of the date hereof),
and excepting any ownership, solely as an investment, so long as the
Executive is not a member of any control group (with the meaning of
the rules and regulations of the Securities and Exchange Commission,
the Office of Thrift Supervision or the Federal Reserve Board of any
such issue), any business engaged in the business of banking or that
of owning or managing or controlling a bank or banks (which term shall
include, but is not limited to, mortgage companies, savings and loan
associations and savings banks), in any county where the Bank or its
Parent or any other subsidiary of either, has an office or branch and
the contiguous counties thereto.
11. Confidential Information. Executive shall not, to the detriment of the
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Bank, knowingly disclose or reveal to any unauthorized person any
confidential information relating to the Bank, its subsidiaries or
affiliates, or to any of the businesses operated by them, and
Executive confirms that such information constitutes the exclusive
property of the Bank. Executive shall not otherwise knowingly act or
conduct himself (i) to the material detriment of the Bank, its
subsidiaries, or affiliates, or (ii) in a manner which is inimical or
contrary to the interests thereof.
12. Federal Income Tax Withholding. The Bank may withhold from any
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benefits payable under this Agreement all federal, state, city, or
other taxes as shall be required pursuant to any law or governmental
regulation or ruling.
13. Effect of Prior Agreements. This Agreement contains the entire
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understanding between the parties hereto and
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supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive.
14. Consolidation, Merger, or Sale of Assets. Nothing in this Agreement
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shall preclude the Bank from consolidating or merging into or with, or
transferring all or substantially all of its assets to another
corporation which assumes this Agreement and all obligations and
undertakings of the Bank hereunder. Upon such a consolidation, merger,
or transfer of assets or assumption, the term "the Bank" as used
herein, shall mean such other corporation and this Agreement shall
continue in full force and effect.
15. General Provisions.
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(a) Nonassignability. Neither this Agreement nor any right or
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interest hereunder shall be assignable by Executive, his
beneficiaries, or legal representatives without the Bank's prior
written consent; provided, however, that nothing in this
paragraph 14(a) shall preclude (i) Executive from designating a
beneficiary to receive any benefits payable hereunder upon his
death, or (ii) the executors, administrators, or other legal
representatives of Executive or his estate from assigning any
rights hereunder to the person or persons entitled thereto.
(b) No Attachment. Except as required by law, no right to receive
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payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation or to execution, attachment, levy, or
similar process of assignment by operation by law, and any
attempt, voluntary or involuntary, to effect any such action
shall be null, void, and of no effect.
(c) Binding Agreement. This Agreement shall be binding upon, and
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inure to the benefit of, Executive and the Bank and their
respective permitted successors and assigns.
16. Modification and Waiver.
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(a) Amendment of Agreement. This Agreement may not be modified or
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amended except by an instrument in writing signed by the parties
hereto.
(b) Waiver. No term or condition of this Agreement shall be deemed to
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have been waived, nor shall there be an estoppel against the
enforcement of any provision of
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this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver unless specifically stated therein,
and each waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than that
specifically waived.
17. Severability. If, for any reason, any provision of this Agreement is
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held invalid, such invalidity shall not effect any other provision of
this Agreement not held so invalid, and each such other provision
shall to the full extent consistent with law continue in full force
and effect. If any provision of this Agreement shall be held invalid
in part, such invalidity shall in no way affect the rest of such
provision, which, together with all other provisions of this
Agreement, shall to the full extent consistent with law continue in
full force and effect. If this Agreement is held invalid or cannot be
enforced, then to the full extent permitted by law any prior agreement
between the Bank (or any predecessor thereof) and Executive shall be
deemed reinstated as if this Agreement has not been executed.
18. Headings. The headings of paragraphs herein are included solely for
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convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
19. Governing Law. This Agreement has been executed and delivered in the
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State of Indiana, and its validity, interpretation, performance, and
enforcement shall be governed by the laws of said State, except to the
extent Federal law is governing.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized,
and Executive has signed this Agreement, all as of the day and year first
above written.
AMERIANA BANK AND TRUST, SB
/s/ Harry J. Bailey
Harry J. Bailey
President and
Chief Executive Officer
ATTEST:
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/s/ Bradley L. Smith
Bradley L. Smith
Senior Vice President, Treasurer
WITNESS:
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