Exhibit 10.2
Amended
and Restated
Employment
Agreement
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into as of
this 27 day of February, 2008 (the “Commencement
Date”), by and between LSB Financial Corp. (the
“Company”) and Mary Jo David (the
“Employee”), but effective as of January 1, 2005
(the “Effective Date”).
This
Agreement amends and restates the prior Employment Agreement
between the Company and the Executive dated February 9, 2006
(the “Prior Agreement”). It has been
amended and restated for compliance with the final regulations
under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), effective as of January 1,
2005.
WHEREAS,
the Employee currently serves as the Vice President and Chief
Financial Officer of the Company and of the Company's
wholly-owned subsidiary, Lafayette Savings Bank, FSB (the
“Bank”);
WHEREAS,
the board of directors of the Company (the “Board of
Directors” or the “Board”) believes it is in
the best interests of the Company and its subsidiaries for the
Company to enter into this Agreement with the Employee in
order to assure continuity of management of the Company and
its subsidiaries; and
WHEREAS,
the Board of Directors has approved and authorized the
execution of this Agreement with the Employee to take effect
on the Commencement Date;
NOW,
THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein, it
is AGREED as follows:
1.
Definitions.
(a) The
term “Change in Control” means any of the
following:
(i) a
change in the ownership of the Bank or the Company which shall
occur on the date that any one person, or more than one person
acting as a group, acquires ownership of stock of the Bank or
the Company that, together with stock held by such person or
group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the
Bank or the Company. However, if any one person, or
more than one person acting as a group, is considered to own
more than fifty percent (50%) of the total fair market value
or total voting power of the stock of the Bank or the Company,
the acquisition of additional stock by the same person or
persons is not considered to cause a change in the ownership
of the Bank or the Company (or to cause a change in the
effective control of the Bank or the Company (within the
meaning of subsection (ii)). An increase in the
percentage of stock owned by any one person, or persons acting
as a group, as a result of a transaction in which the Bank or
the Company acquires its stock in exchange for property will
be treated as an acquisition of stock for purposes of this
subsection. This subsection applies only when there
is a transfer of stock of the Bank or the Company (or issuance
of stock of the Bank or the Company) and stock in the Bank or
the Company remains outstanding after the
transaction.
(ii) a
change in the effective control of the Bank or the Company,
which shall occur only on either of the following
dates:
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(1)
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the
date any one person, or more than one person acting as a group,
acquires (or has acquired during the 12 month period ending on the
date of the most recent acquisition by such person or persons)
ownership of stock of the Bank or the Company possessing thirty
percent (30%) or more of the total voting power of the stock of the
Bank or the Company.
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(2)
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the
date a majority of members of the Company’s board of
directors is replaced during any 12 month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Company’s board of directors before the date
of the appointment or election; provided, however, that this
provision shall not apply if another corporation is a majority
shareholder of the Company.
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If
any one person, or more than one person acting as a group, is
considered to effectively control the Bank or the Company, the
acquisition of additional control of the Bank or the Company
by the same person or persons is not considered to cause a
change in the effective control of the Bank or the Company (or
to cause a change in the ownership of the Bank or the Company
within the meaning of subsection (i) of this
section).
(iii) a
change in the ownership of a substantial portion of the
Bank’s assets, which shall occur on the date that any
one person, or more than one person acting as a group,
acquires (or has acquired during the 12 month period ending on
the date of the most recent acquisition by such person or
persons) assets from the Bank that have a total gross fair
market value equal to or more than forty percent (40%) of the
total gross fair market value of all of the assets of the Bank
immediately before such acquisition or
acquisitions. For this purpose, gross fair market
value means the value of the assets of the Bank, or the value
of the assets being disposed of, determined without regard to
any liabilities associated with such assets. No
change in control occurs under this subsection (iii) when
there is a transfer to an entity that is controlled by the
shareholders of the Bank immediately after the
transfer. A transfer of assets by the Bank is not
treated as a change in the ownership of such assets if the
assets are transferred to –
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(1)
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a
shareholder of the Bank (immediately before the asset transfer) in
exchange for or with respect to its stock;
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(2)
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an
entity, 50 percent or more of the total value or voting power of
which is owned, directly or indirectly, by the Bank.
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(3)
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a
person, or more than one person acting as a group, that owns,
directly or indirectly, 50 percent or more of the total value or
voting power of all the outstanding stock of the Bank;
or
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(4)
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an
entity, at least 50 percent of the total value or voting power of
which is owned, directly or indirectly, by a person described in
paragraph (3).
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For
purposes of this subsection (iii) and except as otherwise
provided in paragraph 1) above, a person’s status is
determined immediately after the transfer of the
assets.
(iv) For
purposes of this section, persons will not be considered to be
acting as a group solely because they purchase or own stock of
the same corporation at the same time, or as a result of the
same public offering. Persons will be considered to
be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition
of stock, or similar business transaction with the Bank or the
Company; provided, however, that they will not be considered
to be acting as a group if they are owners of an entity that
merges into the Bank or the Company where the Bank or the
Company is the surviving corporation..
(b) The
term “Consolidated Subsidiaries” means any
subsidiary or subsidiaries of the Company (or its successors)
that are part of the consolidated group of the Company (or its
successors) for federal income tax reporting.
(c) The
term “Date of Termination” means the date upon
which the Employee's employment with the Company or the Bank
or both ceases, as specified in a notice of termination
pursuant to Section 8 of this Agreement.
(d) The
term “Involuntary Termination” means the
termination of the employment of the Employee (i) by either
the Company or the Bank or both without her express written
consent; or (ii) by the Employee within 120 days following the
earlier of the date the Employee becomes aware of or the date
the Employee reasonably should have become aware of a material
diminution of or interference with her duties,
responsibilities or benefits, including (without limitation)
any of the following actions unless consented to in writing by
the Employee: that remains uncontested for at least 30 days
after the Employee provides the Company notice of such
occurrence (which notice must be provided not less than 90
days after such occurrence): (1) a requirement that the
Employee be based at any place other than Lafayette, Indiana,
or within 35 miles thereof, except for reasonable travel on
Company or Bank business; (2) a material demotion of the
Employee; (3) a material reduction in the number or seniority
of personnel reporting to the Employee or a material reduction
in the frequency with which, or in the nature of the matters
with respect to which such personnel are to report to the
Employee, other than as part of a Bank- or Company-wide
reduction in staff; (4) a reduction in the Employee's salary
or a material adverse change in the Employee's perquisites,
benefits, contingent benefits or vacation, other than prior to
a Change in Control as part of an overall program applied
uniformly and with equitable effect to all members of the
senior management of the Bank or the Company; (5) a material
permanent increase in the required hours of work or the
workload of the Employee; or (6) the failure of the Board of
Directors ( or a board of directors of a successor of the
Company) to elect her as Vice President and Chief Financial
Officer of the Company ( or a successor of the Company) or any
action by the Board of Directors ( or a board of directors of
a successor of the Company) removing her from any of such
offices, or the failure of the board of directors of the Bank
(or any successor of the Bank) to elect her as Vice President
and Chief Financial Officer of the Bank (or any successor of
the Bank) or any action by such board ( or board of a
successor of the Bank) removing her from any of such offices.
The term “Involuntary Termination” does not
include Termination for Cause or termination of employment due
to retirement, death, disability or suspension or temporary or
permanent prohibition from participation in the conduct of the
Bank's affairs under Section 8 of the Federal Deposit
Insurance Act (“FDIA “).
(e) The
terms “Termination for Cause” and
“Terminated for Cause” mean termination of the
employment of the Employee with either the Company or the
Bank, as the case may be, because of the Employee's
dishonesty, incompetence, willful misconduct, breach of a
fiduciary duty involving personal profit, intentional failure
to perform stated duties, willful violation of any law, rule,
or regulation (excluding traffic violations or similar
offenses) or final
cease-and-desist
order, or material breach of any provision of this Agreement.
No act or failure to act by the Employee shall be considered
willful unless the Employee acted or failed to act with an
absence of good faith and without a reasonable belief that her
action or failure to act was in the best interest of the
Company. The Employee shall not be deemed to have been
Terminated for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution, duly adopted
by the affirmative vote of not less than a majority of the
entire membership of the Board of Directors at a meeting of
the Board duly called and held for such purpose (after
reasonable notice to the Employee and an opportunity for the
Employee, together with the Employee's counsel, to be heard
before the Board), stating that in the good faith opinion of
the Board of Directors the Employee has engaged in conduct
described in the preceding sentence and specifying the
particulars thereof in detail. The opportunity of the Employee
to be heard before the Board shall not affect the right of the
Employee to arbitration as set forth in paragraph
19.
2.
Term.
The
initial term of this Agreement shall commence on the Effective
Date and end on December 31, 2008, subject to earlier
termination as provided herein. Beginning on December 31,
2008, and on each anniversary thereafter, the term of this
Agreement shall be extended for a period of one year, provided
that the Company 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
provided further that the Employee has not received an
unsatisfactory performance review by either the Board of
Directors or the board of directors of the Bank.
3.
Employment.
The
Employee is employed as the Vice President and Chief Financial
Officer of the Company and the Bank effective as of the
Commencement Date. As such, the Employee shall render
administrative and management services as are customarily
performed by persons situated in similar executive capacities,
and shall have such other powers and duties as the Board of
Directors or the board of directors of the Bank may prescribe
from time to time. The Employee shall also render services to
any subsidiary or subsidiaries of the Company or the Bank as
requested by the Company or the Bank from time to time
consistent with her executive position. The Employee shall
devote her best efforts and full time and attention to the
business and affairs of the Company and the Bank to the extent
necessary to discharge her responsibilities hereunder. The
Employee may (i) serve on corporate or charitable boards or
committees, and (ii) manage personal investments, so long as
such activities do not interfere materially with performance
of her responsibilities hereunder.
4.
Compensation.
(a)
Salary.
The
Company agrees to pay the Employee during the term of this
Agreement the annual salary established by the Board of
Directors, which during 2008 shall be $109,585 per year (the
“Company Salary”); provided that any amounts of
salary actually paid to the Employee by any Consolidated
Subsidiaries shall reduce the amount to be paid by the Company
to the Employee. The Company Salary shall be paid no less
frequently than monthly and shall be subject to customary tax
withholding. The amount of the Employee's Company Salary shall
be increased (but shall not be decreased) from time to time in
accordance with the amounts of salary approved by the Board of
Directors or the board of directors of any of the Consolidated
Subsidiaries after December 31, 2007. Adjustments in salary or
other compensation shall not limit or reduce any other
obligation of the Company under this Agreement.
(b)
Discretionary:
Bonuses. The
Employee shall be entitled to participate in an equitable
manner with all other executive officers of the Company and
the Bank in such performance based and discretionary bonuses,
if any, as are authorized and declared by the Board of
Directors for executive officers of the Company and by the
board of directors of the Bank for executive officers of the
Bank.
(c)
Expenses.
The
Employee shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Employee in performing
services under this Agreement in accordance with the policies
and procedures applicable to the executive officers of the
Company and the Bank, provided that the Employee accounts for
such expenses as required under such policies and
procedures.
(d)
Deferral of
Non-Deductible Compensation. In
the event that the Employee's aggregate compensation
(including compensatory benefits which are deemed remuneration
for purposes of Section 162(m) of the Internal Revenue Code of
1986 as amended (the “Code'.')) from the Company and the
Consolidated Subsidiaries for any calendar year exceeds the
greater of (i) $1,000,000 or (ii) the maximum amount of
compensation deductible by the Company or any of the
Consolidated Subsidiaries in any calendar year under Section
162(m) of the Code (the “maximum allowable
amount”), then any such amount in excess of the maximum
allowable amount shall be mandatorily deferred with interest
thereon at 8% per annum, compounded annually, to a calendar
year such that the amount to be paid to the Employee in such
calendar year, including deferred amounts and interest
thereon, does not exceed the maximum allowable
amoun
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