Exhibit 10.3
------------
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), entered into this 1st day of October, 2003, by and between
First Federal Bancorp, Inc., a savings and loan holding company
incorporated under Ohio law (hereinafter referred to as "Bancorp"), First
Federal Savings Bank of Eastern Ohio, a savings bank chartered under the
laws of the United States and a wholly-owned subsidiary of Bancorp
(hereinafter referred to as "First Federal"), and J. Xxxxxxx Xxxxxxx, an
individual (herein after referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is an employee of Bancorp and First Federal
(hereinafter collectively referred to as the "EMPLOYERS");
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Boards of Directors of the EMPLOYERS desire to retain the
services of the EMPLOYEE as the President and Chief Executive Officer of
each of the EMPLOYERS;
WHEREAS, the EMPLOYEE desires to continue to serve as the President
and Chief Executive Officer of each of the EMPLOYERS; and
WHEREAS, the EMPLOYEE and the EMPLOYERS desire to enter into this
Agreement to set forth the terms and conditions of the employment
relationship between the EMPLOYERS and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYERS and the EMPLOYEE hereby agree as follows:
1. Employment and Term. Upon the terms and subject to the conditions of
this AGREEMENT, the EMPLOYERS hereby employ the EMPLOYEE, and the EMPLOYEE
hereby accepts employment, as the President and Chief Executive Officer of
each of the EMPLOYERS. The term of this AGREEMENT shall commence on the
date hereof and shall end on September 30, 2006 (hereinafter referred to as
the "TERM"). In September of each year, the Boards of Directors of the
EMPLOYERS shall review the EMPLOYEE's performance and record the results of
such review in the minutes of the Board of Directors.
2. Duties of EMPLOYEE.
-------------------
(a) General Duties and Responsibilities. As the President and
Chief Executive Officer of each of the EMPLOYERS, the EMPLOYEE shall
perform the duties and responsibilities customary for such offices to
the best of his ability and in accordance with the policies established
by the Boards of Directors of the EMPLOYERS and all applicable laws and
regulations. The EMPLOYEE shall perform such other duties not
inconsistent with his position as may be assigned to him from time to
time by the Boards of Directors of the EMPLOYERS; provided, however,
that the EMPLOYERS shall employ the EMPLOYEE during the TERM in a
senior executive capacity without diminishment of the importance or
prestige of his position.
(b) Devotion of Entire Time to the Business of the EMPLOYERS. The
EMPLOYEE shall devote his entire productive time, ability and
attention during normal business hours throughout the TERM to the
faithful performance of his duties under this AGREEMENT. The EMPLOYEE
shall not directly or indirectly render any services of a business,
commercial or professional nature to any person or organization
without the prior written consent of the Boards of Directors of the
EMPLOYERS; provided, however, that the EMPLOYEE shall not be
precluded from (i) vacations and other leave time in accordance with
Section 3(e) hereof; (ii) reasonable participation in community,
civic, charitable or similar organizations; or (iii) the pursuit of
personal investments which do not interfere or conflict with the
performance of the EMPLOYEE's duties to the EMPLOYERS.
3. Compensation, Benefits and Reimbursements.
(a) Salary. The EMPLOYEE shall receive during the TERM an annual
salary payable in equal installments not less often than monthly.
The amount of such annual salary shall be $165,747.00 until changed
by the Boards of Directors of the EMPLOYERS in accordance with
Section 3(b) of this AGREEMENT.
(c) Annual Salary Review. In September of each year throughout the
TERM, the annual salary of the EMPLOYEE shall be reviewed by the
Boards of Directors of the EMPLOYERS and shall be set, effective
October 1, at an amount not less than $165,747.00, based upon the
EMPLOYEE's individual performance and the overall profitability and
financial condition of the EMPLOYERS (hereinafter referred to as the
"ANNUAL REVIEW"). The results of the ANNUAL REVIEW shall be
reflected in the minutes of the Boards of Directors of the EMPLOYERS.
(c) Expenses. In addition to any compensation received under
Section 3(a) or (b) of this AGREEMENT, the EMPLOYERS shall pay or
reimburse the EMPLOYEE for all reasonable travel, entertainment and
miscellaneous expenses incurred in connection with the performance of
his duties under this AGREEMENT. Such reimbursement shall be made in
accordance with the existing policies and procedures of the EMPLOYERS
pertaining to reimbursement of expenses to senior management
officials.
(d) Employee Benefit Program.
-------------------------
(i) During the TERM, the EMPLOYEE shall be entitled to
participate in all formally established employee benefit, bonus,
pension and profit-sharing plans
2
and similar programs that are maintained by the EMPLOYERS from time
to time, including programs in respect of group health, disability or
life insurance, reimbursement of membership fees in civic, social and
professional organizations and all employee benefit plans or programs
hereafter adopted in writing by the Boards of Directors of the
EMPLOYERS, for which senior management personnel are eligible,
including any employee stock ownership plan, stock option plan or
other stock benefit plan (hereinafter collectively referred to as the
"BENEFIT PLANS"). Notwithstanding the foregoing sentence, the
EMPLOYERS may discontinue or terminate at any time any such BENEFIT
PLANS, now existing or hereafter adopted, to the extent permitted by
the terms of such plans and shall not be required to compensate the
EMPLOYEE for such discontinuance or termination.
(ii) After the expiration of the TERM or the termination of
the employment of the employee for any reason other than JUST CAUSE
(as defined hereinafter), the EMPLOYERS shall provide a group health
insurance program in which the EMPLOYEE and his spouse will be
eligible to participate and which shall provide substantially the
same benefits as are available to retired employees of the EMPLOYERS
on the date of this AGREEMENT until both the EMPLOYEE and his spouse
become 65 years of age; provided, however that all premiums for such
program shall be paid equally by the EMPLOYERS and the EMPLOYEE
and/or his spouse after the EMPLOYEE's retirement; provided further,
however, that the EMPLOYEE may only participate in such program for
as long as the EMPLOYERS elect in their sole discretion to make
available an employee group health insurance program which permits
the EMPLOYERS to make coverage available for retirees.
(e) Vacation and Sick Leave. The EMPLOYEE shall be entitled,
without loss of pay, to be absent voluntarily from the performance of
his duties under this AGREEMENT, subject to the following conditions:
(i) The EMPLOYEE shall be entitled to an annual vacation in
accordance with the policies periodically established by the Boards
of Directors of the EMPLOYERS for senior management officials of the
EMPLOYERS;
(ii) Vacation time shall be scheduled by the EMPLOYEE in a
reasonable manner. The EMPLOYEE shall not be entitled to receive any
additional compensation from the EMPLOYERS in the event of his
failure to take the full allotment of vacation time during any one
year. Vacation time accrued in any one year may not be carried over
into any succeeding year; and
(iii) The EMPLOYEE shall be entitled to annual sick leave as
established by the Boards of Directors of the EMPLOYERS for senior
management officials of the EMPLOYERS. In the event that any sick
leave time shall not have been used
3
during any year, such leave shall accrue to subsequent years;
provided, however, that the number of accrued days of sick leave
shall not exceed 35 days.
4.. Termination of Employment.
--------------------------
(a) General. In addition to the termination of the employment of
the EMPLOYEE upon the expiration of the TERM, the employment of the
EMPLOYEE shall terminate at any other time during the TERM upon the
delivery by the EMPLOYERS of written notice of employment termination
to the EMPLOYEE. Without limiting the generality of the foregoing
sentence, the following subparagraphs (i), (ii) and (iii) of this
Section 4(a) shall govern the obligations of the EMPLOYERS to the
EMPLOYEE upon the occurrence of the events described in such
subparagraphs:
(i) Termination for JUST CAUSE. In the event that the
EMPLOYERS terminate the employment of the EMPLOYEE during the TERM
because of the EMPLOYEE's failure to comply with the Human Resources
Policies of the EMPLOYERS or because of the EMPLOYEE's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure or refusal to
perform the duties and responsibilities assigned in this AGREEMENT,
willful violation of any law, rule, regulation or final cease-and-
desist order (other than traffic violations or similar offenses),
conviction of a felony or for fraud or embezzlement, or material
breach of any provision of this AGREEMENT (hereinafter collectively
referred to as "JUST CAUSE"), the EMPLOYEE shall not receive, and
shall have no right to receive, any compensation or other benefits
for any period after such termination, except as required by law.
(ii) Termination in Connection with CHANGE OF CONTROL. In the
event that, before the expiration of the TERM and within six months
before, in connection with or within one year after a CHANGE OF
CONTROL (as defined hereinafter) of either one of the EMPLOYERS, (A)
the employment of the EMPLOYEE is terminated for any reason other
than JUST CAUSE before the expiration of the TERM, (B) the EMPLOYEE
terminates his employment because the present capacity or
circumstances in which the EMPLOYEE is employed are materially
adversely changed, including a material reduction in
responsibilities, authority, compensation or other benefits provided
under this AGREEMENT or the EMPLOYEE must regularly perform his
principal executive functions outside of Muskingum County, Ohio, then
the following shall occur:
(I) The EMPLOYERS shall promptly pay to the EMPLOYEE or
to his beneficiaries, dependents or estate an amount equal to
the sum of (1) the amount of compensation to which the EMPLOYEE
would be entitled for the remainder of the TERM under this
AGREEMENT, plus (2) the difference between (x) the product of
three, multiplied by the total compensation paid to the
EMPLOYEE for the immediately preceding
4
calendar year as set forth on the Form W-2 of the EMPLOYEE,
less (xx) the amount paid to the EMPLOYEE pursuant to clause
(1) of this subparagraph (I);
(II) The EMPLOYEE and his dependents, beneficiaries and
estate shall continue to be covered under all BENEFIT PLANS of
the EMPLOYERS at the EMPLOYERS' expense as if the EMPLOYEE were
still employed under this AGREEMENT until the earliest of the
expiration of the TERM or the date on which the EMPLOYEE is
included in another employer's benefit plans as a full-time
employee; provided, however, that if any of the BENEFIT PLANS
of the EMPLOYERS do not permit such continued coverage, the
EMPLOYERS shall provide to the EMPLOYEE and his dependents,
beneficiaries and estate at the EMPLOYERS' expense
substantially equal benefits for such period of time; and
(III) The EMPLOYEE shall not be required to mitigate
the amount of any payment provided for in this AGREEMENT by
seeking other employment or otherwise, nor shall any amounts
received from other employment or otherwise by the EMPLOYEE
offset in any manner the obligations of the EMPLOYERS
thereunder, except as specifically stated in subparagraph (II).
In the event that payments pursuant to this subsection (ii) or any other
section of this Agreement would result in the imposition of a penalty tax
pursuant to Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (hereinafter
collectively referred to as "SECTION 280G"), such payments shall be reduced
to the maximum amount that may be paid under SECTION 280G without exceeding
such limits.
(iii) Termination Without CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated by the EMPLOYERS before
the expiration of the TERM for any reason other than JUST CAUSE or in
connection with or within one year of a CHANGE OF CONTROL, the
EMPLOYERS shall be obligated to continue (A) to pay on a monthly
basis to the EMPLOYEE, his designated beneficiaries or his estate,
his annual salary provided pursuant to Section 3(a) or (b) of this
AGREEMENT until the expiration of the TERM, (B) to provide to the
EMPLOYEE at the EMPLOYERS' expense, health, life, disability, and
other welfare benefits substantially equal to those being provided to
the EMPLOYEE at the date of termination of his employment until the
earliest to occur of the expiration of the TERM or the date the
EMPLOYEE becomes employed full-time by another employer, and (C) to
provide to the EMPLOYEE a payment upon the expiration of the TERM
equal to the aggregate amount that the EMPLOYER contributed or would
have contributed to the EMPLOYEE's account under the First Federal
401(k) Plan (the "401(K) PLAN") for the portion of the 401(K) PLAN's
fiscal year prior to the termination of the EMPLOYEE's
5
employment if the 401(K) PLAN did not require that the EMPLOYEE be
employed on the last day of the 401(K) PLAN's fiscal year. In the
event that payments pursuant to this subsection (iii) would result in
the imposition of a penalty tax pursuant to SECTION 280G, such
payments shall be reduced to the maximum amount that may be paid
under SECTION 280G without exceeding those limits.
(b) Death of the EMPLOYEE. The TERM automatically terminates upon
the death of the EMPLOYEE. In the event of such death, the
EMPLOYEE's estate shall be entitled to receive the compensation due
the EMPLOYEE through the last day of the calendar month in which the
death occurred, except as otherwise specified herein.
(c) "Golden Parachute" Provision. 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. [SECTION]1828(k) and
any regulations promulgated thereunder.
(d) Definition of "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall
be deemed to have occurred in the event that, at any time during the
TERM, either any person or entity obtains "conclusive control" of the
EMPLOYERS within the meaning of 12 C.F.R. [SECTION]574.4(a), or any
person or entity obtains "rebuttable control" within the meaning of
12 C.F.R. [SECTION]574.4(b) and has not rebutted control in
accordance with 12 C.F.R. [SECTION]574.4(c).
5. Special Regulatory Events. Notwithstanding Section 4 of this
AGREEMENT, the obligations of the EMPLOYERS to the EMPLOYEE shall be
as follows in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the EMPLOYERS' affairs by a notice
served under section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (hereinafter referred to as the "FDIA"), the EMPLOYERS'
obligations under this AGREEMENT shall be suspended as of the date of
service of such notice, unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the EMPLOYERS may, in their
discretion, pay the EMPLOYEE all or part of the compensation withheld
while the obligations in this AGREEMENT were suspended and reinstate,
in whole or in part, any of the obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYERS' affairs by an order
issued under Section 8(e)(4) or (g)(1) of the FDIA, all obligations
of the EMPLOYERS under this AGREEMENT shall terminate as of the
effective date of such order; provided, however, that vested rights
of the EMPLOYEE shall not be affected by such termination.
(c) If the EMPLOYERS are 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; provided, however, that vested rights of the
EMPLOYEE shall not be affected.
6
(d) All obligations under this AGREEMENT shall be terminated,
except to the extent of a determination that the continuation of this
AGREEMENT is necessary for the continued operation of the EMPLOYERS,
(i) by the Director of the Office of Thrift Supervision (hereinafter
referred to as the "OTS"), or his or her designee at the time that
the Federal Deposit Insurance Corporation or the Resolution Trust
Corporation enters into an agreement to provide assistance to or on
behalf of the EMPLOYERS under the authority contained in Section
13(c) of the FDIA or (ii) by the Director of the OTS, or his or her
designee, at any time the Director of the OTS, or his or her
designee, approves a supervisory merger to resolve problems related
to the operation of the EMPLOYERS or when the EMPLOYERS are
determined by the Director of the OTS to be in an unsafe or unsound
condition. No vested rights of the EMPLOYEE shall be affected by any
such action.
6. Consolidation, Merger or Sale of Assets. Nothing in this AGREEMENT
shall preclude the EMPLOYERS from consolidating with, merging into, or
transferring all, or substantially all, of their assets to another
corporation that assumes all of the EMPLOYERS' obligations and undertakings
hereunder. Upon such a consolidation, merger or transfer of assets, the
term "EMPLOYERS," as used herein, shall mean such other corporation or
entity, and this AGREEMENT shall continue in full force and effect;
provided, however, that the assumption of the EMPLOYERS' obligations and
undertakings hereunder shall not affect the EMPLOYEE's right to payments
and benefits pursuant to Section 4(a)(ii) of this AGREEMENT in connection
with such consolidation, merger or transfer of assets.
7. Confidential Information. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information
regarding the EMPLOYERS and their customers and businesses. The EMPLOYEE
agrees and covenants not to disclose or use for his own benefit, or the
benefit of any other person or entity, any confidential information, unless
or until the EMPLOYERS consent to such disclosure or use or such
information becomes common knowledge in the industry or is otherwise
legally in the public domain. The EMPLOYEE shall not knowingly disclose or
reveal to any unauthorized person any confidential information relating to
the EMPLOYERS, their subsidiaries or affiliates, or to any of the
businesses operated by them, and the EMPLOYEE confirms that such
information constitutes the exclusive property of the EMPLOYERS. The
EMPLOYEE shall not otherwise knowingly act or conduct himself (a) to the
material detriment of the EMPLOYERS, their subsidiaries, or affiliates, or
(b) in a manner which is inimical or contrary to the interests of the
EMPLOYERS.
8. Legal Proceedings. The EMPLOYEE agrees not to commence any legal
action or suit relating to the EMPLOYEE's employment with the EMPLOYERS
more than six months after the date of termination of such employment and
hereby waives any statute of limitation establishing a longer period of
time within which to commence such an action or suit.
9. Nonassignability. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries, or legal
representatives without the EMPLOYERS' prior written consent; provided,
however, that nothing in this Section 9 shall
7
preclude (a) the EMPLOYEE from designating a beneficiary to receive any
benefits payable hereunder upon his death, or (b) the executors,
administrators, or other legal representatives of the EMPLOYEE or his
estate from assigning any rights hereunder to the person or persons
entitled thereto.
10. No Attachment. Except as required by law, no right to receive
payment under this AGREEMENT shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge or hypothecation
or to execution, attachment, levy, or similar process of assignment by
operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
11. Binding Agreement. This AGREEMENT shall be binding upon, and inure
to the benefit of, the EMPLOYEE and the EMPLOYERS and their respective
permitted successors and assigns.
12. Amendment of AGREEMENT. This AGREEMENT may not be modified or
amended, except by an instrument in writing signed by the parties hereto.
13. Waiver. No term or condition of this AGREEMENT shall be deemed to
have been waived, nor shall there be an estoppel against the enforcement of
any provision of this AGREEMENT, except by written instrument of the party
charged with such waiver or estoppel. No such written waiver shall be
deemed a continuing waiver, unless specifically stated therein, and each
waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or
as to any act other than the act specifically waived.
14. Severability. If, for any reason, any provision of this AGREEMENT is
held invalid, such invalidity shall not affect the other provisions of this
AGREEMENT not held so invalid, and each such other provision shall, to the
full extent consistent with applicable law, continue in full force and
effect. If this AGREEMENT is held invalid or cannot be enforced, then any
prior AGREEMENT between the EMPLOYERS (or any predecessor thereof) and the
EMPLOYEE shall be deemed reinstated to the full extent permitted by law, as
if this AGREEMENT had not been executed.
15. Headings. The headings of the paragraphs herein are included solely
for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this AGREEMENT.
16. Governing Law. This AGREEMENT has been executed and delivered in the
State of Ohio and its validity, interpretation, performance, and
enforcement shall be governed by the laws of this State of Ohio, except to
the extent that federal law is governing.
17. Effect of Prior Agreements. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior
employment agreement between the EMPLOYERS or any predecessor of the
EMPLOYERS and the EMPLOYEE.
8
18. Notices. Any notice or other communication required or permitted
pursuant to this AGREEMENT shall be deemed delivered if such notice or
communication is in writing and is delivered personally or by facsimile
transmission or is deposited in the United States mail, postage prepaid,
addressed as follows:
If to Bancorp and/or First Federal:
First Federal Savings Bank of Eastern Ohio
Xxxxx & Xxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxx 00000
With copies to:
Xxxx X. Xxxxx, Esq.
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
If to the EMPLOYEE:
Mr. J. Xxxxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
9
IN WITNESS WHEREOF, each of the EMPLOYERS has caused this AGREEMENT
to be executed by its duly authorized officer, and the EMPLOYEE has signed
this AGREEMENT, each as of the day and year first above written.
Attest: FIRST FEDERAL BANCORP, INC.
By /s/ Xxxx X. Xxxxxxxx, III
--------------------------------
Xxxx X. Xxxxxxxx, III
its Chairman
Attest: FIRST FEDERAL SAVINGS BANK
OF EASTERN OHIO
By /s/ Xxxx X. Xxxxxxxx, III
-------------------------
Xxxx X. Xxxxxxxx, III
its Chairman
Attest:
/s/ J. Xxxxxxx Xxxxxxx
J. Xxxxxxx Xxxxxxx
10
