Employment Agreement, James D. Rickard, President and CEO

AGREEMENT


AGREEMENT, effective as July 26, 2000, between Community Bank Shares of Indiana, Inc., an Indiana corporation (the "Corporation" or the "Employer"), and James D. Rickard (the "Executive").


WITNESSETH


WHEREAS, in order to induce the Executive to serve as the President and Chief Executive Officer of the Corporation, the Employer and the Executive desire to enter into this Agreement to specify the terms of the Executive's employment;


NOW THEREFORE, in consideration of the premises and the mutual agreements contained, the parties hereby agree as follows:


1. Definitions. The following words and terms shall have the meanings set forth below for the purposes of this Agreement:


(a) Base Salary. "Base Salary" shall have the meaning set forth in Section 3(a) hereof.


(b) Cause. Termination of the Executive's employment for "Cause" shall mean termination because of personal dishonesty, incompetence, willfull misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willfull violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order or a material breach of any provision of this Agreement by the Executive.


(c) Change in Control of the Corporation. (A) "Change in Control of the Corporation" shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 ("Exchange Act")) is or becomes the "beneficial owner" (as defined in Rule 1 3d-3 under the Exchange Act), directly or indirectly, of securities of the Corporation representing 25% or more of the combined voting power of the Corporation's then outstanding securities; and (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Corporation cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period.


(d) Code. "Code" shall mean the Internal Revenue Code of 1986, as amended


(e) Date of Termination. "Date of Termination" shall mean (i) if the Executive's employment is terminated for Cause or for Disability, the date specified in the Notice of Termination, and (ii) if the Executive's employment is terminated for any other reason, the date on which a Notice of Termination is given or as specified in such Notice.


(f) Disability. Termination by the Employer of the Executive's employment based on "Disability" shall mean termination because of any physical or mental impairment which qualifies the Executive for disability benefits under the applicable long-term disability plan maintained by the Employer or any subsidiary or, if no such plan applies, which would qualify the Executive for disability benefits under the Federal Social Security System.


(g) IRS. IRS shall mean the Internal Revenue Service.


(h) Notice of Termination. Any purported termination of the Executive's employment by the Employer for any reason, including without limitation for Cause, Disability or Retirement, or by the Executive for any reason, shall be communicated by written "Notice of Termination" to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a dated notice which (i) indicates the specific termination provision in this Agreement relied upon, (li) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated, (lii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Employer's termination of Executive's employment for Cause, which shall be effective immediately; and (iv) is given in the manner specified in Section 11 hereof.


(i) Retirement. Termination by the Employer of the Executive's employment based on "Retirement" shall mean voluntary termination by the Executive in accordance with the Employer's retirement policies, including early retirement, generally applicable to their salaried employees.


2. Term of Employment.


(a) The Employer hereby employs the Executive as President and Chief Executive Officer and Executive hereby accepts said employment to commence no later than August 15,2000 and agrees to render such services to the Employer on the terms and conditions set forth in this Agreement. The initial term of employment under this Agreement shall be for two years, commencing on the date of this Agreement and shall extend each year for an additional year on each annual anniversary of the date of this Agreement such that at any time the remaining term of this Agreement shall be from one to two years, unless either party shall notify the other of its intention to stop such extensions. If the Board of Directors or the Executive elects not to extend the term, it shall give written notice of such decision to the other party not less than thirty (30) days prior to any such annual extension date. If any party gives timely notice that the term will not be extended as of any annual extension date, then this Agreement shall terminate at the conclusion of its remaining term. References herein to the term of this Agreement shall refer both to the initial term and successive terms.


(b) During the term of this Agreement, the Executive shall perform such executive services for the Employer as may be consistent with his titles and from time to time assigned to him by the Employer's Board of Directors, provided, however, such executive services shall not be


2 materially changed from the Executive's present duties as President and Chief Executive Officer without the Executive's express written consent, which consent may be withheld in the sole discretion of the Executive.


3. Compensation and Benefits.


(a) The Employer shall compensate and pay Executive for his services during the term of this Agreement at a minimum base salary of $185,000 per year ("Base Salary"), which may be increased from time to time in such amounts as may be determined by the Board of Directors of the Employer. In addition to his Base Salary, the Executive shall receive a cash bonus of $10,000 payable upon the commencement of employment by the Executive and an additional cash bonus of $10,000 payable six months after the commencement of employment by the Executive, subject to the Executive remaining in the employment as President and Chief Executive Officer at such time.


(b) During the term of the Agreement, Executive shall be entitled to participate in and receive the benefits of any pension or other retirement benefit plan, profit sharing, stock option, employee stock ownership, or other plans, benefits and privileges given to employees and executives of the Employer, including life, medical, dental and disability insurance coverage, to the extent commensurate with his then duties and responsibilities, as fixed by the Board of Directors of the Employer; provided, however, the Employer shall provide health insurance for the benefit of the Executive commencing upon the date of this Agreement. The Employer shall not make any changes in such plans, benefits or privileges which would adversely affect Executive's rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executive officers of the Employer. Nothing paid to Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to Executive pursuant to Section 3(a) hereof. Notwithstanding the foregoing, nothing contained in this Agreement shall require the Executive to participate in any tax qualified or non-qualified benefit plan of the Employer.


(c) During the term of this Agreement, the Employer shall obtain and maintain term life insurance for the Executive with a death benefit of at least two (2) times the Executive's Base Salary, up to a maximum benefit of $500,000, with such beneficiary as determined by the Executive.


(d) During the term of this Agreement, the Employer shall provide the Executive with coverage for supplemental long-term disability insurance.


(e) During the term of this Agreement, the Executive shall be entitled to four weeks of paid annual vacation. The Executive shall not be entitled to receive any additional compensation from the Employer for failure to take a vacation, nor shall the Executive be able to accumulate unused vacation time from one year to the next, except to the extent authorized by the Board of Directors of the Employer.


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(f) During the term of this Agreement, the Employer shall either provide the Executive with the use of an automobile comparable to that customarily provided for a chief executive officer by comparable financial institutions or a monthly cash allowance for an automobile in an amount to be mutually agreed upon by the Executive and the Employer.


(g) During the term of this Agreement, the Employer shall pay for or reimbur ...