Exhibit 10.1

AMENDED AND RESTATED

UNITED COMMUNITY BANK

EMPLOYEE SEVERANCE COMPENSATION PLAN

 

A. Purpose.

The primary purpose of the United Community Bank Employee Severance Compensation
Plan (the “Plan”) is to ensure the successful continuation of the business of
United Community Bank (the “Bank”) and the fair and equitable treatment of the
Bank’s employees following a Change in Control (as defined below). The Bank has
amended and restated this Plan to conform with the requirements of Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”).

 

B. Covered Employees.

Subject to paragraph C below, any employee of the Bank with at least one year of
service as of his or her termination date shall be eligible to receive a Change
in Control Severance Benefit (as defined below) if, within the period beginning
on the effective date of a Change in Control and ending on the first anniversary
of such date, (i) the employee’s employment with the Bank is involuntarily
terminated or (ii) the employee terminates employment with the Bank voluntarily
after being offered continued employment in a position that is not a Comparable
Position (as defined below).

 

C. Limitations on Eligibility for Change in Control Severance Benefits or
Management Restructuring Benefits.

 

  1. No employee shall be eligible for a Change in Control Severance Benefit if
(a) his or her employment is terminated for “Cause,” (b) he or she is offered a
Comparable Position and declines to accept such position, or (c) the employee
is, at the time of termination of employment, a party to an individual
employment agreement or change in control agreement with the Bank and/or United
Community Bancorp (the “Company”).

 

  2. For purposes of this Plan, a termination of employment for “Cause” shall
include termination because of the employee’s personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) violation of
any final cease-and desist order, or material breach of any provision of the
Plan.

 

  3. For purposes of this Plan, a “Comparable Position” shall mean a position
that would (i) provide the employee with base compensation and benefits that are
comparable in the aggregate to those provided to the employee prior to the
Change in Control; (ii) provide the employee with an opportunity for variable
bonus compensation that is comparable to the opportunity provided to the
employee prior to the Change in Control; (iii) be in a location that would not
require the employee to increase his or her daily one way commuting distance by
more than thirty-five (35) miles as compared to the employee’s commuting
distance immediately prior to the Change in Control; and (iv) have job skill
requirements and duties that are comparable to the requirements and duties of
the position held by the employee prior to the Change in Control.

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D. Definitions of Change in Control.

For purposes of this Plan, “Change in Control” means the occurrence of any one
of the following events:

 

  (1) Merger: The Company merges into or consolidates with another corporation,
or merges another corporation into the Company, and as a result less than a
majority of the combined voting power of the resulting corporation immediately
after the merger or consolidation is held by persons who were stockholders of
the Company immediately before the merger or consolidation.

 

  (2) Acquisition of Significant Share Ownership: The Company files, or is
required to file, a report on Schedule 13D or another form or schedule (other
than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, if the schedule discloses that the filing person or
persons acting in concert has or have become the beneficial owner(s) of 25% or
more of a class of the Company’s voting securities, but this clause (2) shall
not apply to beneficial ownership of Company voting shares held in a fiduciary
capacity by an entity of which the Company directly or indirectly beneficially
owns 50% or more of its outstanding voting securities.

 

 

(3)

Change in Board Composition: During any period of two consecutive years,
individuals who constitute the Company’s Board of Directors at the beginning of
the two-year period cease for any reason to constitute at least a majority of
the Company’s Board of Directors; provided, however, that for purposes of this
clause (3), each director who is first elected by the board (or first nominated
by the board for election by the stockholders) by a vote of at least two-thirds
( 2/3) of the directors who were directors at the beginning of the two-year
period shall be deemed to have also been a director at the beginning of such
period; or

 

  (4) Sale of Assets: The Company sells to a third party all or substantially
all of its assets.

Notwithstanding anything in this Plan to the contrary, in no event shall the
conversion of the Bank from the mutual holding company form of organization to
the full stock holding company form of organization (including the elimination
of the mutual holding company) constitute a “Change in Control” for purposes of
this Plan.

 

E. Determination of the Change in Control Severance Benefit.

The Change in Control Severance Benefit payable to an eligible employee under
this Plan shall be determined as follows:

 

  (1) Employees who become entitled to receive a Change in Control Severance
under the Plan shall receive a benefit determined under the following schedule:

 

  (a) The basic benefit under the Plan shall be determined as the product of
(i) the employee’s years of service from his or her hire date (including partial
years) through the termination date and (ii) one (1) month of the employee’s
Base Compensation (as defined below). A “year of service” shall mean each
12-month period of service following an employee’s hire date determined without
regard the number of hours worked during such period(s).

 

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  (b) Notwithstanding anything in this Plan to the contrary, the minimum payment
to an eligible employee under this Plan shall be one (1) month of Base
Compensation and the maximum payment to an eligible employee shall not exceed
199% of the employee’s Base Compensation.

 

  (c) The Change in Control Severance Benefit shall be paid in a lump sum not
later than five (5) business days after the date of the employee’s termination
of employment.

 

  (2) For purpose of determinations under this paragraph E, “Base Compensation”
shall mean:

 

  (a) For salaried employees, the employee’s annual base salary at the rate in
effect on his or her termination date or, if greater, the rate in effect on the
date immediately preceding the Change in Control.

 

  (b) For employees whose compensation is determined in whole or in part on the
basis of commission income, the employee’s base salary at termination (or, if
greater, the base salary on date immediately preceding the effective date of the
Change in Control), if any, plus the commissions earned by the employee in the
twelve (12) full calendar months preceding his or her termination date (or, if
greater, the commissions earned in the twelve (12) full calendar months
immediately preceding the effective date of the Change in Control).

 

  (c) For hourly employees, the employee’s total hourly wages for the twelve
(12) full calendar months preceding his or her termination date or, if greater,
the twelve (12) full calendar months preceding the effective date of the Change
in Control.

 

F. Withholding.

All payments will be subject to customary withholding for federal, state and
local tax purposes.

 

G. Parachute Payment.

Notwithstanding anything in this Plan to the contrary, if a Change in Control
Severance Benefit to an employee who is a “Disqualified Individual” shall be in
an amount which includes an “Excess Parachute Payment,” taking into account
payments under this Plan and otherwise, the benefit payable under this Plan
shall be reduced to the maximum amount which does not include an Excess
Parachute Payment. The terms “Disqualified Individual” and “Excess Parachute
Payment” shall have the same meanings as under Section 280G of the Code, or any
successor provision thereto.

 

H. Adoption by Affiliates.

Upon approval by the Board of Directors of the Bank, this Plan may be adopted by
any “Subsidiary” or “Parent” of the Bank. Upon such adoption, the provisions of
the Plan shall be fully applicable to the employees of that Subsidiary or
Parent. The term “Subsidiary” means any corporation in which the Bank, directly
or indirectly, holds a majority of the voting power of its outstanding shares of
capital stock. The term “Parent” means any corporation which holds a majority of
the voting power of the Bank’s outstanding shares of capital stock.

 

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I. Administration.

The Plan is administered by the Board of Directors of the Bank (the “Board”),
which shall have the discretion to interpret the terms of the Plan and to make
all determinations about eligibility and payment of benefits. All decisions of
the Board, any action taken by the Board with respect to the Plan and within the
powers granted to the Board under the Plan, and any interpretation by the Board
of any term or condition of the Plan, are conclusive and binding on all persons,
and will be given the maximum possible deference allowed by law. The Board may
delegate and reallocate any authority and responsibility with respect to the
Plan.

 

J. Source of Payments.

Unless otherwise determined by the Board, all payments and benefits provided
under this Agreement shall be paid solely by the Bank. Notwithstanding anything
in this Agreement to the contrary, no provision of this Agreement shall be
construed so as to result in the duplication of any payment or benefit.

 

K. Inalienability.

In no event may any Employee sell, transfer, anticipate, assign or otherwise
dispose of any right or interest under the Plan. At no time will any such right
or interest be subject to the claims of creditors, nor liable to attachment,
execution or other legal process.

 

L. Governing Law.

The provisions of the Plan will be construed, administered and enforced in
accordance with the laws of the State of Indiana, except to the extent that
federal law applies.

 

M. Severability.

If any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability will not affect any other provision of the Plan, and the Plan
will be construed and enforced as if such provision had not been included.

 

N. No Employment Rights.

Neither the establishment nor the terms of this Plan shall be held or construed
to confer upon any employee the right to a continuation of employment by the
Bank, nor constitute a contract of employment, express or implied. The Bank
reserves the right to dismiss or otherwise deal with any employee to the same
extent and on the same basis as though this Plan had not been adopted. Nothing
in this Plan is intended to alter the at-will status of the Bank’s employees, it
being understood that, except to the extent otherwise expressly set forth to the
contrary in an individual employment-related agreement, the employment of any
employee may be terminated at any time by either the Bank or the employee with
or without cause.

 

O. Amendment and Termination.

The Plan may be terminated or amended in any respect by resolution adopted by a
majority of the Board of Directors of the Bank, unless a Change in Control has
previously occurred. If a Change in Control occurs, the Plan no longer shall be
subject to amendment, change, substitution, deletion, revocation or termination
in any respect whatsoever. The form of any proper amendment or termination

 

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of the Plan shall be a written instrument signed by a duly authorized officer or
officers of the Bank, certifying that the amendment or termination has been
approved by the Board of Directors. A proper amendment of the Plan automatically
shall effect a corresponding amendment to each Participant’s rights hereunder. A
proper termination of the Plan automatically shall effect a termination of all
employees’ rights and benefits hereunder.

 

P. Required Provisions.

 

  (1) In the event any of the provisions of this Section P are in conflict with
the terms of this Plan, this Section P shall prevail.

 

  (2) The Bank’s Board of Directors may terminate an employee’s employment at
any time, but any termination by the Bank, other than termination for Cause,
shall not prejudice employee’s right to compensation or other benefits under
this Plan. An employee shall not have the right to receive compensation or other
benefits for any period after Termination for Cause.

 

  (3) If an employee is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
§1818(e)(3) or (g)(1); the Bank’s obligations under this Plan 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
employee all or part of the compensation withheld while their contract
obligations were suspended; and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.

 

  (4) If an employee is removed and/or permanently prohibited from participating
in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1),
all obligations of the Bank under this Plan shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.

 

  (5) If the Bank is in default as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under
this Plan shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties.

 

  (6) All obligations under this Plan shall be terminated, except to the extent
determined that continuation of the Plan is necessary for the continued
operation of the Bank: (i) by the Director of the OTS (or his designee), at the
time the FDIC enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his
designee) at the time the Director (or his designee) approves a supervisory
merger to resolve problems related to the operations of the Bank or when the
Bank is determined by the Director to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not be affected
by such action.

 

  (7) Any payments made to employees pursuant to this Plan, or otherwise, are
subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and
FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification
Payments.

 

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Q. Section 409A.

If when termination of employment occurs an employee is a “specified employee”
(within the meaning of Section 409A of the Code), and if the cash severance
payment under paragraph E. would be considered deferred compensation under
Section 409A of the Code, and, finally, if an exemption from the six-month delay
requirement of Section 409A(a)(2)(B)(i) of the Code is not available, the
employee’s severance benefit shall be paid to the employee in a single lump sum,
without interest, on the first payroll date of the seventh month after the month
in which the employee’s employment terminates, provided the termination of
employment constitutes a “separation from service” under Section 409A of the
Code. References in this Plan to Section 409A of the Code include rules,
regulations, and guidance of general application issued by the Department of the
Treasury under Section 409A of the Code.

 

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This plan has been approved and adopted by the Board of Directors of the Bank
and is effective as of December 30, 2008

 

      UNITED COMMUNITY BANK Attest:  

/s/ E.G. McLaughlin

    By:  

/s/ William F. Ritzmann

        William F. Ritzmann         President and Chief Executive Officer

 

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