EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (this “AGREEMENT”) is entered into effective the 1st day
of July, 2006, by and between Franklin Savings and Loan Company, a savings and loan association
incorporated under the laws of the State of Ohio (the “EMPLOYER”), and Xxxxxxxx X. Xxxxxxx (the
“EMPLOYEE”), an individual whose residence address is 0000 Xxxxxx Xxxxxx Xxxx, Xxxxxxxxxx, Xxxx
00000;
WITNESSETH:
WHEREAS, the EMPLOYEE has been employed by the EMPLOYER for 35 years;
WHEREAS, the Board of Directors has elected the EMPLOYEE to serve as the President and Chief
Executive Officer of the EMPLOYER, effective July 1, 2006; and
WHEREAS, as a result of the skill, knowledge, experience and performance of the EMPLOYEE, the
EMPLOYER desires to continue to retain the services of the EMPLOYEE as its President and Chief
Executive Officer in accordance with the terms and conditions of this AGREEMENT;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the EMPLOYER
and the EMPLOYEE agree as follows:
1. Employment and Term. The EMPLOYEE is employed as the President and Chief
Executive Officer of the EMPLOYER, and the EMPLOYEE hereby accepts employment as the President of
the EMPLOYER, upon the terms and conditions of this AGREEMENT. The term of employment shall be for
the period commencing on the date hereof and shall end on June 30, 2009 (the “TERM”). Prior to the
end of each year of the TERM, the AGREEMENT may be extended for periods of one year each by the
EMPLOYER’s Board of Directors (“BOARD”) at its sole and exclusive discretion, subject to the
EMPLOYEE’s acceptance thereof. Prior to granting any such extension, the BOARD will conduct a
performance evaluation of the EMPLOYEE, and the results of such review shall be noted in the
minutes of the meeting of the BOARD (the “ANNUAL REVIEW”). The TERM of this AGREEMENT, together
with each extension period, is hereinafter referred to as the “EMPLOYMENT TERM”.
2. Duties of EMPLOYEE.
(a) General Duties and Responsibilities. The EMPLOYEE shall serve as the President
and Chief Executive Officer of the EMPLOYER and shall perform the duties and responsibilities
customary for such offices to the best of her ability and in accordance with the policies
established by the BOARD and all applicable laws and regulations. The EMPLOYEE shall perform such
other duties not inconsistent with her position as may be assigned to her from time to time by the
BOARD; provided, however, that during the EMPLOYMENT TERM, the EMPLOYER shall employ the EMPLOYEE
in a senior executive capacity without diminishment of the importance or prestige of her position.
(b) Devotion of Time to the EMPLOYER’s Business. The EMPLOYEE shall devote her entire
productive time, ability and attention during normal business hours throughout the EMPLOYMENT TERM
to the faithful performance of her 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 BOARD or the CEO; provided, however, that the
EMPLOYEE shall not be precluded from: (i) vacations and other leave time in accordance with
Section 3(c) hereof; (ii) reasonable participation in community, civic, charitable or similar
organizations; (iii) reasonable participation in industry-related activities including, but not
limited to, attending industry trade association conferences and meetings, and holding positions of
responsibility therein; (iv) serving as an officer and/or director of the EMPLOYER’s parent or
subsidiaries and receiving and retaining compensation, directors’ fees and other benefits
therefrom; or (v) the pursuit of personal
investments that do not interfere or conflict with the performance of the EMPLOYEE’s duties for the
EMPLOYER.
3. Compensation, Benefits and Reimbursements.
(a) Salary. The EMPLOYEE shall receive an annual salary payable in equal installments
not less often than monthly. The amount of the annual salary shall be $175,000.00 until changed by
the BOARD. The amount of the EMPLOYEE’s annual salary shall be reviewed in connection with the
ANNUAL REVIEW and shall be set at an amount not less than $175,000.00, based upon the EMPLOYEE’s
individual performance and the overall profitability and financial condition of the EMPLOYER and
such other factors as the EMPLOYER may deem relevant. Any directors’ fees received by the
EMPLOYEE, whether paid by the EMPLOYER or any other entity, shall be in addition to the salary
provided for in this AGREEMENT and may be retained by the EMPLOYEE in their entirety.
(b) Employee Benefit Programs. During the EMPLOYMENT TERM, the EMPLOYEE shall be
entitled to participate in all formally established employee benefit, bonus, retirement plans and
similar programs that are maintained by the EMPLOYER from time to time, including programs
regarding group health, disability or life insurance, salary continuation insurance, reimbursement
of membership fees in civic, social and professional organizations, employee stock ownership plan,
stock option plan, pension or profit-sharing plan, and all employee benefit plans or programs
hereafter adopted in writing by the BOARD, for which senior management personnel are eligible
(collectively, the “BENEFIT PLANS”). Notwithstanding the foregoing, the EMPLOYER may discontinue
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 the elimination
of any such BENEFIT PLANS.
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(c) Vacation and Sick Leave.
(i) The EMPLOYEE shall be entitled to an annual vacation in accordance with the EMPLOYER’s
general vacation policy. Vacation time shall be scheduled by the EMPLOYEE in a reasonable manner
and shall be subject to approval by the CEO; and
(ii) The EMPLOYEE shall be entitled to annual sick leave in accordance with the EMPLOYER’s
general sick leave policy.
(d) Disability. In the event of the disability, the EMPLOYEE shall be entitled to
benefits in accordance with the terms and conditions of any disability program maintained by the
EMPLOYER.
(e) Expenses. The EMPLOYER shall pay or reimburse the EMPLOYEE for all reasonable
travel, entertainment and miscellaneous expenses incurred in connection with the performance of her
duties under this AGREEMENT including participation in industry-related activities. Such
reimbursement shall be made in accordance with the existing policies and procedures of the EMPLOYER
pertaining to reimbursement of expenses to senior management officials.
4. Termination of Employment. The EMPLOYER may terminate the employment of the
EMPLOYEE at any time during the EMPLOYMENT TERM. In the event that the EMPLOYER terminates the
employment of the EMPLOYEE during the EMPLOYMENT TERM 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 (collectively, “JUST CAUSE”), the EMPLOYEE
shall have no right to receive any compensation or other benefits for any period after such
termination. If the EMPLOYER terminates the employment of the EMPLOYEE during the EMPLOYMENT TERM
for any reason other than JUST CAUSE, the EMPLOYEE, depending on the circumstances, shall be
entitled to the following:
(a) Termination After CHANGE OF CONTROL. If, in connection with or within one year
after a CHANGE OF CONTROL (hereinafter defined) of the EMPLOYER, the EMPLOYEE elects to terminate
her employment or the EMPLOYER terminates the employment of the EMPLOYEE for any reason other than
JUST CAUSE, then the following shall occur:
(i) The EMPLOYER shall promptly pay to the EMPLOYEE or to her beneficiaries, dependents or
estate an amount equal to three times the EMPLOYEE’s “average annual compensation” as such term is
defined in Section 280G of the Internal Revenue Code of 1986, as amended.
(ii) The EMPLOYEE, her eligible dependents and beneficiaries shall continue to be covered
under any group health, hospitalization and disability plans maintained by the EMPLOYER at the
EMPLOYER’s expense and as if the EMPLOYEE were still employed under this AGREEMENT, to the extent
permitted under the terms of such plans, until the earliest of (A) the end of the EMPLOYMENT TERM
or (B) the date on which the EMPLOYEE is included in another employer’s plans providing comparable
benefits and coverage.
(b) Termination without CHANGE OF CONTROL. In the event the EMPLOYER terminates the
employment of the EMPLOYEE for any reason other than JUST CAUSE, and the termination is not in
connection with a CHANGE OF CONTROL pursuant to Section 4(a) of this AGREEMENT, the EMPLOYER shall
be obligated to continue to (i) pay on a monthly basis to the EMPLOYEE, her designated
beneficiaries or her estate, her annual salary provided pursuant to Section 3(a) of this AGREEMENT
as of the date of termination for a period of 12 months; (ii) provide to the EMPLOYEE, his eligible
dependents and benficiaries, at the EMPLOYER’s current percentage of total expense, group health
benefits, hospitalization and disability benefits substantially equal to those being provided to
the EMPLOYEE at the date of termination of her employment, to the extent permitted under the terms
of such plans, until the earliest to occur of (A) the first anniversary of the effective date of
the EMPLOYEE’s termination, or (B) the date the EMPLOYEE is included in another employer’s plans
providing comparable benefits and coverage.
(c) Death of the EMPLOYEE. The EMPLOYMENT TERM shall automatically terminate 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.
(d) No Mitigation. The EMPLOYEE shall not be required to mitigate the amount of any
payment provided for in this AGREEMENT, whether in this Section 4 or elsewhere in this AGREEMENT,
by seeking other employment or otherwise, nor shall any amounts received from other employment or
otherwise by the EMPLOYEE offset
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in any manner the obligations of the EMPLOYER hereunder, except as
specifically stated in (a)(ii) and (b)(ii) of this Section 4.
(e) “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. §1828(k)
and any regulations promulgated thereunder.
(f) Definition of “CHANGE OF CONTROL”. A “CHANGE OF CONTROL” shall mean any one of
the following events; (i) the acquisition of ownership or power to vote more than 25% of the voting
stock of the EMPLOYER or its parent company; (ii) the acquisition of the ability to control the
election of a majority of the directors of the EMPLOYER or its parent company; (iii) during any
period of up to two consecutive years, individuals who at the beginning of such period constitute
the board of directors of the EMPLOYER or its parent company cease for any reason to constitute at
least two-thirds thereof; provided, however, that any individual whose election or nomination for
election as a member of the board of directors of the EMPLOYER or its parent company was approved
by a vote of at least two-thirds of the directors then in office shall be considered to have
continued to be a member of the board of directors of the EMPLOYER or its parent company; or (iv)
the acquisition by any person or entity of “conclusive control” of the EMPLOYER within the meaning
of 12 C.F.R. §574.4(a), or the acquisition by any person or entity of “rebuttable control” within
the meaning of 12 C.F.R. §574.4(b) that has not been rebutted in accordance with 12 C.F.R.
§574.4(c). For purposes of this paragraph, the term “person” refers to an individual or
corporation, partnership, trust, association, or other organization, but does not include the
EMPLOYEE and any person or persons with whom the EMPLOYEE is “acting in concert” within the meaning
of 12 C.F.R. Part 574.
5. Special Regulatory Events. Notwithstanding Section 4 of this AGREEMENT, the
obligations of the EMPLOYER 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 EMPLOYER’s affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act (the “FDIA”), the EMPLOYER’s 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 EMPLOYER shall 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 EMPLOYER’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, all
obligations of the EMPLOYER 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 EMPLOYER 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; provided, however, that vested
rights of the EMPLOYEE shall not be affected;
(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 EMPLOYER, (i) by the Director of the OTS, or his or her designee at the time that the Federal
Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the
EMPLOYER 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 approves a supervisory merger to
resolve problems related to the operation of the EMPLOYER or when the EMPLOYER is determined by the
Director of the OTS to be in an unsafe or unsound condition; provided, however that no vested
rights of the EMPLOYEE shall be affected by any such termination; and
(e) The provisions of this Section 5 are governed by the requirements of 12 C.F.R. §563.39(b)
and in the event that any statements in this Section 5 are inconsistent with 12 C.F.R. §563.39(b),
the provisions of 12 C.F.R. §563.39(b) shall be controlling.
6. Confidential Information. The EMPLOYEE acknowledges that during her employment he
has learned, will learn and will have access to confidential information regarding the EMPLOYER and
its customers and business. The EMPLOYEE agrees and covenants not to disclose or use for her own
benefit or the benefit of any other person or entity any confidential information, unless or until
the EMPLOYER consents 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 EMPLOYER, its
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 EMPLOYER. The EMPLOYEE shall not
otherwise knowingly act or conduct himself to the material detriment of the EMPLOYER, its
subsidiaries or affiliates or in a manner which is inimical or contrary to the interests of the
EMPLOYER.
7. Nonassignability. Neither this AGREEMENT nor any right or interest hereunder shall
be assignable by the EMPLOYEE, her beneficiaries or legal representatives without the EMPLOYER’s
prior written consent; provided, however,
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that nothing in this Section 7 shall preclude (i) the
EMPLOYEE from designating a beneficiary to receive any benefits payable hereunder upon her death or
(ii) the executors, administrators or other legal representatives of the EMPLOYEE or her estate
from assigning any rights hereunder to the person or persons entitled thereto.
8. 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.
9. Binding Agreement. This AGREEMENT shall be binding upon, and inure to the benefit
of, the EMPLOYEE and the EMPLOYER and their respective permitted successors and assigns.
10. Amendment of AGREEMENT. This AGREEMENT may not be modified or amended, except by
an instrument in writing signed by the parties hereto.
11. 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.
12. 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 EMPLOYER (or any predecessor thereof) and the EMPLOYEE shall be
deemed reinstated, as if this AGREEMENT had not been executed.
13. 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.
14. 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 the State of Ohio, except to the extent that federal law is governing.
15. Effect of Prior Agreements. This AGREEMENT contains the entire understanding
between the parties hereto and supersedes any prior employment agreement between the EMPLOYER, or
any predecessor of the EMPLOYER, and the EMPLOYEE.
IN WITNESS WHEREOF, the EMPLOYER has caused this AGREEMENT to be executed by its duly
authorized officers, and the EMPLOYEE has signed this AGREEMENT, all as of the day and year first
above written.
| FRANKLIN SAVINGS AND LOAN COMPANY |
||||
| By: | /s/ Xxxxxx X Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | ||||
| its Chairman of the Board | ||||
| /s/ Xxxxxxxx X Xxxxxxx | ||||
| Xxxxxxxx X. Xxxxxxx | ||||
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