Special Termination Agreement with Bennett


    EXHIBIT
      10.1

     

    Special
      Termination Agreement

     

    THIS
      SPECIAL TERMINATION AGREEMENT (“Agreement”) is made and entered into as of this
      _Seventh
      (7th)____
      day
      of __August______,
      2006, by and between Lincoln
      Bank,
      a
      federally chartered savings bank whose address is 905 Southfield Drive,
      Plainfield, Indiana 46168 (which, together with any successor thereto which
      executes and delivers the assumption agreement provided for in Section 12(a)
      hereof or which otherwise becomes bound by the terms and provisions of this
      Agreement by operation of law, is hereinafter referred to as the “Bank”), and
_Doug
      Bennett______________,
      whose
      residence address is _2517
      Caray Court, Bloomington, IN 47401______________(the
      “Employee”).

     

    WHEREAS,
      the Employee is currently serving as _Senior
      Vice President, Business Development__________of
      the Bank; and

     

    WHEREAS,
      the Bank is a wholly-owned subsidiary of Lincoln Bancorp, a publicly traded
      corporation organized under Indiana law (the “Holding Company”);
      and

     

    WHEREAS,
      the Board of Directors of the Bank recognizes that, as is the case with publicly
      held corporations generally, the possibility of a change in control of the
      Holding Company may exist and that such possibility, and the uncertainty and
      questions which it may raise among management, may result in the departure
      or
      distraction of key management personnel to the detriment of the Bank, the
      Holding Company and its shareholders; and

     

    WHEREAS,
      the Board of Directors of the Bank believes it is in the best interests of
      the
      Bank to enter into this Agreement with the Employee in order to assure
      continuity of management of the Bank and to reinforce and encourage the
      continued attention and dedication of the Employee to his or her assigned duties
      without distraction in the face of potentially disruptive circumstances arising
      from the possibility of a change in control of the Holding Company, although
      no
      such change is now contemplated; and

     

    WHEREAS,
      the Board of Directors of the Bank has approved and authorized the execution
      of
      this Agreement with the Employee to take effect as stated in Section 1
      hereof;

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the respective covenants
      and
      agreements of the parties herein contained, it is agreed as
      follows:

     

    1.  TERM
      OF
      AGREEMENT.  The
      term
      of this Agreement shall be deemed to have commenced as of the date hereof (the
      “Effective Date”) and shall continue until the anniversary of the Effective
      Date. Prior to that anniversary date and at each anniversary date thereafter,
      the Board of Directors may review this Agreement and, in its discretion,
      authorize extension thereof for an additional one-year period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.  PAYMENTS
      TO THE EMPLOYEE UPON CHANGE IN CONTROL.

     

    (A)  Upon
      the
      occurrence of a change in control of the Bank or the Holding Company (as herein
      defined) at any time during the term of this Agreement followed within 12 months
      by the involuntary or voluntary termination of the Employee’s employment with
      the Bank, other than for cause (as defined in Section 2(d) hereof) whether
      or
      not such termination occurs during the term of this Agreement, the provisions
      of
      Section 3 shall apply.

     

    (B)  A
“change
      in control” of the Bank or the Holding Company shall mean an acquisition of
“control” of the Holding Company or of the Bank within the meaning of 12 C.F.R.
§574.4(a) (other than a change of control resulting from a trustee or other
      fiduciary holding shares of capital stock of the Holding Company under an
      employee benefit plan of the Holding Company or any of its
      subsidiaries).

     

    (C)  The
      Employee’s employment under this Agreement may be terminated at any time by the
      Board of Directors of the Bank. The terms “involuntary termination” or
“involuntarily terminated” in this Agreement shall refer to the termination of
      the employment of Employee without his or her express written consent. In
      addition, a ma-terial diminution of or interference with the Employee’s duties,
      responsibilities and benefits shall be deemed and shall constitute an
      involuntary termination of employment to the same extent as express notice
      of
      such involuntary termination. By way of example and not by way of limitation,
      any of the following actions, if unreasonable and materially adverse to the
      Employee, shall constitute such diminution or interference unless consented
      to
      in writing by the Employee: (1) the requirement that the Employee perform his
      or
      her principal employment duties more than thirty-five (35) miles from his or
      her
      primary office as of the date of the change in control; (2) a material reduction
      in the Employee’s salary, perquisites, contingent benefits or vacation time as
      in effect on the date of the change in control as the same may be changed by
      mutual agreement from time to time, unless part of an institution-wide
      reduction; (3) the assignment to the Employee of duties and responsibilities
      materially different from those normally associated with his or her position
      as
      referenced in this Agreement; or (4) a material diminution or reduction in
      the
      Employee’s responsibilities or authority (including reporting responsibilities)
      in connection with his or her employment with the Bank.

     

    (D)  The
      Employee shall not have the right to receive termination benefits pursuant
      to
      Section 3 hereof upon termination for cause. For purposes of this Agreement,
      termination for “cause” shall include termination because of, in the good faith
      determination of the Board of Directors of the Bank, the Employee’s personal
      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 (other than a law, rule or regulation
      relating to traffic violations or similar offenses) or final cease-and-desist
      order, or material breach of any provision of this Agreement. Notwithstanding
      the foregoing, 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 of the Bank at a meeting
      of
      the Board 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), such meeting 

     

     

    
      
        
        

      

      
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      and
        the
        opportunity to be heard to be held prior to, or as soon as reasonably
        practicable following, termination, but in no event later than 60 days following
        such termination, finding that in the good faith opinion of the Board the
        Employee was guilty of conduct constituting “cause” as set forth above and
        specifying the particulars thereof in detail. If, following such meeting,
        the
        Employee is reinstated, he or she shall be entitled to receive back pay for
        the
        period following termination and continuing through
        reinstatement.

    

     

    3.  TERMINATION
      BENEFITS.

     

    (A)  If
      during
      the term of this Agreement there is a change in control of the Bank or the
      Holding Company, and within 12 months following such change in control there
      is
      an involuntary termination of the Employee’s employment with the Bank, other
      than for cause, whether or not such termination occurs during the term of this
      Agreement, the Bank shall pay to the Employee in a lump sum in cash within
      25
      business days after the date of severance of employment an amount equal to
      100
      percent of the Employee’s “base amount” of compensation, as defined in Section
      280G(b)(3) of the Internal Revenue Code of 1986, as amended
      (“Code”).

     

    (B)  If
      during
      the term of this Agreement there is a change in control, and within 12 months
      following such change in control there is an involuntary termination of the
      Employee’s employment, other than for cause, whether or not such termination
      occurs during the term of this Agreement, the Bank shall cause to be continued
      life, health and disability coverage substantially identical to the coverage
      maintained by the Bank for the Employee prior to his or her severance. Subject
      to applicable federal and state laws, such coverage shall cease upon the earlier
      of the Employee’s obtaining similar coverage by another employer or twelve (12)
      months from the date of the Employee’s termination. In the event the Employee
      obtains new employment and receives less coverage for life, health or
      disability, the Bank shall provide coverage substantially identical to the
      coverage maintained by the Bank for the Employee prior to termination for the
      balance of the twelve (12) month period.

     

    (C)  If
      during
      the term of this Agreement there is a change in control of the Bank or the
      Holding Company, and within 12 months following such change in control, the
      Employee voluntarily terminates his or her employment, other then as a result
      of
      receiving notice that his or her employment is to be terminated for cause,
      whether or not such voluntary termination of employment occurs during the term
      of this Agreement, the Bank shall continue to pay Employee his or her base
      compensation and shall continue to provide life, health and disability coverage
      maintained for the Employee prior to his or her voluntary termination of
      employment for any remaining portion of the period ending 12 months following
      such change in control; provided, however, that subject to applicable federal
      and state laws, such life, health and disability coverage shall cease upon
      Employee’s obtaining substantially similar coverage from another
      employer.

     

    4.  CERTAIN
      REDUCTION OF PAYMENTS BY THE BANK.

     

    (A)  Anything
      in this Agreement to the contrary notwithstanding, in the event it shall be
      determined that any payment or distribution by the Bank to or for the benefit
      of
      the Employee (whether paid or payable or distributed or distributable pursuant
      to the terms of this Agreement 

     

     

    
      
        
        

      

      
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      or
        otherwise) (a “Payment”) would be nondeductible (in whole or part) by the Bank
        for Federal income tax purposes because of Section 280G of the Code, then
        the
        aggregate present value of amounts payable or distributable to or for the
        benefit of the Employee pursuant to this Agreement (such amounts payable
        or
        distributable pursuant to this Agreement are hereinafter referred to as
“Agreement Payments”) shall be reduced to the Reduced Amount. The “Reduced
        Amount” shall be an amount, not less than zero, expressed in present value which
        maximizes the aggregate present value of Agreement Payments without causing
        any
        Payment to be nondeductible by the Bank because of Section 280G of the Code.
        For
        purposes of this Section 4, present value shall be determined in accordance
        with
        Section 280G(d)(4) of the Code.

    

     

    (B)  All
      determinations required to be made under this Section 4 shall be made by the
      Bank’s independent auditors, or at the election of such auditors by such other
      firm or individuals of recognized expertise as such auditors may select (such
      auditors or, if applicable, such other firm or individual, are hereinafter
      referred to as the “Advisory Firm”). The Advisory Firm shall within ten business
      days of the date of termination of the Employee’s employment by the Bank or the
      Holding Company resulting in benefit payments hereunder (the “Date of
      Termination”), or at such earlier time as is requested by the Bank, provide to
      both the Bank and the Employee an opinion (and detailed supporting calculations)
      that the Bank has substantial authority to deduct for federal in-come tax
      purposes the full amount of the Agreement Payments and that the Employee has
      substantial authority not to report on his or her federal income tax return
      any
      excise tax imposed by Section 4999 of the Code with respect to the Agreement
      Payments. Any such determination and opinion by the Advisory Firm shall be
      binding upon the Bank and the Employee. The Employee shall determine which
      and
      how much, if any, of the Agreement Payments shall be eliminated or reduced
      consistent with the requirements of this Section 4, provided that, if the
      Employee does not make such determination within ten business days of the
      receipt of the calculations made by the Advisory Firm, the Bank shall elect
      which and how much, if any, of the Agreement Payments shall be eliminated or
      reduced consistent with the requirements of this Section 4 and shall notify
      the
      Employee promptly of such election. Within five business days of the earlier
      of
      (i) the Bank’s receipt of the Employee’s determination pursuant to the
      immediately preceding sentence of this Agreement or (ii) the Bank’s election in
      lieu of such determination, the Bank shall pay to or distribute to or for the
      benefit of the Employee such amounts as are then due the Employee under this
      Agreement. The Bank and the Employee shall cooperate fully with the Advisory
      Firm, including without limitation providing to the Advisory Firm all
      information and materials reasonably requested by it, in connection with the
      making of the determinations required under this Section 4.

     

    (C)  As
      a
      result of uncertainty in application of Section 280G of the Code at the time
      of
      the initial determination by the Advisory Firm hereunder, it is possible that
      Agreement Payments will have been made by the Bank which should not have been
      made (“Overpayment”) or that additional Agreement Payments will not have been
      made by the Bank which should have been made (“Underpayment”), in each case,
      consistent with the calculations required to be made hereunder. In the event
      that the Advisory Firm, based upon the assertion by the Internal Revenue Service
      against the Employee of a deficiency which the Advisory Firm believes has a
      high
      probability of success, determines that an Overpayment has been made, any such
      Overpayment paid or distributed by the Bank to or for the benefit of Employee
      shall be treated for all purposes as a loan ab initio
      which
      the Employee shall repay to the Bank together with interest at the

     

     

    
      
        
        

      

      
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      applicable
        federal rate provided for in Section 7872(f)(2) of the Code; provided, however,
        that no such loan shall be deemed to have been made and no amount shall be
        payable by the Employee to the Bank if and to the extent such deemed loan
        and
        payment would not either reduce the amount on which the Employee is subject
        to
        tax under Section 1 and Section 4999 of the Code or generate a refund of
        such
        taxes. In the event that the Advisory Firm, based upon controlling precedent
        or
        other substantial authority, determines that an Underpayment has occurred,
        any
        such Underpayment shall be promptly paid by the Bank to or for the benefit
        of
        the Employee together with interest at the applicable federal rate provided
        for
        in Section 7872(f)(2) of the Code.

    

     

    5.  REQUIRED
      REGULATORY PROVISIONS.

     

    (A)  The
      Bank
      may terminate the Employee’s employment at any time, but any termination by the
      Bank, other than a termination for cause, shall not prejudice the Employee’s
      right to compensation or other benefits under this Agreement. The Employee
      shall
      not have the right to receive compensation or other benefits for any period
      after a termination for cause as defined in Section 2(d)
      hereinabove.

     

    (B)  If
      the
      Employee 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 Insurance Act, 12 U.S. C. §1818 (e)(3) and (g)(1), the
      Bank’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, the Bank may in its discretion (i) pay the 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 the obligations
      which
      were suspended.

     

    (C)  If
      the
      Employee is removed from office and/or permanently prohibited from participating
      in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or
      (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 Agreement shall terminate, as of the
      effective date of the order, but vested rights of the parties shall not be
      affected.

     

    (D)  If
      the
      Bank 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 (d) shall not affect any vested rights
      of
      the parties.

     

    (E)  All
      obligations under this Agreement may be terminated, except to the extent
      determined that continuation of this Agreement is necessary for the continued
      operation of the Bank: (i) by the Director of the Office of Thrift Supervision
      (the “Director”), or his or her designee, at the time the Federal Deposit
      Insurance Corporation 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, or his or
      her designee, at the time the Director or his or her designee approves a
      supervisory merger to resolve problems related to operation 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 any such action.

     

     

    
      
        
        

      

      
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    6.  REINSTATEMENT
      OF BENEFITS UNDER SECTION 3.  In
      the
      event the Employee is suspended and/or temporarily prohibited from participating
      in the conduct of the Bank’s affairs by a notice described in Section 6(b)
      hereof (the “Notice”) during the term of this Agreement and a change in control
      occurs, the Bank will assume its obligation to pay and the Employee will be
      entitled to receive all of the termination benefits provided for under Section
      3
      of this Agreement upon the Bank’s receipt of a dismissal of charges in the
      Notice.

     

    7.  EFFECT
      ON
      PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.  This
      Agreement contains the entire understanding between the parties hereto and
      supersedes any prior agreement between the Bank and the Employee.

     

    8.  NO
      ATTACHMENT.

     

    (A)  Except
      as
      required by law, no right to receive 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 or assignment by operation of law, and any attempt, voluntary or
      involuntary, to affect any such action shall be null, void, and of no
      effect.

     

    (B)  This
      Agreement shall be binding upon, and inure to the benefit of, the Employee,
      the
      Bank and their respective successors and assigns.

     

    9.  MODIFICATION
      AND WAIVER.

     

    (A)  This
      Agreement may not be modified or amended except by an instrument in writing
      signed by the parties hereto.

     

    (B)  No
      term
      or condition of this Agreement shall be deemed to have been waived, nor shall
      there be any estoppel against the enforcement of any provision of 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 such 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.

     

    10.  NO
      MITIGATION.  Except
      as
      expressly provided herein, the amount of any payment or benefit provided for
      in
      this Agreement shall not be reduced by any compensation earned by the Employee
      as the result of employment by another employer, by retirement benefits after
      the date of termination or otherwise.

     

    11.  NO
      ASSIGNMENTS.

     

    (A)  This
      Agreement is personal to each of the parties hereto, and neither party may
      assign or delegate any of its rights or obligations hereunder without first
      obtaining the written consent of the other party; provided, however, that the
      Bank will require any successor or assign (whether direct or indirect, by
      purchase, merger, consolidation or otherwise) to all or substantially all of
      the
      business and/or assets of the Bank, by an assumption agreement in form and
      substance satisfactory to the Employee, to expressly assume and agree to perform
      this 

     

    
      
        
        

      

      
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      Agreement
        in the same manner and to the same extent that the Bank would be required
        to
        perform it if no such succession or assignment had taken place. Failure of
        the
        Bank to obtain such an assumption agreement prior to the effectiveness of
        any
        such succession or assignment shall be a breach of this Agreement and shall
        entitle the Employee to compensation from the Bank in the same amount and
        on the
        same terms as the compensation pursuant to Section 3 hereof. For purposes
        of
        implementing the provisions of this Section 11(a), the date on which any
        such
        succession becomes effective shall be deemed the Date of
        Termination.

    

     

    (B)  This
      Agreement and all rights of the Employee hereunder shall inure to the benefit
      of
      and be enforceable by the Employee’s personal and legal representatives,
      executors, administrators, successors, heirs, distributees, devisees and
      legatees. If the Employee should die while any amounts would still be payable
      to
      the Employee hereunder if the Employee had continued to live, all such amounts,
      unless otherwise provided herein, shall be paid in accordance with the terms
      of
      this Agreement to the Employee’s devisee, legatee or other designee or if there
      is no such designee, to the Employee’s estate.

     

    12.  NOTICE. 
      For
      the
      purposes of this Agreement, notices and all other communications provided for
      in
      the Agreement shall be in writing and shall be deemed to have been duly given
      when personally delivered or sent by certified mail, return receipt requested,
      postage prepaid, addressed to the respective addresses set forth on the first
      page of this Agreement (provided that all notices to the Bank shall be directed
      to the attention of the Board of Directors of the Bank with a copy to the
      Secretary of the Bank), or to such other address as either party may have
      furnished to the other in writing in accordance herewith.

     

    13.  AMENDMENTS. 
      No
      amendments or additions to this Agreement shall be binding unless in writing
      and
      signed by both parties, except as herein otherwise provided.

     

    14.  PARAGRAPH
      HEADINGS.  The
      paragraph headings used in this Agreement are included solely for convenience
      and shall not affect, or be used in connection with, the interpretation of
      this
      Agreement.

     

    15.  SEVERABILITY. 
      The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof.

     

    16.  GOVERNING
      LAW.  This
      Agreement shall be governed by the laws of the United States to the extent
      applicable and otherwise by the laws of the State of Indiana.

     

    17.  ARBITRATION. 
      Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration in accordance with the rules of the
      American Arbitration Association then in effect. Judgment may be entered an
      the
      arbitrator’s award in any court having jurisdiction.

     

    18.  REIMBURSEMENT. 
      In
      the
      event the Bank purports to terminate the Employee for cause, but it is
      determined by a court of competent jurisdiction or by an arbitrator pursuant
      to
      Section 18 that cause did not exist for such termination, or if in any event
      it
      is determined by any such court or arbitrator that the Bank has failed to make
      timely payment of any amounts owed to

     

    
      
        
        

      

      
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     the
      Employee under this Agreement, the Employee shall be entitled to reimbursement
      for all reasonable costs, including attorneys’ fees, incurred in challenging
      such termination or collecting such amounts. Such reimbursement shall be in
      addition to all rights to which the Employee is otherwise entitled under this
      Agreement.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the day and
      year
      first above written.

     

    THIS
      AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
      THE
      PARTIES.

     

    

      


       

      
        	 	
                LINCOLN
                  BANK

              
	 	 	 
	 	 	 
	 	
                By:

              	/s/
                Jerry R. Engle
	 	
                “BANK”

              
	 	 	 
	 	 	 
	 	 	 
	 	/s/
                Doug Bennett
	 	
                “Employee”

              


      

      


    

    
      
        
        

      

      
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    The
      undersigned, Lincoln Bancorp, sole shareholder of Bank, agrees that if it shall
      be determined for any reason that any obligation on the part of Bank to continue
      to make any payments due under this Agreement to Employee is unenforceable
      for
      any reason, Lincoln Bancorp agrees to honor the terms of this Agreement and
      continue to make any such payments due hereunder to Employee or to satisfy
      any
      such obligation pursuant to the terms of this Agreement, as though it were
      the
      Bank hereunder.

    
 

    
      
        	
                LINCOLN
                  BANCORP

              	 
	 	 	 
	 	 	 
	
                By:

              	/s/
                Jerry R. Engle	 


      

       

       

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