EMPLOYMENT AGREEMENT
Exhibit 99.1 December 5, 2005
THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of December 5, 2005 (the
“Effective Date”), by and among THE COMMERCIAL AND SAVINGS BANK OF MILLERSBURG, OHIO, an Ohio
bank with its principal office located at 0 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxx 00000
(“Bank”), CSB Bancorp, Inc., an Ohio corporation and a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (“CSB”), and Xxxx X. Xxxxxxx, a resident of
Ohio (“Employee”).
WITNESSETH:
WHEREAS, Bank is a state-chartered bank duly organized and validly existing under the laws of the
State of Ohio and engages in banking activities as a wholly-owned subsidiary of CSB;
WHEREAS, Employee has knowledge, experience and expertise in the area of business of Bank, and
Bank wishes to obtain the benefits of Employee’s knowledge, experience and expertise; and
WHEREAS, Bank desires to employ Employee on the terms and subject to the conditions set forth
herein and subject to approval, permission and determinations of safety, soundness and fairness of
any and all appropriate regulatory entities, and Employee is willing to accept employment on such
terms and conditions.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties, intending to be legally bound, agree as follows:
| 1. | Employment. The parties acknowledge and agree that this Agreement shall replace and shall supercede in full a certain Employment Agreement by and among the parties dated May 20, 2003 (the “Initial Agreement” herein). On the terms and subject to the conditions set forth in this Agreement and subject to approval, permission and determinations of safety, soundness and fairness of any and all appropriate regulatory entities, Bank shall employ Employee to serve as President of the Bank and as President and Chief Executive Officer of CSB, and shall perform all services and duties customarily accompanying those positions. Further, Bank and CSB may appoint Employee to such other offices as the Board |
| of Directors of Bank or CSB may determine, and Employee shall perform the duties of such other offices. |
Employee shall devote Employee’s entire productive time, ability and attention to the business of
Bank and CSB and shall not directly or indirectly render any services of a business, commercial or
professional nature to any other person or organization, whether for compensation or otherwise,
without prior consent of the Board of Directors. The Employee will provide his best professional
efforts and a minimum forty (40) to fifty (50) productive hours per week.
2. Compensation.
2.1 Base Salary. As consideration for Employee’s services as an employee hereunder,
Bank agrees to pay Employee, and Employee agrees to accept, an annual base salary of $154,500.00
for the current year of the term (“Base Salary”), subject to annual review and change by the CSB
Compensation Committee and the Board of Directors for the remainder of the term. The Base Salary
shall be payable in equal biweekly installments subject to withholding for taxes and other
applicable items. Employee shall receive no additional compensation for serving as a director
(including service or any committee) of either Bank or CSB.
2.2 Bonus. Employee shall be eligible to receive a bonus of up to 40% of Base Salary
at t the discretion of the Board of Directors. The Board of Directors shall determine what
percentage is to be paid at the meeting of the Board of Directors in February of each year, or,
if the audited financial statements for CSB are not prepared at least seven (7) days before such
meeting, at the meeting of the Board of Directors in March. In connection with the determination
of Employee’s bonus, the Board of Directors shall deliver to Employee a performance review.
2.3 Benefits. Employee shall be entitled to participate in any insurance or other
benefit plans now or hereafter provided or made available to employees of Bank generally; provided,
however that nothing contained in this Agreement shall require Bank to establish, maintain or
continue any such benefits already in existence or hereafter adopted for employees of Bank. Bank
shall pay for Employee to join a local country club and shall reimburse Employee for the monthly
dues of such club.
2.4 Vacation. Employee shall be entitled to annual vacation and leave time of four
(4) weeks at full pay with no more than two (2) weeks to be taken consecutively without Board of
Directors approval. Unused vacation time may not be carried from one year to another year, but
may be forfeited annually by the Employee in exchange for compensation based on base annual
salary.
2.5 Stock. Employee is hereby granted an option to purchase up to ten thousand
(10,000) common shares of CSB for $17.75 per share. This option shall expire on May 19, 2008. This
grant shall not be deemed to be in addition to the grant contained
in Section 2.5 of the Initial Agreement, but rather a continuation thereof.
2.6 Automobile Allowance. Employee shall be reimbursed for the person use of his
personal automobile at the rate per mile specified by the Internal Revenue Service upon the
submission of appropriate documentation.
3. Residence.
3.1 Residence. Employee shall establish his primary residence during the contract
period in Xxxxxx County, Ohio.
4. Term and Termination.
4.1
Term. Employee shall be employed for a three (3) year term commencing on the
Effective Date hereof, and ending on the anniversary of the Effective Date, unless sooner
terminated in accordance with the provisions of this Agreement.
4.2 Termination.
(a) Death or Disability. If Employee dies or becomes disabled to the extent that
Employee cannot perform his duties under this Agreement for a period of more than sixty (60)
consecutive days (the `Disability Period”), this Agreement shall cease and terminate on the date
of Employee’s death or conclusion of the Disability Period, as applicable. The stock option
entitlement granted under Section 2.5 shall be unaffected by Employee’s death or disability.
(b) Termination for Cause. If this Agreement is terminated by Bank or CSB for Cause
(as defined herein), this Agreement and the employment of Employee shall cease and terminate as
of such date. “Cause” shall be defined as (i) commission of an act of dishonesty in the course
of Employee’s duties hereunder; (ii) conviction (whether as a result of a trial or plea,
including a plea of nolo contendere) by a court of competent jurisdiction of a crime
constituting a felony or conviction (whether as a result of a trial or plea, including a plea of
nolo contendere) with respect to any act involving fraud, dishonesty, or moral turpitude; (iii)
Employee’s continued, habitual intoxication or performance under the influence of controlled
substances during working hours; (iv) frequent or extended, and unjustifiable (not as a result
of incapacity or disability) absenteeism; (v) Employee’s continued inability or refusal to
perform the duties and responsibilities described in this Agreement and any Exhibits hereto, if
(A) Bank shall have given Employee prior written notice of the reason therefor and (B) a period
of ten (10) days following receipt by Employee of such notice shall have lapsed and the matters
which constitute or give rise to such Cause shall not have been cured or eliminated by Employee;
or (vi) CSB’s or Bank’s CAMELS rating
being 3, 4 or 5.
4.3 Termination Without Cause. Bank or CSB may terminate Employee’s employment at any
time without Cause, by giving thirty (30) days advance notice in writing to Employee.
4.4 Employee’s Rights Upon Termination. In the event that this Agreement is
terminated by Bank without cause, Employee shall receive all Base Salary to be paid according to
this Agreement through the remaining current term of this Agreement, plus six (6) months Base
Salary. Such amount shall be paid on an accelerated basis in a lump-sum on the termination date.
Additionally, Employee shall be entitled to participate, at the Bank’s expense, in the employee
benefits provided pursuant to Section 2.3 above for six (6) months from the termination date. The
stock option entitlement under Section 2.5 shall remain in full force and effect through May 19,
2008. Employee’s rights upon termination shall be subject to determinations of safety, soundness
and fairness of any and all appropriate regulatory entities. In the event that this Agreement is
terminated by CSB or Bank for Cause, Employee shall be entitled to receive all pay and benefits
earned through the date of termination with any benefits being paid in arrears being pro rated
through the date of termination. The stock option entitlement under Section 2.5 shall terminate
thirty (30) business days after such termination by Bank for Cause. Anything to the contrary herein
notwithstanding, in the event that Bank or CSB shall terminate the employment of Employee without
Cause within 90 days prior to the occurrence of a Change in Control, or at any time without Cause
following a Change in Control, Employee shall be eligible to receive the Change in Control benefits
set forth in Sections 7.2(a), (b), and (c) herein in place of the termination benefits otherwise
provided in this Subsection 4.4.
5. Covenant Not to Compete. From the date hereof and for a period of one (1) year following
the termination of this Agreement for any reason, Employee shall not, without prior written consent
of Bank, engage in any business activity, directly or indirectly, on his own behalf or as a
partner, shareholder (except by ownership of less than five percent (5%) of the stock of a
publicly-held bank or corporation), director, trustee, principal, agent, employee, consultant or
otherwise, with any bank, thrift, savings and loan or credit union having an office or branch
within a 25-mile radius of any of Bank’s offices or branches.
6. Confidential Information and Property of Bank.
6.1 Confidential Information. Employee acknowledges and agrees that in connection with
his employment Employee will have access to certain confidential and proprietary information owned
by and related to Bank and CSB and its and their customers and business. For purposes of this
Agreement, “Confidential Information” means any proprietary information of or related to Bank and
CSB and their respective customers and businesses, including but not limited to: (i) operations
manuals and guidelines, marketing manuals and plans and business strategies, techniques and
methodologies; (ii) financial information, including information set forth in internal records,
files and ledgers, or incorporated in profit and loss statements, fiscal reports,
sales reports and business plans; (iii) any and all active prospective mergers or acquisitions
of Bank or CSB, and all financial data, pricing terms, information memoranda and due diligence
reports relating thereto; (iv) all internal memoranda and other office records, including
electronic and data processing files and records and financial information regarding customers of
Bank and (v) any other information constituting a trade secret under governing trade secrets law.
6.2 Non-Disclosure of Confidential Information. Employee shall not at any time
willfully use, disclose or divulge any such Confidential Information to any person, firm or
corporation, except: (i) in connection with the discharge of his duties hereunder; (ii) with the
prior written consent of Bank and CSB which consent may be withheld in their sole discretion or
(iii) to the extent necessary to comply with law or the valid order of a court of competent
jurisdiction, in which event Employee shall notify Bank as promptly as practicable and, if
possible, prior to making such disclosure. Employee shall use his best efforts to prevent any such
disclosure by others.
7. Change in Control.
7.1 Change in Control. Upon the occurrence of a Change in Control (as herein defined)
CSB or Bank shall provide Change in Control Benefits to Employee as set forth below, subject to the
provisions of Sections 7.2(d) and (e) herein. A “Change in Control” for the purposes of this
Agreement shall be deemed to have occurred if either (i) any person, together with its Affiliates
or Associates, acquires beneficial ownership, directly or indirectly, of shares of CSB, entitling
such person, together with such Affiliates or Associates, to cast more than one-third of the votes
eligible to be cast at any meeting of shareholders of CSB, (ii) a change occurs in the acquisition
of the ability to control the election of a majority of CSB’s or Bank’s directors, (iii) a change
occurs in the acquisition of a controlling influence over the management or policies of CSB or Bank
by any person or by persons acting as a “group” (within the meaning of Section 13(d) of the
Securities Exchange Ace of 1934), or (iv) during any period of two consecutive years, individuals
(the “Continuing Directors”) who at the beginning of such period constitute the Board of Directors
of CSB (the “Existing Board”) ceases for any reason to constitute at least a majority thereof,
provided that any individual whose election or nomination for election as member of the Existing
Board was approved by a vote of at least a majority of the Continuing Directors then in office
shall be considered a Continuing Director. For purposes of this definition, a person shall be
deemed the “beneficial owner” of any shares of CSB (i) which such person or any of its Affiliates
or Associates, as defined below, beneficially owns, directly or indirectly; (ii) which such person
or any of its Affiliates or Associates, has directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other person with which such person or any of
its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any shares of CSB. For purposes of this Agreement, a
“person” shall mean any individual, firm, company, partnership, other entity or group, and the
terms “Affiliate” or “Associate” shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as of the date hereof. Provided however, that a Change
of Control shall not be deemed to have resulted from any transfer (i) to CSB, (ii) to a fiduciary
for the benefit of the transferring owner or his spouse or lineal descendants or (iii) by will or
by operation of the laws of descent and distribution.
7.2. Change in Control Benefits. The Change in Control benefits that Employee shall
be entitled to receive in accordance with the provisions hereof are as follows:
(a) Employee shall receive his Base Salary for a three (3) year period following termination
of employment pursuant to Section 7.2(d) below. Such Base Salary shall be paid periodically at the
same frequency as prior to the termination of employment, subject to applicable withholding for
taxes and other proper charges.
(b) CSB or Bank shall provide to Employee continued coverage for one (1) year following
termination pursuant to Section 7.2(d) below under a health plan with benefits the same or similar
to those Employee had with CSB and/or Bank prior to the Change in Control.
(c) Any outstanding stock options shall immediately vest and become exercisable in accordance
with their terms.
(d) Notwithstanding any other provision of this Agreement, no Change in Control benefits under
subsections (a), (b), and (c) will be payable unless and until Employee’s employment is terminated:
(i) by CSB or Bank within ninety (90) days prior to the occurrence of a Change in Control or at any
time following the Change in Control, except for Cause; (ii) by Employee: (a) for Good Reason
within ninety (90) days prior to the occurrence of a Change in Control (except where the changes
constituting “Good Reason” otherwise constitute Cause) or (b) for Good Reason at any time
subsequent to the occurrence of the Change in Control; or (iii) by Employee for any reason or no
reason during a period commencing 180 days following the occurrence of a Change in Control and
ending 210 days following the occurrence of a Change in Control. For purposes of this Agreement,
“Good Reason” shall be defined as a reduction in the compensation or benefits of Employee, or
change or reduction in title or responsibilities of Employee, from those in effect during the
period commencing ninety (90) days prior to the occurrence of a Change in Control, or reassignment
of Employee to a position requiring travel more than ten (10) miles from the current headquarters
office of Bank.
(e) Anything to the contrary herein notwithstanding, no Change in Control benefits shall be
payable to Employee under this Section 7 in the event that a Change in Control occurs as a result
of negotiations initiated by the Employee with third parties, unless such negotiations and parties
are: (i) authorized or approved in advance by the Board of Directors of CSB, or (ii) ratified and
approved subsequent thereto by the Board of Directors of CSB.
7.3 Tax Obligations. In the event that any Change in Control Benefits which Employee
is entitled to receive from Bank (either under this Agreement or otherwise) constitute an “excess
parachute payment” as defined for the purpose of Section 280G(b)(1) of the Internal Revenue Code of
1986, as amended (the “Code”), then such Change in Control benefits shall be reduced such that no
“excess parachute payment” is received by Employee from CSB or Bank.
7.4 Mitigation of Benefits. Employee shall not be required to mitigate the amount of
any paid Change in Control benefit by seeking other employment or otherwise, nor shall the amount
of any Change in Control benefit be reduced by any compensation earned by Employee as the result of
employment by another employer, by retirement benefits, by offset against any amount claimed to be
owned by Employee to CSB or Bank or for any other reason.
8. Remedies. For purposes of Sections 5 and 6 of this Agreement, Employee acknowledges that
the services to be rendered by him are of a special, unique and extraordinary character and that it
would be extremely difficult or impracticable to replace such services, that the material
provisions of this Agreement are of crucial importance to Bank and CSB and that any damage caused
by the breach of this Agreement could result in irreparable harm to the business of Bank and CSB.
Accordingly, Employee agrees to employ his reasonable best efforts at all times to honor and comply
with all of the provisions of this contract.
9. Entire Agreement. This Agreement constitutes the entire agreement and understanding of
the parties with respect to the transactions contemplated hereby and supersedes all prior
agreements, arrangements and understandings of the parties with respect to the subject matter
hereof.
No amendment or modification of this Agreement shall be valid or binding unless made in
writing and signed by the parties hereto.
10. Notices. All notices and other communications under this Agreement shall be in writing
and shall be deemed to have been duly given on the date of service if served personally on the
party (Including without limitation service by overnight courier service) to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage prepaid, at the address set forth below, or on
the date of service if delivered by facsimile to the facsimile number then utilized by the party
receiving the facsimile. All notices shall be addressed to the parties to be served as follows:
If to Bank and CSB:
CSB Bancorp, Inc.
The Commercial and Savings Bank
0 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxx 00000
Attn: Chairman of the Board
The Commercial and Savings Bank
0 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxx 00000
Attn: Chairman of the Board
Copy to:
Xxxxxxx X. Xxxxx
Xxxxxxxx Xxxx LLP
00 X. Xxxxx Xx.
0xx Xxxxx
Xxxxxxxx, Xxxx 00000
Xxxxxxxx Xxxx LLP
00 X. Xxxxx Xx.
0xx Xxxxx
Xxxxxxxx, Xxxx 00000
(a) If to Employee:
Xxxx X. Xxxxxxx
0000 Xxxxxxx Xx. 000
Xxxxxxxxxxx, XX 00000
0000 Xxxxxxx Xx. 000
Xxxxxxxxxxx, XX 00000
Copy to:
12. Severability. If any provision of this Agreement shall be invalid or
unenforceable, in whole or in part, then such provision shall be deemed to be modified or
restricted to the extent and in the manner necessary to render the same valid and
enforceable, and this Agreement shall be construed and enforced to the maximum extent
permitted by law.
13. Waiver. No waiver of any default or breach of this Agreement shall be deemed
a continuing waiver or a waiver of any other breach or default.
14. Governing Law. This agreement shall be governed by and construed in accordance with
the laws of the State of Ohio without regard to principles of conflicts of law.
15. Assignment. Employee may not assign any rights under this Agreement without the prior
written consent of Bank and CSB. If Bank or CSB, or any entity resulting from any stock purchase,
merger or consolidation with or into Bank or CSB, is merged with or consolidated into or with any
other entity or entities, or if substantially all of the stock or operating assets of any of the
aforementioned entities is sold or otherwise transferred to another entity, the provisions of
this Agreement shall be binding upon and shall inure to the benefit of the continuing entity in,
or the entity resulting from, such
asset purchase, merger or consolidation, or the entity to which such assets are sold or
transferred.
16. Headings; Gender. The headings contained in this Agreement are for reference
purposes only and should not affect in any way the meaning or interpretation of this Agreement.
When the context requires, the gender of all words used herein shall include the masculine,
feminine and neuter.
17. Mutual Negotiation. Each party has been represented by counsel in drafting and
negotiating this Agreement.
This Agreement shall therefore be deemed to have been negotiated, prepared and drafted jointly
hereto. This Agreement shall not be construed against any party as the sole drafter or author of
the Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the
Effective Date.
By
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/s/ Xxxx X. Xxxxxxx
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Its:
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Chairman of the Board of Directors | |||
| CSB BANCORP, Inc., an Ohio corporation | ||||
By
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/s/ Xxxxxx X. Xxxxx | |||
| Xxxxxx X. Xxxxx | ||||
Its:
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Chairman of the Board of Directors | |||
| EMPLOYEE | ||||
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx |
