EXHIBIT 10.1
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (hereinafter referred to as this "AGREEMENT")
is entered into as of the 20th day of August, 2001, by and between Peoples
Federal Savings and Loan Association of Massillon, a savings and loan
association chartered under the laws of the United States (hereinafter referred
to as the "EMPLOYER"), and Xxxx xxx Xxxxxx, an individual (hereinafter referred
to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the President and Chief
Executive Officer of the EMPLOYER;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the EMPLOYER desires to retain the services
of the EMPLOYEE as the President and Chief Executive Officer of the EMPLOYER;
WHEREAS, the EMPLOYEE desires to continue to serve as the President and
Chief Executive Officer of the EMPLOYER; and
WHEREAS, the EMPLOYEE and the EMPLOYER desire to enter into this
AGREEMENT to set forth their understanding as to their respective rights and
obligations in the event of the termination of EMPLOYEE's employment under the
circumstances set forth in this AGREEMENT.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYER and the EMPLOYEE hereby agree as follows:
1. EMPLOYMENT AND TERM.
(a) TERM. This AGREEMENT shall commence on the date set forth above and
shall end on December 31, 2002, subject to extension pursuant to
subsection (b) of this Section 1 (hereinafter, including any such
extensions, referred to as the "TERM"), and to earlier termination as
provided herein.
(b) EXTENSION. Prior to each anniversary of the date of this AGREEMENT,
the Board of Directors of the EMPLOYER shall review this AGREEMENT and
document its approval of this AGREEMENT in the minutes of the Board of
Directors. In connection with such annual review, the TERM shall be
extended for a one-year period beyond the then-effective expiration
date, provided the Board of Directors of the EMPLOYER determines in a
duly adopted resolution that this AGREEMENT should be extended. Any
such extension shall be subject to the written consent of the EMPLOYEE.
2. TERMINATION OF EMPLOYMENT.
(a) TERMINATION FOR JUST CAUSE. In the event that the EMPLOYER
terminates the employment of the EMPLOYEE before the expiration of the
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 (other than traffic violations or similar
offenses) or final cease-and-desist order, 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.
(b) TERMINATION WITHOUT JUST CAUSE AND WITHOUT A CHANGE OF CONTROL. In
the event that the EMPLOYER terminates the employment of the EMPLOYEE
before the expiration of the TERM without JUST CAUSE and on a date that
is more than six months before a CHANGE OF CONTROL (hereinafter
defined) or that is after one year following a CHANGE OF CONTROL, the
EMPLOYEE shall not receive, and shall have no right to receive, any
compensation or other benefits for any period after such termination.
(c) TERMINATION IN CONNECTION WITH A CHANGE OF CONTROL. In the event
that in connection with a CHANGE OF CONTROL (hereinafter defined),
including, without limitation, a termination other than for JUST CAUSE
within six months prior to a CHANGE OF CONTROL or within one year after
a CHANGE OF CONTROL the employment of the EMPLOYEE is terminated by the
EMPLOYER for any reason other than JUST CAUSE before the expiration of
the TERM, then the following shall occur:
(i) The EMPLOYER shall promptly pay to the EMPLOYEE or to his
beneficiaries, dependents or estate $85,000; and
(ii) 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 EMPLOYER hereunder.
(In the event that payments pursuant to this subsection (c) 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 which may be paid under SECTION 280G without exceeding such
limits. Payments pursuant to this subsection (c) also may not exceed
applicable limits established by the Office of Thrift Supervision
(hereinafter referred to as the "OTS"). In the event a reduction in
payments is necessary in order to comply with the requirements of this
AGREEMENT relating to the limitations of SECTION 280G or applicable OTS
limits, the EMPLOYEE may determine, in his sole discretion, which
categories of payments are to be reduced or eliminated.
(d) DEATH OF THE EMPLOYEE. The 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,
except as otherwise specified herein.
(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. Section 1828(k) and any
regulations promulgated thereunder.
(f) DEFINITION OF "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall be
deemed to have occurred in the event that, at any time during the
EMPLOYMENT 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).
(g) LEGAL FEES. EMPLOYER shall promptly pay all legal fees and expenses
which EMPLOYEE may incur as a result of EMPLOYEE or EMPLOYER contesting
the validity or enforceability of this
AGREEMENT if a court of competent jurisdiction renders a final decision
in favor of EMPLOYEE with respect to any such contest, or to the extent
agreed to by EMPLOYER and EMPLOYEE in an agreement of settlement with
respect to any such contest.
3. SPECIAL REGULATORY EVENTS. Notwithstanding Section 2 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 (hereinafter referred to as 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 (i) pay the EMPLOYEE
all of the compensation withheld while the obligations in this
AGREEMENT were suspended and (ii) reinstate 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, or
his or her designee, 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. No vested rights of the EMPLOYEE shall be affected by any
such action.
4. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT
shall preclude the EMPLOYER from consolidating with, merging into, or
transferring all, or substantially all, of its assets to another corporation
that assumes all of the EMPLOYER's obligations and undertakings hereunder. Upon
such a consolidation, merger or transfer of assets, the term "EMPLOYER," as used
herein, shall mean such other corporation or entity, and this AGREEMENT shall
continue in full force and effect.
5. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the EMPLOYER and its 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 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 parent, 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 (a) to the material
detriment of the EMPLOYER, its subsidiaries, or affiliates, or (b) in a manner
which is inimical or contrary to the interests of the EMPLOYER.
6. NATURE OF EMPLOYMENT. Nothing contained in this AGREEMENT shall
create any employment relationship between the EMPLOYER and the EMPLOYEE other
than an employment relationship that is terminable "at will." The EMPLOYER may
terminate the EMPLOYEE's employment at any time, subject to providing any
payments specified herein in accordance with the terms hereof.
7. NONASSIGNABILITY. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries or his legal
representatives without the EMPLOYER's prior written consent; provided, however,
that nothing in this Section 7 shall 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.
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.
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; REGULATORY AUTHORITY. 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. References to the OTS
included herein shall include any successor primary federal regulatory authority
of the EMPLOYER.
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.
16. 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 the EMPLOYER:
Peoples Federal Savings and Loan
Association of Massillon
000 Xxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxxx 00000
Attention: President
If to the EMPLOYEE:
Xxxx xxx Xxxxxx
0000 Xxxxxx Xxxxxx, X.X.
Xxxxxxxxx, Xxxx 00000
IN WITNESS WHEREOF, the EMPLOYER 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: PEOPLES FEDERAL SAVINGS AND LOAN
ASSOCIATION OF MASSILLON
By
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Attest:
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Xxxx xxx Xxxxxx
