DCB FINANCIAL CORP
EXHIBIT 10
EMPLOYMENT AGREEMENT
This Agreement is made and entered into this 1st day of January, 2005,
(the "Agreement Date") by and between DCB Financial Corp. and its wholly-owned
subsidiary The Delaware County Bank and Trust Company (collectively, the
"Bank"), an Ohio-chartered FDIC-insured nonmember bank, and Xxxxxxx Xxxxxx
("Executive"), an individual. (The Bank and Executive will be referred to
collectively herein as the "Parties.")
In consideration of the mutual promises contained herein, the sufficiency
of which is hereby acknowledged, the Parties agree as follows:
1. EMPLOYMENT
a. The Bank agrees to continue to employ Executive and Executive agrees to
continue to serve as the President and Chief Executive Officer of the Bank. As
President and Chief Executive Officer, Executive will devote his full
professional time to rendering administrative and management services such as
are customarily performed by persons situated in similar executive positions.
Executive will perform such other duties as the Board of Directors of the Bank
(the "Board," which may with respect to any of its obligations hereunder
designate a member or committee thereof to perform such obligation) may from
time to time reasonably direct.
b. Executive agrees to serve as a Director of the Bank if elected by the
shareholders, but agrees that he shall have no vote regarding matters pertaining
to his employment as President and Chief Executive Officer, including but not
limited to his duties, responsibilities, goals, job performance, and
compensation, and further agrees that he may from time to time be excused by the
Board from discussions regarding such matters and that the Board may in its sole
discretion meet with other senior Bank managers out of Executive's presence.
However, upon termination for any reason of Executive's employment hereunder,
Executive will immediately resign as a Director of the Bank and will sign all
documents necessary to accomplish such resignation. In the event Executive
refuses to sign documents necessary to so resign then this document will act as
the resignation pursuant to this paragraph.
c. Executive will be furnished with a private office, necessary
secretarial assistance, and with such other facilities, amenities, and services
as are appropriate for Executive's position and adequate for the performance of
the duties hereunder.
d. Executive represents and warrants that Executive is not a party to any
contract or agreement, written or unwritten, that would restrict Executive's
ability to be employed by the Bank in the manner specified herein. Executive
also agrees not to disclose to the Bank any information Executive is
contractually or otherwise legally bound to keep confidential.
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2. TERM OF EMPLOYMENT
Executive is hereby employed for a term commencing on the Agreement Date
and ending December 31, 2007. At the end of any calendar year thereafter in
which Executive is continuously employed hereunder, this Agreement will be
extended for an additional one-year term and Executive for each such one-year
extension will for all purposes continue to be considered as employed under this
Agreement unless either Party notifies the other in writing no later than
December 1 of that calendar year of his or its intent to terminate, for any
reason or no reason at all, Executive's employment hereunder.
3. STANDARDS AND EVALUATION OF PERFORMANCE
a. Executive agrees to devote Executive's best efforts and full time to
the business and affairs of the Bank and to discharge the duties assigned by the
Board. Executive will not during Executive's employment hereunder render any
services as an employee, independent contractor, consultant, or otherwise, other
than to the Bank, except for service on such corporate, civic, or charitable
boards or committees as are approved by the Board.
b. The Board will each contract year provide Executive with performance
goals (the "Goals"), Executive's best efforts towards the attainment of which
will constitute part of Executive's duties. Executive will provide the Board
with no less than quarterly reports on the status of attaining each of the
Goals. The Board may in its discretion reasonably adjust the Goals from time to
time in response to business conditions.
c. The Board will conduct an annual performance evaluation of Executive,
which process Executive will initiate no later than January 15 of each year.
4. COMPENSATION AND BENEFITS
a. Base Salary. The Bank agrees to pay Executive (in addition to any
payments under paragraph 1(b) of this Agreement) an initial annual salary of One
Hundred Seventy Thousand Dollars ($170,000) (the "Base Salary"), payable on the
Bank's regular payroll schedule for other executive employees.
b. Eligibility for Performance-Based Bonus. The Goals will include
standards by which Executive may achieve a performance-based bonus of up to
Three Hundred Thirty Seven Thousand Five Hundred Dollars ($337,500) (the
"Potential Bonus") as described below. The Board will consider upward adjustment
of the Potential Bonus each year at the time that it sets the Goals. No later
than the date 30 days after the completion of audited financial statements for
the preceding year (the "Bonus Date"), the Board will in its sole discretion
determine the total performance-based bonus for that year (the "Bonus Amount").
It is the Parties' mutual expectation and desire that Executive's performance
will result in the Bonus Amount for each year being at least 65% of the
Potential Bonus.
One-half of the Bonus Amount will be paid as a lump sum cash payment
(subject to applicable withholding and payroll taxes) to Executive within 30
days of the Bonus Date. With respect to the other one-half of the Bonus Amount,
Executive will be granted the option to purchase common shares of the capital
stock of the Bank (the "Performance Bonus Stock Options") at the opening public
trading price on the Bonus Date (the "Performance Bonus Exercise Price") in an
amount of shares determined by dividing one-half of the Bonus Amount as the
numerator by the Performance Bonus Exercise Price as the denominator and
rounding down to the largest whole number of shares. The Performance Bonus Stock
options will vest as follows:
Fraction of
Shares Vesting Date
----------- ---------------------------
1/3 3 years from the Bonus Date
1/3 4 years from the Bonus Date
1/3 5 years from the Bonus Date
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Vested Performance Bonus Stock Options will be exercisable for up to 10 years
following the Bonus Date unless Executive's employment hereunder is terminated
under paragraph 5(a) below, in which case all Performance Bonus Stock Options
not yet vested on the date of termination will be forfeited. All Performance
Bonus Stock Options will be provided through a Non-Statutory Stock Option
Agreement to be developed by the Bank and approved by the Board.
It is the Parties' mutual expectation and desire that, in order to
demonstrate and establish his commitment to the Bank's shareholders, Executive
will of his own accord purchase capital stock of the Bank in addition to what he
may be granted and/or purchase under this paragraph 4(b).
The benefits provided for by this paragraph 4(b) are separate from and in
addition to any benefits that may be provided to Executive under the Incentive
Stock Option Plan for Officers and Directors of Delaware County Bank & Trust
Plan.
c. Executive Employee Benefits. Executive will be eligible for all of the
Bank's employee benefit plans pursuant to the terms of those plans, as they may
be amended from time to time in the Bank's sole discretion.
d. Reimbursement for Business Expenses. The Bank will reimburse Executive
for reasonable entertainment, travel, lodging and other miscellaneous expenses,
whether local or out-of-city, incurred on its behalf and directly related to the
performance of Executive's duties hereunder. The Bank further agrees to furnish
Executive with a corporate credit card for business use in connection with
entertainment, travel, lodging and other miscellaneous expenses. The
reimbursement will include the payment of reasonable expenses for attending
meetings of trade associations. Executive will submit documentation of the
expenses incurred in a form that is satisfactory to the Bank. The Bank may from
time to time at its sole discretion conduct a review of Executive's expenses
through the Compensation Committee of the Board or an auditor appointed thereby.
e. Country Club Membership and Expenses. The Bank agrees to purchase a
corporate membership at Dornoch Golf Club in Delaware, Ohio, for use by
Executive and other senior managers of the Bank at Executive's directions and to
reimburse Executive for any reasonable business-related costs associated
therewith. These expenses will be detailed and provided to the Bank in
connection with Executive's periodic submission of reasonable entertainment
expenses.
f. Vacation and Leaves. Executive will be entitled, without loss of pay,
to an annual vacation of not less than 4 weeks per year, to be scheduled in a
reasonable manner by Executive. Vacation time not used within the calendar year
will be forfeited. Executive will not be entitled to receive any additional
compensation from the Bank for unused vacation time, including upon the
termination for any reason of Executive's employment hereunder. Executive will
be entitled to such other leaves as are provided for executive employees under
Bank policies.
5. TERMINATION OF EMPLOYMENT AND SEVERANCE PAYMENT
In addition to either Party's right to terminate Executive's employment
hereunder pursuant to paragraph 2 of this Agreement, the Bank may terminate the
employment of Executive at any other time, with or without cause, and with or
without notice.
a. If the Bank terminates Executive's employment hereunder because of
Executive's dishonesty, incompetence, misconduct, breach of fiduciary duty,
failure or refusal to perform the duties and responsibilities assigned under
this Agreement (including but not limited to failure to meet the annual budget
approved by the Board), willful violation of any law, rule or regulation (other
than misdemeanor 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 termination for "Just Cause"),
or if Executive resigns or retires for any reason other that provided in
paragraph 5(c) below, Executive will have no right to receive any compensation
for any period after such termination and any Performance Bonus Stock Options
provided for in paragraph 4(c) and not yet vested will be forfeited.
b. If the Bank terminates Executive's employment hereunder for any reason
other than Just Cause then Executive will be entitled to continuation of the
Base Salary for a period of 12 months, provided, however, that (i) each monthly
payment will be reduced by the amount of wages or other compensation for
services rendered earned by
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DCB FINANCIAL CORP
Executive during the preceding month from sources other than the Bank and (ii)
Executive must use reasonable efforts to obtain such employment or other work
and, upon the Bank's request, provide documentation of such efforts to the
Bank's satisfaction.
c. If the Bank while Executive is employed hereunder merges with, is
acquired by, or sells substantially all of its assets to an entity not
affiliated with the Bank or an entity created for the express purpose of
facilitating such a transaction, Executive will receive the severance payments
provided for in and subject to the terms of paragraph 5(b) of this Agreement if
Executive resigns employment within one year of the closing date of such merger,
acquisition, or sale.
d. Executive's employment hereunder automatically terminates upon the
death of Executive. In the event of such death, Executive's estate will be
entitled to receive the compensation due Executive through the last day of the
calendar month in which Executive's death occurred.
e. Special Regulatory Events. Notwithstanding any other provision of this
Agreement, the obligations of the Parties will be as follows in the event of any
of the following circumstances:
i. If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8 of the Federal Deposit Insurance Act, 12 U.S.C. Section 1818, the
Bank's obligations under this Agreement will be suspended as of the date of
service of such notice unless otherwise ordered by a tribunal of competent
jurisdiction. If the charges in the notice are dismissed, the Bank may, in its
sole discretion, pay Executive all or part of the compensation withheld while
the obligations of this Agreement were suspended and reinstate in whole or in
part any of the obligations which were suspended.
ii. If Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under Section 8 of the Federal Deposit Insurance Act, 12 U.S.C. Section
1818(e) or Ohio Revised Code Sections 1121.33 and 1121.34, all obligations of
the Bank under this Agreement will terminate as of the effective date of the
order.
iii.If the Bank is in default, as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1), or declared
insolvent by the Ohio Superintendent of Banks pursuant to Ohio Revised Code
Section 1125.09, all obligations under this Agreement will terminate as of the
date of default or insolvency, but this provision will not affect any vested
rights of the Parties.
iv. All obligations under this Agreement may be terminated by the
FDIC at the time the FDIC enters into an agreement to provide assistance to or
on behalf of the Bank under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1823(c).
6. EXECUTIVE'S COVENANTS PROTECTING THE BANK'S BUSINESS RESOURCES
a. Non-Disclosure of Trade Secrets and Other Confidential Information.
Executive acknowledges that Executive has received, and the Bank agrees to
continue to provide to Executive on an ongoing basis, certain of the Bank's
confidential business information. Executive will not divulge, disclose, reveal,
or communicate to any business entity or other person such information or any
trade secrets or other information that Executive may have obtained during the
term of employment with the Bank concerning any matters affecting or relating to
the business of the Bank, including without limitation any of its customers or
borrowers (including lists thereof), sales prices (including price lists),
costs, plans, technology, processes, policies, techniques, trade practices,
finances, accounting methods, methods of operations, trade secrets, or other
data considered by the Bank to be confidential information, for so long as such
information is not publicly available other than in whole or in part through the
efforts of Executive.
b. Books and Records. Executive will, upon the termination of employment
hereunder, surrender and deliver to the Bank all property of the Bank, including
any and all customer or price lists, manuals, blueprints, operating plans,
books, records, papers and similar items (including all copies thereof in his
possession) that contain information regarding the business of the Bank.
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DCB FINANCIAL CORP
c. Covenant Not to Compete. Executive will not during employment under this
Agreement or for a period of 2 years after termination, regardless of the reason
for termination thereof, compete with the Bank without the Bank's prior written
consent. Executive will be deemed to be competing with the Bank if Executive is
self-employed as, employed by, works for, becomes associated with (whether as
partner, officer, director, 10% shareholder, consultant, Executive, agent, or
otherwise), furnishes information to, or communicates with any of the Bank's
customers or borrowers on behalf of any business entity or other person that
competes or that may reasonably be construed to compete with the Bank, including
but not limited to any business entity that (i) itself or through an affiliated
entity produces, markets, or sells products, renders services, or engages in
business activities that are the same as, similar to, or otherwise competitive
with those of, or under development or research by the Bank and (ii) produces,
markets, or sells such products, renders such services, or engages in such
activities in the Bank's market area at that time (as that market area may
change from time to time).
Executive acknowledges that Executive is qualified for other comparable
employment, including for entities that do not compete with the Bank.
Accordingly, Executive represents and warrants that Executive's experience and
capabilities are such that this covenant will not prevent Executive from earning
an adequate livelihood for Executive and Executive's dependents if this covenant
should be specifically enforced against Executive.
d. Other Bank Employees. Executive will not during employment under this
Agreement or for a period of 2 years after termination (for any reason) thereof
induce or solicit, or attempt to induce or solicit, any other Bank employee to
leave employment with the Bank without the Bank's prior written consent.
e. Remedies for Breach. Executive stipulates that the covenants contained
herein are essential for the protection of the trade secrets, confidential
business and technological information, customer relationships, and competitive
position of the Bank; that a breach of any covenant contained herein would cause
the Bank irreparable damage for which damages at law would not be an adequate
remedy; and that, in addition to damages and other remedies to which the Bank
would otherwise be entitled, it will be entitled to whatever injunctive relief
is appropriate for any such breach. Executive also agrees that Executive will be
responsible for attorney fees and other legal expenses incurred by the Bank or
its successors or assigns to enforce any of the covenants in this paragraph 6
against Executive.
f. Tolling Period. The term(s) of any covenant(s) in this paragraph 6 will
not run during any time in that Executive is in violation of said covenant(s).
g. Claims against the Bank Not a Defense. The existence of any claim(s) or
cause(s) of action of Executive against the Bank will not constitute a defense
to the enforcement by the Bank of any or all of the covenants contained in this
paragraph 6.
h. Survival of Covenants. The covenants in this paragraph 6 will survive
the termination of this Agreement.
7. MISCELLANEOUS
a. Successors and Assigns. This Agreement will be binding upon and inure
to the benefit of (i) the Bank and its successors and assigns and (ii) Executive
and Executive's heirs and personal representatives.
b. Notices. All notices, requests, demands and other communications hereunder
will be in writing and will be deemed to have been duly given if delivered via
telecopy, overnight delivery, or prepaid certified or registered U.S. Mail,
return receipt requested, to the following addresses or to such other address as
either party may designate by like notice.
If to the Bank, to:
Dr. G. Xxxxxxx Xxxxxx
c/o DCB Financial Corp.
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxx 00000
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DCB FINANCIAL CORP
If to Executive, to:
Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxx, Xxxx 00000
and to such other additional person(s) or location(s) as either party will have
designated to the other party in writing by like notices.
c. Entire Agreement; Modification. This Agreement contains the entire
agreement of the Parties about the subjects in it, and it replaces all prior
contemporaneous oral or written agreements, understandings, statements,
representations and promises by either party, including but not limited to the
Employment Agreement entered into between them on January 1, 2002, of which the
parties hereby agree this Agreement is a valid modification pursuant to
paragraph 7(c) thereof. No supplement, modification, or amendment to this
Agreement will be effective and binding unless the same is contained in a
writing accepted and duly executed by the Parties.
d. Paragraph Headings. The paragraph headings used in this Agreement are
included solely for convenience and will not affect, or be used in connection
with, the interpretation of this Agreement.
e. Severability. The provisions of this Agreement will be deemed severable
and the invalidity or unenforceability of any provision will not affect the
validity or enforceability of the other provisions hereof.
f. Governing Law. This Agreement will, except to the extent that federal law
will be deemed to apply, be governed by and construed and enforced in accordance
with the law of Ohio.
g. Arbitration of Disputes. All disputes under this Agreement, except for
claims for injunctive relief, will be settled conclusively and without right of
appeal therefrom by arbitration in Delaware County, Ohio, before a single
arbitrator pursuant to the Rules of Commercial Arbitration of the American
Arbitration Association ("AAA"). The arbitrator will be selected by the joint
agreement of the Parties, but if they do not so agree within 10 calendar days
after notice from either party to the other that it is instituting arbitration,
they will request from the AAA a panel of 7 arbitrators from which the Parties
will alternately strike names until a single arbitrator has been selected. The
initial strike will be determined by the flip of a coin. Each Party will pay its
own expenses of arbitration and the expenses of the arbitrator will be equally
shared provided that, if in the opinion of the arbitrator any claim, defense, or
argument raised in the arbitration was unreasonable, the arbitrator may assess
all or part of the expenses of the other Party (including attorney fees) and of
the arbitrator as the arbitrator deems appropriate. To the extent the Parties
resort to judicial action arising under this Agreement for injunctive relief, to
enforce the judgment of an arbitrator, or because an arbitrator deems issues not
arbitrable, the Parties hereby expressly consent to the jurisdiction of, and
agree that such an action will be instituted only in, the state and federal
courts sitting in or for Delaware County, Ohio, waive any objection to venue
therein, and consent to service of process in any such action by certified mail.
IN WITNESS WHEREOF, the Parties have entered this Agreement on the day and year
first hereinabove written.
FOR THE BANK:
By: /s/ G. Xxxxxxx Xxxxxx
----------------------------------------
G. Xxxxxxx Xxxxxx Date February 25, 2005
Its: Chairman, Board of Directors -----------------
And: /s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx Date February 25, 2005
Its: Chairman, Salary and Benefits Committee -----------------
FOR EXECUTIVE:
/s/ Xxxxxxx Xxxxxx Date March 7, 2005
-------------------------------------------- -------------------
(Signature)
Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
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