Exhibit 10.1
EMPLOYMENT AGREEMENT
This Agreement is made this 14th day of December, 2001, by and between
Western Reserve Bancorp., Inc., an Ohio corporation (the "Corporation"), and
Xxxxxx X. XxXxxx (the "Employee").
WHEREAS, the Board of Directors of the Corporation believes that the
future services of the Employee in the capacity of President and Chief Executive
Officer will be of great value to the Corporation;
WHEREAS, the Corporation and Employee have previously entered into an
Employment Agreement dated as of October 22, 1997 (the "Prior Agreement"), which
has been amended by an Addendum to Employment Agreement dated as of June 28,
1998, and a Stock Option Grant Agreement and Second Addendum to Employment
Agreement dated as of October 22, 1998 (the "Second Addendum"); and
WHEREAS, the Corporation operates a wholly owned commercial banking
subsidiary known as Western Reserve Bank, which is engaged in the general
business of banking, hereinafter the "Bank"; and
WHEREAS, the Employee is willing to continue in the employ of the
Corporation and the Bank on a full-time basis for the term of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto have agreed and do hereby
mutually agree as follows:
1. TERM -- AGREEMENT TO SERVE
The Corporation hereby employs for itself, the Bank and or any
additional subsidiaries (hereinafter sometimes collectively referred to
as the "Corporation"), the services of Employee for a period commencing
as of January 1, 2002 and terminating December 31, 2005 (the
"Termination Date"), subject to the rights of earlier termination
hereinafter set forth, to perform the duties of President and Chief
Executive Officer for the Corporation and the Bank. The Employee hereby
accepts such employment in consideration of the compensation and the
other terms and conditions herein provided, and agrees to serve the
Corporation well and faithfully and to devote his best efforts to such
employment as long as it shall continue hereunder. During the period of
such employment, the Employee will devote all of his time and attention
-- reasonable vacations, periods of illness and the like excepted -- to
the affairs of the Corporation.
2. BASE SALARY AND FRINGE BENEFITS
Except as otherwise provided herein, as compensation for these services
hereunder, the Corporation will pay to Employee, in installments and on
dates in accordance with its normal payroll, during the period of his
employment hereunder, a base salary at the aggregate rate of One
Hundred Thirty Six Thousand Five Hundred Dollars ($136,500)
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per year, subject to the right of the parties, by mutual agreement, to
adjust such rate upward in respect of any future calendar year or years
after the date hereof, (hereinafter referred to as "Base Pay"). It is
the intent of the parties that the base salary set forth herein will be
reviewed for the year 2002 after the Compensation Committee of the
Corporation has conducted its annual review of Employee for the year
ended December 31, 2001.
In addition the Corporation shall:
(a) Pay for and provide to the Employee for his exclusive use a
full-sized automobile, the make and model of which shall be
mutually agreed to between the Corporation and the Employee,
which automobile shall be equipped with a car phone.
(b) Provide $250,000 in term life insurance, payable to the
beneficiary of Employee's choice.
(c) Provide four (4) weeks paid vacation annually.
(d) Pay for and provide to Employee reasonable and customary
disability insurance that shall provide Employee with a
monthly disability insurance payment equal to not less than
60% of his monthly Base Pay in the event of disability.
(e) Provide comprehensive health and medical insurance coverage at
least comparable to that provided to other employees of the
Company.
(f) Reimburse fees and expenses incurred in connection with
business of the Corporation or the Bank including fees for
attendance at banking related conventions and similar items
approved by the Board of Directors.
3. BONUS AND OPTIONS
(a) Subject to the rules and regulations applicable thereto, the
Corporation shall provide for Employee's participation in any
incentive employee benefit plans or programs administered by
the Corporation or the Bank or under its direction, including
any employee bonus plans as may presently exist or are be
placed into effect after the date hereof.
(c) (b) The Corporation and Employee hereby acknowledge that
options to purchase shares of the common stock of the
Corporation have been granted to Employee under the terms of
the Second Addendum (the "Options") and the Employee agrees to
abide by the terms of the Second Addendum and the terms of the
Amended and Restated Western Reserve Bancorp, Inc. 1998 Stock
Option Plan relative to the Options.
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4. TERMINATION OF EMPLOYMENT
The employment of the Employee under the terms of this Agreement shall
cease and terminate as follows:
(a) EXPIRATION OF TERM
On the Termination Date; or,
(b) DEATH
On the date of his death; or,
(c) TERMINATION BY THE CORPORATION WITH CAUSE
For Cause at any time by action of the Board. For purposes
hereof, the term "Cause" shall mean removal by order of a
regulatory agency having jurisdiction over the Corporation or
the Bank, or the Employee's willful and repeated failure to
perform his duties under this Employment Agreement, which
failure has not been cured within thirty (30) days after the
Corporation gives notice thereof to the Employee; it being
expressly understood that negligence or bad judgment shall not
constitute "Cause" so long as such negligent act or omission
shall be without intent of personal profit and is reasonably
believed by the Employee to be in or not adverse to the best
interests of the Corporation; or,
(d) DISABILITY
Upon receipt by the Employee of written notice from the
Corporation that, in its opinion, based on reliable medical
evidence, the Employee is unable by reason of permanent
physical or mental disability to continue the proper
performance of his duties hereunder. For purposes of this
Employment Agreement, the Employee's "permanent disability"
shall be deemed to have occurred after one hundred eighty
(180) consecutive days, during which one hundred eighty (180)
days the Employee, by reason of his physical or mental
disability or illness, shall have been unable to discharge his
duties under this Employment Agreement. The date of permanent
disability shall be such one hundred eightieth (180th) day. In
the event either the Corporation or the Employee, after
receipt of notice of the Employee's permanent disability from
the other, dispute that the Employee's permanent disability
shall have occurred, the Employee shall promptly submit to
physical examinations by three physicians in the Cleveland,
Ohio, area and, unless two of such physicians shall issue
their written statement to the effect that in their opinion,
based on their diagnosis, the Employee is capable of resuming
his employment and devoting his full time and energy to
discharging his duties within sixty (60) days after the date
of such statement, such permanent disability shall be deemed
to have occurred; or,
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(e) TERMINATION BY THE CORPORATION WITHOUT CAUSE
At the election of the Corporation, at any time during the
term of this Agreement without cause.
(f) TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL.
i) A "Change in Control" shall result if, and shall be deemed to
have occurred on the date of, a transaction pursuant to which:
(a) Any person or group (as such terms are used in
connection with Sections 13(d) and 14(d) of the Exchange
Act) becomes the "beneficial owner" (as defined in Rule
13(d)(3) and 13(d)(5) 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; provided
that not withstanding anything in this definition of
beneficial owner to the contrary, no person shall be
deemed to be the beneficial owner of, or to beneficially
own, any security beneficially owned by another person
solely by reason of a revocable proxy given in response
to a public proxy or consent solicitation or any
agreement, arrangement or understanding with such other
person relating to the solicitation of revocable proxies
made pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under
the Exchange Act, provided that such other person
retains the right at any time to withdraw from, revoke
or terminate any such agreement, arrangement or
understanding and further provided that such persons
would not otherwise be deemed to be a group under
Section 13(d) of the Exchange Act or otherwise be deemed
to be acting in concert;
(b) A merger, consolidation, sale of assets, reorganization,
or proxy contest is consummated and, as a consequence of
which, members of the Board in office immediately prior
to such transaction or event constitute less than a
majority of the Board thereafter;
(c) During any period of 24 consecutive months, individuals
who at the beginning of such period constitute the Board
(including for this purpose any new director whose
election or nomination for election by the Corporation's
stockholders was approved by a vote of at least one-half
of the directors then still in office who were directors
at the beginning of such period) cease for any reason to
constitute at least a majority of the Board; or
(d) A merger, consolidation or reorganization is consummated
with any other corporation pursuant to which the
shareholders of the Corporation immediately prior to the
merger, consolidation or reorganization do not
immediately thereafter directly or indirectly own more
than fifty percent
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(50%) of the combined voting power of the voting
securities entitled to vote in the election of directors
of the merged, consolidated or reorganized entity.
Notwithstanding the foregoing, no trust department or
designated fiduciary or other trustee of such trust department
of the Corporation or a subsidiary of the Corporation, or
other similar fiduciary capacity of the Corporation with
direct voting control of the stock shall be treated as a
person or group within the meaning of subsection (i)(a)
hereof. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or
other employee benefit plan of the Corporation or any of its
subsidiaries, and no trustee of any such plan in its capacity
as such trustee, shall be treated as a person or group within
the meaning of subsection (i)(a) hereof.
ii) If during the term of this Agreement and after the date of a
Change in Control, Employee is discharged without Cause or
Employee resigns because he has: (1) been demoted, (2) had his
compensation reduced, (3) had his principal place of employment
transferred away from Xxxxxx County, Ohio or a county contiguous
thereto, or (4) had his job title, status or responsibility
materially reduced, then the Corporation shall make the payments
to Executive set forth in subsection (iv) of this Section (f).
iii) If Employee is discharged by the Corporation other than for Cause
and there is a Change in Control within twelve (12) months
following the discharge, then the Company shall make the payments
to Executive set forth in subsection (iv) of this Section (f).
iv) In the event of the termination of Employee's employment as
described in (ii) or (iii) above, Employee shall be entitled to
receive: (1) a lump sum cash payment equal to 2.99 times his
Compensation (as defined below), or (2) upon Employee's election,
2.99 times his Compensation payable in equal monthly payments, in
cash, without interest. The lump sum cash payment or the first
monthly cash payment, as the case may be, shall be paid at the end
of the first month commencing after the Employee's termination of
employment in the case of a benefit entitlement under Subsection
(ii) above, and in the event of the election by Employee to
receive monthly payments, shall continue each consecutive month
thereafter until 36 payments have been made. In the event of
termination of employment as described in (iii) above, the lump
sum or first monthly payment shall be paid immediately upon the
Change in Control. If Employee's employment is terminated as
described in Subsection (ii) above, then in addition to the above
cash payment(s), the Corporation shall continue at no cost to
Employee for the term of the Benefit Period as defined below, the
benefits to which Employee's is entitled under Sections 2(a), (b),
(d) and (e) at the same levels that had been provided immediately
prior to his termination of employment. The Benefit Period shall
commence on the date of termination of the Employee's employment
and shall end on the last day of the 36th consecutive whole month
thereafter.
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In the event Employee dies before collecting all amounts and
benefits due under this Section, any payments owing shall be
paid to the person or persons as stated in the last
designation of beneficiary concerning this Agreement signed by
Employee and filed with the Corporation, and if not, then to
the personal representative of the Employee.
The payments and benefits provided for in this Section 3(f)
are in lieu of compensation, benefits or amounts the Employee
might otherwise be entitled to under the Corporation's
severance policy or otherwise payable by the Corporation by
reason of termination of employment.
The term "Compensation," as used in this section, shall mean
the average of the sum of Employee's base salary plus any cash
bonuses for the last three complete calendar years preceding
Employee's termination of employment. Compensation shall not
include any amount, other than base salary and cash bonuses,
included in Employee's taxable compensation for federal income
tax purposes and reported to Employee and the Internal Revenue
Service ("IRS"), such as the reporting of previously deferred
compensation or gain realized upon exercise of any non
qualified stock options.
v) Any subsequent employment by Employee shall not reduce the
obligation of the Corporation to make the full payments and
provide the full benefits specified herein and Employee shall have
no obligation to seek other employment or otherwise mitigate the
effect of his discharge from employment.
Upon termination of employment of the Employee pursuant to paragraph 4(a), (b),
(c) or (d) above, the Employee shall be entitled to receive the amount of Base
Pay provided for in paragraph 2 hereof through the date of his termination of
employment. In the event of the termination of employment of Employee pursuant
to paragraph 4(e) above, the Corporation shall pay to the Employee his Base Pay
and other benefits listed in paragraphs 2 and 3 through the Termination Date.
5. COVENANT NOT TO COMPETE
(a) Throughout the term of this Agreement and for a period of two
years thereafter, Employee agrees that he will not, except on
behalf of the Corporation or with the written consent of the
Corporation,
(i) engage in any business activity, directly or
indirectly, on his own behalf or as a partner,
stockholder (except by ownership of less than 1% of
the outstanding stock of a publicly held corporation),
director, trustee, principal, agent, employee,
consultant or otherwise of any person, firm or
corporation, which is competitive with any activity in
which the Corporation or any parent, subsidiary or
affiliate of the Corporation is engaged at the time,
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(ii) allow the use of his name by or in connection with any
business which is competitive with an activity in
which the Corporation or any parent, subsidiary or
affiliate of the Corporation is engaged, or
(iii) offer employment to or employ, for himself or on
behalf of any competitor of the Corporation or any
parent, subsidiary or affiliate thereof, any person
who at any time within the prior three years shall
have been employed by the Corporation or any parent,
subsidiary or affiliate of the Corporation.
(b) The parties acknowledge that this paragraph 5 is fair and
reasonable under the circumstances. It is the desire and
intent of the parties that the provisions of this paragraph 5
shall be enforced to the fullest extent permitted by law.
Accordingly, if any particular portion of this paragraph 5
shall be adjudicated to be invalid or unenforceable, this
paragraph 5 shall be deemed amended to
(i) reform the particular portion to provide for such
maximum restrictions as will be valid and
enforceable, or if that is not possible,
(ii) delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such reformation or
deletion to apply only with respect to the operation
of this paragraph 5 in the particular jurisdiction in
which such adjudication is made.
(c) During the term of Employee's employment hereunder, the
covenants contained in this paragraph 5 shall apply without
regard to geographic location. Upon the termination of
Employee's employment, the covenants contained in this
paragraph 5 shall be limited to Xxxxxx County, Ohio and
contiguous counties, except for Cuyahoga County.
6. INVENTIONS, DISCOVERIES AND IMPROVEMENTS
The Employee hereby agrees to assign and transfer to the Corporation,
its successors and assigns, his entire right, title and interest in and
to any and all inventions, discoveries, trade secrets and improvements
thereto which he may discover or develop, either solely or jointly with
others, during his employment hereunder and for a period of one year
after termination of such employment, which would relate in any way to
the business of the Corporation or any parent, subsidiary or affiliate
of the Corporation, together with all rights to letters patent,
copyrights or trademarks which may be granted with respect thereto.
Immediately upon making or developing any invention, discovery, trade
secret or improvement thereto, Employee shall notify the Corporation
thereof and shall execute and deliver to the Corporation, without
further compensation, such documents as may be necessary to assign and
transfer to the Corporation his entire right, title and interest in and
to such invention, discovery, trade secret or improvement thereto, and
to prepare or prosecute applications for letters patent with respect to
the same in the name of the Corporation.
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7. CONFIDENTIAL INFORMATION
Employee shall not at any time, in any manner, while employed by the
Corporation or thereafter, either directly or indirectly, except in the
course of carrying out the Corporation's business or as previously
authorized in writing on behalf of the Corporation, disclose or
communicate to any person, firm, or corporation, any information of any
kind concerning any matters affecting or relating to the Corporation's
business or any of its data, figures, projections, estimates, customer
lists, tax records, personnel histories, and accounting procedures of
the Corporation, without regard to whether any or all of such
information would otherwise be deemed confidential or material.
8 NON-ASSIGNABILITY
(a) Neither party to this Agreement shall have the right to assign
this Agreement or any rights or obligations hereunder provided
that nothing herein shall prevent the Employee from
designating one or more members of his family or a trust or
trusts for the members of his family as a beneficiary or
beneficiaries entitled to receive payments hereunder as
heretofore specified.
(b) Except as provided above, no title to any payments which shall
become due and payable to the Employee, his personal
representative or designated beneficiary under the provisions
hereof, shall be vested in him or any of them until the actual
payment thereof is made to such person by the Corporation in
accordance with the provisions of this Agreement. Neither he
nor any of them shall have the right or power to transfer,
assign, anticipate or encumber any interest in any such
payment, prior to the actual receipt thereof from the
Corporation. Neither this Agreement, the Corporation nor any
person's rights hereunder shall be liable for the debt,
contract or engagement of any of them. None of them shall be
permitted to appoint any agent or attorney-in-fact and except
as provided herein, to collect or receive his share of such
payments or any part thereof unless permission to do so shall
be specifically granted by the Corporation in writing. The
Corporation, in the absence of such written permission, shall
not in any manner recognize such appointment, transfer,
assignment or encumbrance.
(c) If the Employee or any personal representative or any
designated beneficiary attempts to transfer, assign or
encumber his interest in such payments, or any part thereof,
prior to the payment or distribution thereof to him or her;
or, if any transfer or seizure thereof is attempted to be made
or brought through the operation of any bankruptcy or
insolvency law, the right of the person taking such action or
concerned therein or affected thereby, and who would, but for
this provision, be entitled to receive such payments, or any
part thereof, shall forthwith and ipso facto terminate, all
rights bestowed on any such person being hereby, on the
happening of any such event, expressly revoked; and the
Corporation shall thereafter, in its absolute discretion, at
such time or times as it
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deems proper, cause such part of such person's theretofore
existing share of such payments to be paid to such person or
persons, including the Employee, of any parent, spouse or
child of said person, as the Corporation, in its uncontrolled
discretion, shall deem advisable; and the remainder of such
payments, if any, may be distributed by the Corporation to the
person or person who would have been entitled to receive the
same if such person had died immediately prior to said
attempted transfer, assignment or encumbrance, or attempted
transfer or seizure by operation of law.
9. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of any
successor of the Corporation, and any such successor shall be deemed
substituted for the Corporation under the terms of this Agreement. As
used in this Agreement, the term "successor" shall include any person,
firm, corporation, or other business entity which, at any time, whether
by merger, purchase, or otherwise, acquires all or substantially all of
the assets or business of the Corporation.
10. ENTIRE AGREEMENT
This Agreement contains the entire agreement of the parties hereto
concerning the subject matter hereof, and cancels any and all other
oral or written agreements or understandings between the parties with
respect to the subject matter hereof, provided, however, that the
provisions of the Second Addendum, other than paragraph 4 thereof,
shall remain in full force and effect. The Agreement may not be changed
orally, but only by agreement in writing signed by both parties.
11. AUTHORIZATION FOR ACTS OF CORPORATION
Any act, request, approval, consent or opinion of the Corporation
hereunder shall be authorized, given or expressed by resolution of its
Board of Directors.
12. ARBITRATION
Subject to the Corporation's right to seek injunctive relief under
paragraph 5 of this Agreement, in the event the parties are unable to
resolve any issue, misunderstanding, disagreement or dispute after
making a good faith effort to do so, the parties hereto agree to
arbitrate any such issue, misunderstanding, disagreement or dispute in
connection with the terms in effect in this Agreement in accordance
with the Rules of the American Arbitration Association, before one
arbitrator mutually agreeable to the parties hereto. If after eight
weeks they have been unable to agree upon one arbitrator, then either
party may appoint one arbitrator and require the other party to appoint
a second arbitrator. Whereupon, the two appointed arbitrators shall
appoint a third arbitrator mutually agreeable to the two arbitrators.
The arbitration shall occur in Medina, Ohio, or such other place as
mutually agreed upon. Each party shall bear their own expenses in
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connection with such arbitration. Judgement on the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereof.
13. GOVERNING LAW
This Agreement is executed and delivered in the State of Ohio and is
intended to be interpreted, construed and enforced in accordance with
the laws of such State.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by the Chairman of its Board of Directors, and the
Employee has signed this Agreement, all as of the date and year first above
written.
Western Reserve Bancorp, Inc.
/s/ P.M. Xxxxx
By:
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P.M. Xxxxx, Chairman, Board of Directors
/s/ Xxxxxx X. XxXxxx
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Xxxxxx X. XxXxxx
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