Document:

EX-10.1

 

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT

     This Amended and Restated Employment and Non-competition Agreement (this “Agreement”) is made
August 22, 2006, between First Financial Bancorp., an Ohio corporation (the “Company”), and Claude
E. Davis (“Employee”).

     WHEREAS, The Company and Employee (the “Parties”) are parties to an Employment and
Non-competition Agreement dated September 21, 2004; and

     WHEREAS, the Parties desire to amend and restate that Agreement as provided herein;

     NOW, THEREFORE, the Parties hereby agree as follows:

     §1. Employment. The Company hereby employs Employee, and Employee hereby accepts
employment with the Company, upon the terms and subject to the conditions described in this
Agreement.

     §2. Term. Employee’s employment with the Company pursuant to this Agreement shall
begin on October 1, 2004 (the “Commencement Date”) and shall end on the first anniversary of the
Commencement Date (the “Initial Term”), unless sooner terminated pursuant to §6 of this Agreement.
The term of this Agreement shall renew automatically for successive one-year periods after the
Initial Term (the “Renewal Terms”), unless and until terminated pursuant to §6 of this Agreement.
When permitted by the context, any reference in this Agreement to the “term of this Agreement”
shall include the Initial Term and all Renewal Terms, if any.

     §3. Services. Employee shall be employed as the President and Chief Executive Officer
of the Company and shall perform such services and be responsible for such activities as may be
reasonably assigned to him from time to time by the Board of Directors of the Company (the
"Board”), or a duly authorized Board committee, subject to the business policies and operating
programs, budgets, procedures, and directions established from time to time by the Company (the
"Services”). Employee shall devote his best efforts and full business and professional time,
attention, energy, loyalty, and skill to the rendering of the Services, to the business affairs of
the Company, and to the advancement of the Company’s interests.

     §4. Compensation.

     (A) Base Compensation. As compensation for his Services under this Agreement,
the Company shall pay Employee a base salary at the annual rate of $450,000 (the “Base
Salary”), payable in accordance with the Company’s general policies and procedures for
payment of salaries to its executive personnel. Payment of the Base Salary and any other
compensation to Employee hereunder shall be subject to all applicable tax and other
withholding requirements. Employee’s performance shall be reviewed not less often than
annually by the Board or a Board committee for the purpose of considering potential
increases in the Base Salary, but the Company shall not be obligated to make any such
increases.

 

 

     (B) Bonuses. Employee shall participate in the Company’s Annual Short Term
Bonus Plan (the “Bonus Plan”) or such other bonus compensation plans established by the
Board or a Board committee from time to time.

     In addition, so long as Employee is employed by the Company on the applicable
anniversary, the Company shall pay Employee a bonus of $33,000 not later than 30 days after
each of the first three anniversaries of the Commencement Date (the “Additional Bonuses”).
The Additional Bonuses may be deferred by Employee under the Company’s Deferred Compensation
Plan dated June 1, 2003, subject to the terms and conditions of such plan.

     (C) Stock Options. On the Commencement Date or as soon thereafter as may be
reasonably practicable, the Company shall grant Employee an option to purchase 50,000 shares
of the Company’s Common Stock, as defined in the Company’s 1999 Stock Incentive Plan for
Officers and Employees (the “Stock Plan”), at a price equal to the Fair Market Value (as
defined in the Stock Plan) on the date of grant (the “Option”), with all of the shares of
Common Stock subject to the Option to vest on the first anniversary of the date of grant,
and with accelerated vesting upon a Change in Control, as defined in the Stock Plan (a
“Change in Control”); provided that the Option shall be subject to the terms and conditions
of the Stock Plan and the execution by Employee of a stock option agreement approved by the
Board or the Committee (as defined in the Stock Plan) pursuant to the Stock Plan. Future
grants of stock options, if any, and the related terms shall be at the discretion of the
Board or the Committee.

     (D) Restricted Stock. On the Commencement Date or as soon thereafter as may be
reasonably practicable, the Company shall award to Employee 35,000 shares of Common Stock as
Restricted Stock, as defined in the Stock Plan (the “Restricted Stock”), of which 17,500
shares shall vest on the first anniversary of the date of the award and 8,750 shall vest on
each of the second and third anniversaries of the date of the award, and with accelerated
vesting upon a Change in Control; provided that the Restricted stock shall be subject to the
terms and conditions of the Stock Plan and the execution by Employee of a restricted stock
agreement approved by the Board or the Committee pursuant to the Stock Plan. Future grants
of restricted stock, if any, an the related terms shall be at the discretion of the Board or
the Committee.

     (E) Fringe Benefits and Perquisites. During the term of this Agreement,
Employee shall be entitled to the following fringe benefits and perquisites:

     (1) Employee shall be eligible to participate in all of the incentive plans and
programs of the Company, including retirement plans, which are generally applicable
to its executive personnel, subject in each case to the terms and conditions of the
applicable incentive plan or program.

     (2) Employee shall be provided employee pension and welfare benefits and group
employee benefits such as sick leave, vacation, group disability and health, life,
and accident insurance and similar indirect compensation which may

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from time to time be offered generally to the Company’s executive personnel, subject
in each case to the terms and conditions of the applicable benefit plan or program.

     (3) The Company shall pay Employee’s reasonable dues and expenses for
membership in one country club in accordance with the Company’s customary practices
for its executive personnel.

     (4) The Company shall furnish Employee with an automobile or automobile
allowance in accordance with the Company’s policy regarding Company-owned vehicles
for its executive personnel.

§5. Confidentiality; Non-competition and Non-solicitation

     (A) Confidentiality. Employee shall not, directly or indirectly, at any time (whether
during the term of this Agreement or thereafter), disclose any Confidential Information (as defined
below) to any person, association or other entity (other than the Affiliated Companies, as defined
below), or use, or authorize or assist any person, association or other entity (other than the
Affiliated Companies) to use, any Confidential Information, excepting only disclosures required by
applicable law; provided, that if Employee believes that disclosure of Confidential Information is
required by applicable law, Employee shall promptly (and in any event prior to such disclosure)
give the Company notice of such proposed disclosure and cooperate with the Company in all ways
reasonably requested by it in its efforts to obtain a protective order or otherwise limit the scope
of such disclosure to the extent the Company deems necessary or appropriate. Upon termination of
his employment with the Company (for any reason) Employee shall promptly deliver to the Company all
documents and other materials containing any Confidential Information which are in his possession
or under his control.

     (B) Non-competition. During the term of Employee’s employment with the Company or any
Affiliated Company (whether pursuant to this Agreement or otherwise) and during the first twelve
(12) months of the Restricted Period (as defined below), Employee shall not, directly or
indirectly, whether individually or as a shareholder (except as a shareholder owning 1% or less of
the outstanding capital stock of a publicly traded corporation) or other owner, partner, member,
director, officer, employee, independent contractor, creditor or agent of any person, other than
for the Company:

     (1) Enter into, engage in, or promote or assist (financially or otherwise), directly or
indirectly, any business which provides any commercial banking, savings banking, mortgage
lending, or any similar lending or banking services (the “Restricted Services”) anywhere in
the geographic area consisting of the states in which the Company operates at any time
during the term of this Agreement (the “Restricted Territory”);

     (2) Solicit any person or entity located in the Restricted Territory for the provision
of any Restricted Services;

     (3) Induce or encourage any employee, officer, director, agent, customer, depositor,
supplier, or independent contractor of any Affiliated Company to terminate its relationship
with any Affiliated Company, or otherwise interfere or attempt to interfere in

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any way with any Affiliated Company’s relationship with any of its employees, officers,
directors, agents, customers, depositors, suppliers, independent contractors, or others;

     (4) Employ or engage any person who, at any time within the one-year period immediately
preceding such employment or engagement, was an employee, officer, or director of any
Affiliated Company; or

     (5) Make any statement (oral or written), or take any other action, which is in any way
disparaging to any Affiliated Company or tends to diminish the reputation of any Affiliated
Company.

     (C) Non-solicitation. During the remaining twelve (12) months of the Restricted
Period, Employee shall not, directly or indirectly, whether individually or as a shareholder
(except as a shareholder owning 1% or less of the outstanding capital stock of a publicly traded
contractor, creditor or agent of any person, other than for the Company:

     (1) Induce or encourage any employee, officer, director, agent, customer, depositor,
supplier, or independent contractor of any Affiliated Company to terminate its relationship
with any Affiliated Company, or otherwise interfere or attempt to interfere in any way with
any Affiliated Company’s relationship with any of its employees, officers, directors,
agents, customers, depositors, suppliers, independent contractors, or others;

     (2) Employ or engage any person who, at any time within the one-year period immediately
preceding such employment or engagement, was an employee, officer, or director of any
Affiliated Company; or

     (3) Make any statement (oral or written), or take any other action, which is in any way
disparaging to any Affiliated Company or tends to diminish the reputation of any Affiliated
Company.

     (D) For purposes of this Agreement:

     (1) Confidential Information” shall mean all trade secrets, proprietary data, and other
confidential information of or relating to any Affiliated Company, including without
limitation financial information, information relating to business operations, services,
promotional practices, and relationships with customers, suppliers, employees, independent
contractors, or other parties, and any information which any Affiliated Company is obligated
to treat as confidential pursuant to any course of dealing or any agreement to which it is a
party or otherwise bound, provided that Confidential Information shall not include
information which is or becomes available to the general public and did not become so
available through any breach of any provision of this or any other agreement by Employee;

     (2) “Affiliated Companies” shall include the Company, all of its subsidiaries, and any
other entities controlled by, controlling, or under common control with the Company; and

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     (3) the “Restricted Period” shall mean the period beginning on the Commencement Date
and ending on the conclusion of the Severance period (as defined in §7).

     (E) Employee acknowledges that:

     (1) the various covenants, restrictions, and obligations set forth in this section are
separate and independent obligations, and may be enforced separately or in any combination;

     (2) the provisions of this section are fundamental and essential for the protection of
the Company’s and the Affiliated Companies’ legitimate business and proprietary interests,
and the Affiliated Companies are intended third party beneficiaries of such provisions (to
the extent such provisions elate to the Affiliated Companies);

     (3) such provisions are reasonable and appropriate in all respects; and

     (4) in the event of any violation by Employee of any of such provisions, the Company
and, if applicable, the Affiliated Companies, would suffer irreparable harm and their
remedies at law would be inadequate. In the event of any violation or attempted violation
of such provisions by Employee, the Company and the Affiliated Companies, or any of them, as
the case may be, shall be entitled to a temporary restraining order, temporary and permanent
injunctions, specific performance, and other equitable relief, without any showing of
irreparable harm or damage or the posting of any bond, in addition to any other rights or
remedies which may then be available to them. During the term of Employee’s employment with
the Company or any Affiliated Company (whether pursuant to this Agreement or otherwise) and
during the Restricted Period (as defined below), Employee shall not, directly or indirectly,
whether individually or as a shareholder (except as a shareholder owning 1% or less of the
outstanding capital stock of a publicly traded corporation) or other owner, partner, member,
director, officer, employee, independent contractor, creditor or agent of any person, other
than for the Company.

     §6. Termination.

     (A) Employee’s employment with the Company:

     (1) shall terminate automatically upon the death of Employee;

     (2) may be terminated by either the Company or Employee at the end of the Initial Term
or any Renewal Term upon not less than 90 days prior written notice given by either of them
to the other;

     (3) may be terminated by Employee at any time for Good Reason (as defined below) upon
not less than 30 days prior written notice to the Company; or

     (4) may be terminated by the Company immediately upon notice to Employee at any time
(a) for Cause (as defined below) or (b) if Employee is then under a Long-Term Disability
(defined below).

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     (B) For purposes of this Agreement:

     (1) “Cause” shall mean any one or more of the following:

     (a) any act constituting (i) a felony under the federal laws of the United
States, the laws of any state, or any other applicable law, (ii) fraud,
embezzlement, misappropriation of assets, willful misfeasance, or dishonesty, or
(iii) other actions or criminal conduct which in any way materially and adversely
affects the reputation, goodwill, or business position of the Company;

     (b) the failure of Employee to perform and observe all material obligations and
conditions to be performed and observed by Employee under this Agreement, or to
perform his duties in accordance, in all material respects, with the policies,
procedures, and directions established from time to time by the Board or a duly
authorized Board committee (any such failure, a “Performance Failure”), and to
correct such Performance Failure promptly following notice from the Board to do so;
or

     (c) having corrected (or the Company having waived the correction of) a
Performance Failure, the occurrence of any subsequent Performance Failure (whether
of the same or different type or nature).

     (2) “Long-Term Disability” shall mean that, because of physical or mental incapacity,
it is more likely than not that Employee will be unable, within 180 days after such
incapacity commenced, to perform the essential functions of his position with the Company,
with or without reasonable accommodation. In the event of any disagreement about whether or
when Employee is under a Long-Term Disability, the question shall be determined:

     (a) by a physician selected by agreement between the Parties if such a
physician is selected within the 10 days after either Party requests the other to so
agree; or, if not,

     (b) by two physicians, the first of whom shall be selected by Employee and the
second of whom shall be selected by the Company or, if Employee fails to make a
selection within 10 days after being requested to do so by the Company, the second
physician shall be selected by the first physician; and

     (c) if the two physicians fail to agree, a third physician selected by the
first two physicians. Employee shall submit to all reasonable examinations
requested by any such physicians.

     (3) “Good Reason” shall mean the occurrence, without Employee’s consent, of a
significant reduction in Employee’s Base Salary or his authority or responsibilities as set
forth in §3 of this Agreement.

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     §7 Severance.

     (A) In the event the Company terminates Employee’s employment pursuant to §6(A)(2) or
§6(A)(4)(b), or Employee terminates his employment pursuant to §6(A)(3), and Employee
provides the Company with a separate, written release (in a form provided by the Company
and reasonably satisfactory to Employee and which shall comply with the requirements of the
Older Workers Benefit Protection Act and applicable state and federal laws and regulations)
which releases the Company from all claims arising from Employee’s employment with the
Company and the termination thereof, Employee shall receive:

     (1) Termination Compensation equal to 24 months of his Base Salary payable
ratably over a 24 month period (the “Severance Period”) in accordance with the
Company’s general policies and procedures for payment of salaries to its executive
personnel and subject to all applicable tax withholding requirements to which the
Company is subject;

     (2) a Termination Bonus equal to 2 times the target payment under the Bonus
Plan for the calendar year in which Employee’s termination occurs;

     (3) notwithstanding the provisions of the second paragraph of §4(B) of this
Agreement to the contrary, if any Additional Bonuses remain unpaid at the time of
such termination, then the Company shall pay such Additional Bonuses, as additional
severance compensation;

     (4) if the date upon which employee is terminated (the “Date of Termination”)
is within twelve (12) months after a Change in Control, and provided that Employee
either elects to have that Policy described in Employee Split Dollar Agreement
assigned to Employee as specified in Section IX of the Split Dollar Agreement or
Employee consents to the termination of Employee’s rights under the Split Dollar
Agreement, Employee will receive a payment (the “Split Dollar Payment”) in one
lump-sum equal to the present value of the death benefit Employee would have
received under the Split Dollar Agreement, determined as if Employee last day of
work was Employee’s Date of Termination, were then eligible to receive a retirement
benefit under the early, normal, late, or disability retirement provisions of First
Financial Bancorp Employees’ Pension Plan (whether or not this is actually the
case), and died at age 75 when the Split Dollar Agreement was still in effect. for
purposes of this Section 5, present value will be determined using a discount rate
based upon the effective U.S. Treasury securities rate for the applicable discount
period (the number reached by subtracting Employee age at Date of Termination from
75), not to exceed 10 years. Notwithstanding the prior two sentences, if Employee
elect to receive an assignment of the policy under Section IX of the Split Dollar
Agreement, the Split Dollar Payment shall be applied to the cash payment to the
Company required under Section IX of the Split Dollar Agreement, and any portion of
the Split Dollar Payment in excess of the amount required under Section IX shall be
paid to Employee. The provisions of this Paragraph will apply whether or not
Employee Split Dollar Agreement is terminated before Employee receives the Split
Dollar Payment;

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     (5) if Section 409A(a)(2) of the Internal Revenue Code applies to this
Agreement and Employee is a “key employee” as defined by Internal Revenue Code
Section 416(i), Employee’s Termination Compensation, Termination Bonus any
Additional Bonuses and any Split Dollar Payment (collectively the “Severance
Benefits”) under this Agreement will be paid as follows: (a) any portion of
Employee’s Severance Benefits that would otherwise be payable during the first six
months following the Date of Termination will instead be paid in a lump sum as soon
as administratively practicable after six months have elapsed following Employee’s
Date of Termination (the “Six-Month Anniversary”), and (b) the remainder of
Employee’s Severance Benefits will be paid in equal bi-weekly installments over the
Severance Period, beginning as soon as administratively practicable after the
Six-Month Anniversary. This Agreement is intended to comply with Section 409A of
the Internal Revenue Code and shall be considered and interpreted in accordance with
such intent. Any provision of this Agreement that would cause the grant and/or
issuance of Severance Benefits to fail to satisfy Section 409A of the Internal
Revenue Code shall have no force and effect until amended to comply with Section
409A, which amendment will be retroactive to the extent permitted under applicable
law.

     (B) Provided Employee elects COBRA coverage, the Company shall pay the premiums for
the first twelve months of coverage. Thereafter Employee will be responsible for paying
COBRA premiums.

     (C) Employee shall be entitled to full executive outplacement assistance with an agency
selected by The Company with the fee paid by The Company in an amount not to exceed five
percent (5%) of Employee’s Base Salary;

     (D) Notwithstanding any other provision of this Agreement, if the receipt of any
payment under this Agreement, in combination with any other payments to Employee from the
Company or its affiliates, shall, in the opinion of independent tax counsel of recognized
standing selected by the Company, result in the payment by Employee of any excise tax
provided for in Section 280G and Section 4999 of the Internal Revenue Code, then the Company
will pay to Employee an additional amount equal to the amount of such excise tax and the
additional federal, state and local income taxes for which Employee will be liable as a
result of this additional payment.

     (E) Except as expressly provided in §7(A), above, Employee shall have no right to
receive any compensation or other benefits under this Agreement as a result of or in
connection with the termination of his employment with the Company or for any period after
such termination.

     (F) Notwithstanding any other provision of this Agreement to the contrary, the
obligation of the Company to pay Termination Compensation and any Additional Bonuses
otherwise payable following termination of Employee’s employment with the Company shall
automatically and immediately terminate upon the breach by Employee of any of Employee’s
duties or obligations under this Agreement, including without limitation those under §5.

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     §8 Capacity. Employee represents and warrants to the Company that he has the capacity
and right to enter into this Agreement and perform all of his obligations under this Agreement
without any restriction.

     §9. Remedies. Subject to the right of the Company and the Affiliated Companies to
exercise the remedies described in the second paragraph of §5 of this Agreement in any court having
jurisdiction, all disagreements and controversies arising with respect to this Agreement, or with
respect to its application to circumstances not clearly set forth in this Agreement, shall be
settled by binding arbitration to be held, and the award made, in Hamilton, Ohio, pursuant to the
then-applicable Commercial Arbitration Rules of the American Arbitration Association. In any such
arbitration, the arbitrators shall consist of a panel of three arbitrators, which shall act by
majority vote and which shall consist of one arbitrator selected by the Party on one side of the
issue subject to the arbitration, one arbitrator selected by the Party on the other side of the
issue, and a third arbitrator selected by the two arbitrators so selected, who shall be wither a
certified public accountant or an attorney at law licensed to practice in the State of Ohio and who
shall act as chairman of the arbitration panel; provided that if the Party on one side of the issue
selects its arbitrator for the panel and the other Party fails so to select its arbitrator within
10 business days after being requested by the first Party to do so, then the sole arbitrator shall
be the arbitrator selected by the first Party. A decision in any such arbitration shall apply both
to the particular question submitted and to all similar questions arising thereafter and shall be
binding and conclusive upon both Parties and shall be enforceable in any court having jurisdiction
over the Party to be charged.

     All costs and expenses of arbitration shall be borne by the Parties as determined by the
arbitrator or arbitration panel, except that the fees and expenses of any arbitrator on an
arbitration panel who is selected individually by a Party shall be borne separately by the Party
appointing the arbitrator; provided that if one Party fails to select an arbitrator for a penal,
and the sole arbitrator is the arbitrator selected by the other Party, then the fees of that
arbitrator shall be borne by the Parties as determine by that arbitrator.

     All rights and remedies of each Party under this Agreement are cumulative and in addition to
all other rights and remedies which may be available to that Party from time to time, whether under
any other agreement, at law, or in equity.

     §10. Survival. The termination of Employee’ employment by the Company (for any
reason) shall not relieve Employee of any of his obligations to the Company existing at, arising as
a result of, or relating to acts or omissions occurring prior to, such termination. Without
limiting the generality of the preceding sentence, in no event shall the termination of such
employment modify or affect any obligations of Employee or rights of the Company or the Affiliated
Companies under §5 of this Agreement, all of which shall survive the termination of such
employment.

     §11. Notices. All notices and other communications under this Agreement to either
Party shall be in writing and shall be deemed given when (a) delivered personally to that Party,
(b) telecopied (which is confirmed) to that Party at the telecopy number for that Party set forth
in this Agreement, (c) mailed by certified mail (return receipt requested) to that Party at the
address for that Party set forth in this Agreement, or (d) delivered to Federal Express, UPS, or
any similar express delivery service for delivery the next business day to that Party at that
address.

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     (1) If to the Company:

First Financial Bancorp.

300 High Street

P.O. Box 476

Hamilton, Ohio 45012-0476

Telecopy No.: 513-785-3434

     (2) If to Employee:

500 Random Oaks Drive

Hamilton, Ohio 45013

Telecopy No.: 513-642-5223

     Either Party may change its address or telecopy number for notices under this Agreement by
giving the other Party notice of such change.

     §12 Severability. The intention of the Parties is to comply fully with all rules,
laws, and public policies to the extent possible. If and to the extent that any court of competent
jurisdiction is unable to so construe any provision of this Agreement and holds that provision to
be invalid, such invalidity shall not affect the remaining provisions of this Agreement, which
shall remain in full force and effect. With respect to any provision in this Agreement finally
determined by such a court to be invalid or unenforceable, such court shall have jurisdiction to
reform this Agreement to the extent necessary to make such provision valid and enforceable, and, as
reformed, such provision shall be binding on the Parties.

     §13. Non-Waiver. No failure be either Party to insist upon strict compliance with any
term of this Agreement, to exercise any option, to enforce any right, or to seek any remedy upon
any default of the other Party shall affect, or constitute a waiver of, the other Party’s right to
insist upon such strict compliance, exercise that option, enforce that right, or seek that remedy
with respect to that default or any prior, contemporaneous, or subsequent default. No custom or
practice of the Parties at variance with any provision of this Agreement shall affect or constitute
a waiver of, either Party’s right to demand strict compliance with all provisions of this
Agreement.

     §14. Complete Agreement. This Agreement and all documents referred to in this
agreement, all of which are hereby incorporated herein by reference, contain the entire agreement
between the Parties and supersede all other agreements and understanding s between the Parties with
respect to the subject matter of this Agreement. This Agreement shall be of no force or effect
unless and until executed and delivered by both Employee and a duly authorized representative of
the Company. No alterations, additions, or other changes to this Agreement shall be made or be
binding unless made in writing and signed by both Parties.

     §15. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio.

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     §16. Captions. The captions of the various sections of this Agreement are not part of
the context of this Agreement, are only guides to assist in locating those sections, and shall be
ignored in construing this Agreement.

     §17. Genders and Numbers. Where permitted by the context, each pronoun used in this
Agreement includes the same pronoun in other genders and numbers, and each noun used in this
Agreement includes the same noun in other numbers.

     §18. Successors. This Agreement shall be personal to Employee and no rights or
obligations of Employee under this Agreement may be assigned or delegated by Employee to any
person. Any assignment or attempted assignment by Employee in violation of the preceding sentence
shall be null and void. Subject to the foregoing, this Agreement shall be binding upon, inure to
the benefit of, and be enforceable by and against the heirs, personal representatives, successors,
and assigns of each Party.

     §19. Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which taken together shall constitute one and
the same Agreement.

	 	 	 	 	 
	 	 	FIRST FINANCIAL BANCORP.
	 
	 	 	 	 
	/s/Claude E. Davis

	 	By:
	 	Bruce E. Leep
	 

	 	 	 	 
	CLAUDE E. DAVIS

	 	 	 	Bruce E. Leep, Chairman of the Board
	 
	 	 	 	 
	8/22/06

	 	 	 	8/22/06
	 

	 	 	 	 
	Date

	 	 	 	Date

11EX-10.1

 

Exhibit 10.1

Layne Christensen Company

Water and Wastewater Infrastructure Group Incentive Compensation Plan

Effective August 1, 2006

 

 

SECTION I. Definitions.

          In addition to the terms defined elsewhere throughout this Plan (as defined in Section II
below), the following terms shall have the following meanings:

          “Committee” shall mean the administrative committee of this Plan (as defined in Section III
below).

          “Company” shall mean Layne Christensen Company and its subsidiaries.

          “District” shall mean a separate profit center of the Company within the Division (as defined
below) as determined from the Company’s internal financial records and as set forth in Exhibit A
attached hereto; provided, however, that the Committee shall have the authority in its discretion
to group one or more profit centers into one “District” for purposes of this Plan.

          “Division” shall mean that portion of the Company which forms the Water and Wastewater
Infrastructure Group as determined by the Committee in its sole discretion from time to time.

          “EBIT” shall mean earnings before interest and taxes exclusive of any of the Company’s general
and administrative expenses, as determined by the Committee in its sole discretion from time to
time.

          “EBIT Benchmark” shall mean the performance benchmark assigned to a certain District, Region
(as defined below) and/or the Division and based on the EBIT of such respective District, Region or
the Division.

          “Pool” shall mean the bonus pool established for each District, Region and/or the Division for
each fiscal year.

          “Region” shall mean a separate grouping of Districts within the Division identified on Exhibit
B as Region A, Region B, ___; provided, however, that the Committee shall have the authority in its
discretion to change the grouping of Districts and the makeup of all or any Regions from time to
time.

SECTION II. Purpose of the Plan.

          The Company desires to effect a program of making awards as soon as practicable after the end
of each fiscal year, as provided below, to certain employees of the Division who during such fiscal
year, in the judgment of the Committee, have significantly contributed to the achievement of
certain objectives of the Division and of the Districts or Regions in which such employees perform
services. The purpose of this program is to provide additional incentive for the eligible
employees to promote the best interests and most profitable operation of the Division.

          This program shall be known as the “Layne Christensen Company Water and Wastewater
Infrastructure Group Incentive Compensation Plan” (hereinafter referred to as the “Plan”). This
Plan amends and supersedes the Layne Christensen Company District Incentive Compensation Plan
effective February 1, 2003 (the “District Incentive Compensation Plan”) as it relates to
participants of this Plan and, except as otherwise expressly provided herein, no participant of this Plan shall be
eligible to

 

 

participate in the District Incentive Compensation Plan after July 31, 2006. The
existence of the Plan shall not be in lieu of or otherwise affect or be affected by any other
compensation plan or arrangement of the Company.

SECTION III. Administration.

          The Plan shall be administered by the Committee. The Committee shall consist of at least
three persons appointed by the Board of Directors of the Company. Except as otherwise permitted by
the Board of Directors of the Company, during the one-year period prior to the commencement of
service of a Committee member on the Committee, such member shall not have participated in, and
while serving and for one year after serving on the Committee, such member shall not be eligible
for participation in, the Plan.

          The Committee shall have full power, in its sole discretion, to interpret, construe and
administer the Plan and adopt rules and regulations relating to the Plan.

          Decisions made by the Committee in good faith and in the exercise of its powers and duties
hereunder shall be binding upon all parties concerned. No member of the Committee shall be liable
to anyone for any action taken or decision made in good faith pursuant to the power or discretion
vested in such person under the Plan.

SECTION IV. Participation.

          All salaried, non-clerical employees of the Division (but not any Company corporate general
and administrative employees or any participants of the Reynolds, Inc. Cash Bonus Plan) shall be
eligible for participation in the Plan (and shall hereinafter be referred to as “Participants”).

          In addition to the Participants and at the discretion of the Committee, a portion of the Pool
may be set aside for payment to Division employees who do not participate in any other Company
bonus or incentive program.

SECTION V. Calculation of Benchmarks.

          The incentive compensation to be allocated to the Pool for each District, Region and the
Division shall be based on certain performance benchmarks. Each fiscal year, each District, Region
and the Division will be assigned an EBIT Benchmark. The EBIT Benchmark for each District, Region
and the Division shall be calculated by adding the EBIT for each respective District, Region and
the Division for the three (3) immediately preceding fiscal years and dividing the sum of those
three (3) numbers by three (3); provided, however, with respect to the EBIT Benchmark calculation
for any fiscal year commencing after fiscal year 2007, the EBIT for any of such three (3)
immediately preceding fiscal years shall not be less than three percent (3%) of the revenue, nor
more than one hundred twenty-five percent (125%) of the EBIT Benchmark, for such fiscal year. The
Committee may, at its discretion, adjust an EBIT Benchmark for any District, Region and/or the
Division to account for an acquisition or disposition affecting such District, Region and/or the
Division.

SECTION VI. Generation of Bonus Pools.

          Subject to the provisions of the second paragraph of this Section VI below, as soon as
practical following the end of each fiscal year, a Pool shall be established for each District,
Region and the Division in an amount equal to (i) $0.02 for each $1.00 of EBIT generated during
such fiscal year to the extent such District, Region or the Division achieves less than eighty
percent (80%) of its respective EBIT Benchmark; or (ii) $0.03 for each $1.00 of EBIT generated
during such fiscal year to the extent such District, Region or the Division achieves eighty percent
(80%) to one hundred percent (100%) of its
respective EBIT Benchmark (in which case no amount shall be credited to any Pool under clause (i)
above); or (iii) $0.045 for each $1.00 of EBIT generated during such fiscal year to the extent such

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District, Region or the Division achieves more than one hundred, but less than one hundred twenty
five percent (125%) of its respective EBIT Benchmark (in which case no amount shall be credited to
any Pool under clauses (i) or (ii) above); or (iv) $0.065 for each $1.00 of EBIT generated during
such fiscal year to the extent such District, Region or the Division achieves more than one hundred
twenty five percent (125%) of its respective EBIT Benchmark (in which case no amount shall be
credited to any Pool under clauses (i), (ii) or (iii) above).

          The total incentive compensation award for all Districts, Regions and the Division for fiscal
year 2007 shall be determined by calculating the total incentive compensation award that would
otherwise be payable had the District Incentive Compensation Plan been in effect during all of
fiscal year 2007 (the “DICP Award”) and the total incentive compensation award that would otherwise
be payable had this Plan been in effect since February 1, 2006 (the “New Plan Award”) and then
adding the DICP Award to the New Plan Award and dividing the sum by two (with such quotient to be
referred to as the “FY 2007 Award”). The FY 2007 Award shall be allocated to the Pool for each
District, Region and the Division as determined by the Committee in its sole discretion.

SECTION VII. Determination of Amount of Award.

          The amount of incentive award to be granted from the Pool to a Participant shall be determined
by the Committee.

          The amount of the individual awards shall be discretionary and in the sole judgment of the
Committee, based upon the Participant’s performance for the fiscal year in which the incentive
award is based, provided, however, that the amount of any cash incentive award shall not exceed:
(i) 100% of the Participant’s annual regular salary for Participants included in Group I (as set
forth in Exhibit C), (ii) 75% of the Participant’s annual regular salary for Participants included
in Group II (as set forth in Exhibit C) and (iii) 50% of the Participant’s annual regular salary
for Participants included in Group III (as set forth in Exhibit C). The term “annual regular
salary” shall mean the annual regular salary of the Participant as of the first day of such fiscal
year.

SECTION VIII. Type of Award.

          The incentive compensation award will be paid in cash or, as permitted under the Company’s
2006 Equity Incentive Plan, in shares of restricted or unrestricted common stock of the Company, or
a combination of any of the foregoing as determined by the Board of Directors of the Company or the
Compensation Committee thereof. To the extent such award is payable in stock, the Participant shall
receive the Company’s common stock, par value $.01 per share.

SECTION IX. Termination of Employment.

          In the event a Participant voluntarily terminates his or her employment with the Company at
any time prior to the close of the fiscal year, the Participant will not be eligible for any award
otherwise payable for the fiscal year.

          In the event a Participant is involuntarily terminated (without cause) prior to the close of
the fiscal year, the Participant will be considered for receipt of the award he or she would have
otherwise received (as determined by the Committee in its sole discretion) and, if awarded,
prorated to reflect the length of the Participant’s service during the relevant fiscal year. The
Committee will take into consideration the circumstances of the termination in determining the
propriety and amount of the award. The Company’s payment of severance or post-employment salary
support to a Participant will not be considered part of the Participant’s annual regular salary for
purposes of the Plan.

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SECTION X. Miscellaneous.

          There shall be deducted from each cash payment made under the Plan the amount of any tax
required by any governmental authority to be withheld by the Company with respect to such payment.
A Participant receiving stock hereunder shall have deducted by the Company from the award the
amount of any taxes which the Company is required by any governmental authority to withhold with
respect to such stock prior to calculation of the number of shares of stock to be awarded.

          Nothing in the Plan shall be construed to give any person any benefit, right or interest
except as expressly provided herein, and nothing in the Plan shall be construed as establishing any
right of continued employment by the Company.

          A Participant’s rights and interests under the Plan may not be assigned or transferred. In
the case of a Participant’s death prior to payment of a Participant’s award, payment in an amount
equal to what the Participant would have otherwise received had he or she been employed on the last
day of the fiscal year (as determined by the Committee in its sole discretion), prorated to reflect
the length of the Participant’s service during the relevant fiscal year, shall be made to the
personal representatives of the Participant’s estate or such other person or persons as the
Committee deems appropriate.

          The Board of Directors of the Company, or the Compensation Committee thereof, may discontinue
the Plan, in whole or in part, at any time, or may, from time to time, amend the Plan in any
respect that such Board (or Committee) may deem advisable. In the event the Plan is terminated, no
further payments will be made under the Plan.

SECTION XI. Effective Date.

          The Plan, as amended, shall be effective as of August 1, 2006.

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