EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 26th day of October 1998, by and between HOME FEDERAL SAVINGS AND LOAN
ASSOCIATION OF NILES, 00 Xxxxx Xxxx Xxxxxx, Xxxxx, Xxxx (hereinafter referred to
as the "Association" whether in mutual or stock form), and XXXXXXX X. XXXXXXXX
(the "Employee").
WHEREAS, the Employee is currently serving as President and Chief
Executive Officer of the Association; and
WHEREAS, the Association has adopted a plan of conversion whereby the
Association will convert to capital stock form as the subsidiary of First Niles
Financial, Inc. (the "Holding Company"), subject to the approval of the
Association's members and the Office of Thrift Supervision (the "Conversion");
and
WHEREAS, the Board of Directors of the Association believes it is in the
best interests of the Association to enter into this Agreement with the Employee
in order to assure continuity of management of the Association and to reinforce
and encourage the continued attention and dedication of the Employee; and
WHEREAS, the Board of Directors of the Association has approved and
authorized the execution of this Agreement with the Employee to take effect as
stated in Section 4 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. EMPLOYMENT. The Employee is employed as President and Chief Executive
Officer of the Association. As President and Chief Executive Officer, Employee
shall render administrative and management services as are customarily performed
by persons situated in similar executive capacities, and shall have other powers
and duties as may from time to time be prescribed by the Board, provided that
such duties are consistent with the Employee's position as President and Chief
Executive Officer. The Employee shall continue to devote his best efforts and
substantially all his business time and attention to the business and affairs of
the Association and its subsidiaries and affiliated companies.
2. COMPENSATION.
(a) SALARY. The Association agrees to pay the Employee during the
term of this Agreement a salary established by the Board of Directors. The
salary hereunder as of the Commencement Date (as defined in Section 4 hereof)
shall be $142,440 per year. The Employee's salary shall be payable not less
frequently than monthly and not later than the tenth day following the
expiration of the month in question. The amount of the Employee's salary shall
be reviewed by the Board of Directors not less often than annually, beginning
not later than the date one year after the Commencement Date (as defined in
Section 4 hereof). Any adjustments in salary or other compensation shall in no
way limit or reduce any other obligation of the Association hereunder. The
Employee's salary in effect hereunder from time to time shall not thereafter be
reduced.
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(b) DISCRETIONARY BONUSES. The Employee shall be entitled to
participate in an equitable manner with all other executive officers of the
Association in discretionary bonuses as authorized and declared by the Board of
Directors of the Association to its executive employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the Employee's
right to participate in such bonuses when and as declared by the Board of
Directors.
(c) EXPENSES. During the term of his employment hereunder, the
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him in performing services hereunder, in accordance with
the Association's policies and procedures, provided that the Employee properly
accounts therefor in accordance with Association policy.
3. BENEFITS.
(a) PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS. The
Employee shall be entitled while employed hereunder to participate in, and
receive benefits under, all plans relating to pension, thrift, profit-sharing,
group life insurance, medical coverage, education, cash bonuses, and other
retirement or employee benefits or combinations thereof, that are maintained for
the benefit of the Association's executive employees or for its employees
generally.
(b) FRINGE BENEFITS. The Employee shall be eligible while employed
hereunder to participate in, and receive benefits under, any other fringe
benefit plans which are or may become applicable to the Association's executive
employees or to its employees generally.
4. TERM. The term of employment under this Agreement shall be a period of
three years commencing on the date of completion of the Conversion (the
"Commencement Date"), subject to earlier termination as provided herein.
Beginning on the first anniversary of the Commencement Date, and on each
anniversary thereafter, the term of employment under this Agreement shall be
extended for a period of one year in addition to the then-remaining term of
employment under this Agreement, unless either the Association or the Employee
gives contrary written notice to the other not less than 90 days in advance of
the date on which the term of employment under this Agreement would otherwise be
extended, PROVIDED that such term will not be automatically extended unless,
prior thereto, the Board of Directors of the Association explicitly reviews and
approves the extension. Reference herein to the term of employment under this
Agreement shall refer to both such initial term and such extended terms.
5. VACATIONS. The Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:
(a) the Employee shall be entitled to an annual vacation of not less
than four (4) weeks per year;
(b) the timing of vacations shall be scheduled in a reasonable
manner by the Employee and the Association; and
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(c) solely at the Employee's request, the Board of Directors shall
be entitled to grant to the Employee a leave or leaves of absence with or
without pay at such time or times and upon such terms and conditions as the
Board, in its discretion, may determine.
6. TERMINATION OF EMPLOYMENT; DEATH.
(a) The Association's Board of Directors may terminate the
Employee's employment at any time, but any termination by the Association's
Board of Directors other than termination for cause, shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. If the
employment of the Employee is involuntarily terminated, other than for "cause"
as provided in this Section 6(a) or pursuant to any of Sections 6(d) through
6(g), or by reason of death or disability as provided in Sections 6(c) or 7, the
Employee shall be entitled to (i) his then applicable salary for the
then-remaining term of the Agreement as calculated in accordance with Section 4
hereof, payable in such manner and at such times as such salary would have been
payable to the Employee under Section 2 had he remained in the employ of the
Association, and (ii) health insurance benefits as maintained by the Association
for the benefit of its senior executive employees or its employees generally
over the then-remaining term of the Agreement as calculated in accordance with
Section 4 hereof.
The terms "termination" or "involuntarily terminated" in this Agreement
shall refer to the termination of the employment of Employee without his express
written consent, other than retirement. In addition, a material diminution of or
interference with the Employee's duties, responsibilities and benefits as
President and Chief Executive Officer of the Association shall be deemed and
shall constitute an involuntary termination of employment to the same extent as
express notice of such involuntary termination. Any of the following actions
shall constitute such diminution or interference unless consented to in writing
by the Employee: (1) a change in the principal workplace of the Employee to a
location outside of a 30 mile radius from the Association's headquarters office
as of the date hereof; (2) a material demotion of the Employee, a material
reduction in the number or seniority of other Association personnel reporting to
the Employee, or a material reduction in the frequency with which, or in the
nature of the matters with respect to which, such personnel are to report to the
Employee, other than as part of a Association- or Holding Company-wide reduction
in staff; (3) a material adverse change in the salary, perquisites, benefits,
contingent benefits or vacation time which had previously been provided to the
Employee, other than as part of an overall program applied uniformly and with
equitable effect to all members of the senior management of the Association or
the Holding Company; and (4) a material permanent increase in the required hours
of work or the workload of the Employee.
In case of termination of the Employee's employment for cause, the
Association shall pay the Employee his salary through the date of termination,
and the Association shall have no further obligation to the Employee under this
Agreement. For purposes of this Agreement, termination for "cause" shall include
termination for 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
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
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affirmative vote of not less than a majority of the entire membership of the
Board of Directors of the Association 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), stating 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.
(b) The Employee's employment may be voluntarily terminated by the
Employee at any time upon 90 days written notice to the Association or upon such
shorter period as may be agreed upon between the Employee and the Board of
Directors of the Association. In the event of such voluntary termination, the
Association shall be obligated to continue to pay the Employee his salary and
benefits only through the date of termination, at the time such payments are
due, and the Association shall have no further obligation to the Employee under
this Agreement.
(c) In the event of the death of the Employee during the term of
employment under this Agreement and prior to any termination hereunder, the
Employee's estate, or such person as the Employee may have previously designated
in writing, shall be entitled to receive from the Association the salary of the
Employee through the last day of the calendar month in which his death shall
have occurred, and the term of employment under this Agreement shall end on such
last day of the month.
(d) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA"),
12 U.S.C. ss. 1818(e)(3) and (g)(1), the Association'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
Association 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 its obligations which were
suspended.
(e) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. ss. 1818(e)(4) and
(g)(1), all obligations of the Association under this Agreement shall terminate
as of the effective date of the order, but vested rights of the contracting
parties shall not be affected.
(f) If the Association is in default (as defined in Section 3(x)(1)
of the FDIA), all obligations under this Agreement shall terminate as of the
date of default, but this provision shall not affect any vested rights of the
contracting parties.
(g) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Association: (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 ("FDIC") or the Resolution Trust
Corporation ("RTC") enters into an agreement to provide assistance to or on
behalf of the Association under the authority contained in Section 13(c) of the
FDIA; 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
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resolve problems related to operation of the Association or when the Association
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.
(h) In the event the Association purports to terminate the Employee
for cause, but it is determined by a court of competent jurisdiction or by an
arbitrator pursuant to Section 16 that cause did not exist for such termination,
or if in any event it is determined by any such court or arbitrator that the
Association has failed to make timely payment of any amounts owed to 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.
7. DISABILITY. If the Employee shall become disabled as defined in the
Association's then current disability plan or if the Employee shall be otherwise
unable to serve as President and Chief Executive Officer, the Employee shall be
entitled to receive group and other disability income benefits of the type then
provided by the Association for other executive employees.
8. CERTAIN REDUCTION OF PAYMENTS BY THE ASSOCIATION.
(a) Notwithstanding any other provision of this Agreement, if the
value and amounts of benefits under this Agreement, together with any other
amounts and the value of benefits received or to be received by the Employee
would cause any amount to be nondeductible by the Association or the Holding
Company for federal income tax purposes pursuant to Section 280G of the Code,
then amounts and benefits under this Agreement shall be reduced (not less than
zero) to the extent necessary so as to maximize amounts and the value of
benefits to the Employee without causing any amount to become nondeductible by
the Association or the Holding Company pursuant to or by reason of such Section
280G. The Employee shall determine the allocation of such reduction among
payments and benefits to the Employee.
(b) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C.
1828(k) and any regulations promulgated thereunder.
9. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement 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.
10. 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 Association will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
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substantially all of the business and/or assets of the Association, by an
assumption agreement in form and substance satisfactory to the Employee, to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Association would be required to perform it if no such
succession or assignment had taken place. For purposes of implementing the
provisions of this Section 10(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.
11. 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. All notices to the Association
shall be sent to its home office, directed to the attention of the Board of
Directors of the Association, with a copy to the Secretary of the Association.
All notices to the Employee shall be sent to the home or other address the
Employee has most recently provided in writing to the Association.
12. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided. The parties hereto agree to amend this Agreement to comply with any
required provisions of 12 C.F.R. ss. 563.39(b), as the same may be amended.
13. 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.
14. 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.
15. 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
Ohio.
16. 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 on the arbitrator's award in any court having jurisdiction.
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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.
HOME FEDERAL SAVINGS AND LOAN
ASSOCIATION OF NILES
By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------
Xxxxx X. Xxxxxx, Xx.
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
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