EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into this ____ day
of ____________, 1999, by and between Xxxxxx Xxxx Corp., an Ohio corporation
(the "Employer"), and Xxxxxx X. Xxxxxxxx, an individual (the "Employee");
WITNESSETH:
WHEREAS, the Employee is currently employed as the President and Chief
Executive Officer of the Employer, of Xxxxxx, Xxxx & Co., Inc., and of Xxxxxx
Xxxx Asset Management Co. (the latter two companies being wholly-owned
subsidiaries of Employer);
WHEREAS, the Employer and United Community Financial Corp., an Ohio
corporation ("UCFC"), have entered into an Agreement and Plan of Merger dated
April 15, 1999 (the "Merger Agreement"), pursuant to which UCFC will acquire all
of the stock of the Employer;
WHEREAS, the Employer and UCFC desire to be ensured of Employee's continued
active participation in the business of Employer and its subsidiaries; and
WHEREAS, in order to induce Employee to remain in the employ of Employer
and in consideration of Employee agreeing to remain in the employ of Employer,
the parties desire to specify the terms of such employment;
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. Upon the terms and subject to the conditions of this
Agreement, the Employer hereby employs the Employee, and the Employee hereby
accepts employment, as the President and Chief Executive Officer of the
Employer, of Xxxxxx, Xxxx & Co., Inc., and of Xxxxxx Xxxx Asset Management Co.
The term of this Agreement shall commence on ____________, 1999, and shall end
on ____________, 2002, unless extended by the Employer, with the consent of the
Employee, as provided in subsection (b) of this Section 1 (together with such
extensions, the "Term").
(b) EXTENSION. On or before each anniversary of the date of this
Agreement, the board of directors of the Employer (the "Board") shall review
this Agreement and, upon approval by the Board, shall extend the Term of this
Agreement for a one-year period beyond the then effective expiration date. Any
such extension shall be subject to the written consent of the Employee. The
Board shall document its reasons for extending the Term of this Agreement in the
minutes of the meeting at which such action is taken.
2. DUTIES OF THE EMPLOYEE.
(a) GENERAL DUTIES AND RESPONSIBILITIES. The Employee shall serve as
the President and Chief Executive Officer of the Employer, of Xxxxxx, Xxxx &
Co., Inc., and of Xxxxxx Xxxx Asset Management Co. Subject to the direction of
the Board, the Employee shall perform all duties and shall have all powers which
are commonly incident to the offices of President and Chief Executive Officer or
which, consistent therewith, are delegated to him by the Board. Such duties may
include, but shall not be limited to, developing policies and strategic growth
and business plans and objectives, directing and coordinating corporate
programs, supervising and evaluating senior management members.
(b) DEVOTION OF ENTIRE TIME TO THE BUSINESS OF THE EMPLOYER. 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 other than the Employer, UCFC, or any subsidiary of the
Employer or UCFC without the prior written consent of the Board; provided,
however, that the Employee shall not be precluded from (i) vacations and other
leave time in accordance with Section 3(f) below, (ii) reasonable participation
in community, civic, charitable or similar organizations, (iii) reasonable
participation in industry-related activities, including, but not limited to,
attending state and national trade association or Young Presidents' Organization
meetings and serving as an officer, director or trustee of a state or national
trade association or the Young Presidents' Organization, (iv) serving as an
officer or director of the Employer, UCFC or any subsidiary of the Employer or
UCFC and receiving a salary, director's fees or other compensation or benefits,
as appropriate, or (v) pursuing personal investments which do not interfere or
conflict with the performance of the Employee's duties to the Employer and UCFC.
(c) REPORTING OBLIGATIONS. The Employee shall report directly to the
Board.
3. COMPENSATION.
(a) ANNUAL SALARY. The Employee shall receive an annual salary of
not less than $200,000, payable in equal installments not less often than
monthly.
(b) ANNUAL REVIEW. On or before ________________ of each year,
commencing in 2000, the salary of the Employee shall be reviewed by the Board
and shall be set at an amount not less than $200,000, based upon the Employee's
individual performance and such other factors as the Board may deem appropriate
(the "Annual Review"). The results of the Annual Review shall be reflected in
the minutes of the Board.
(c) BONUS PAYMENT. During the Term, the Employee shall be entitled
to receive a bonus, payable not less often than annually, equal to the sum of
the following components: (1) 2% of the first $500,000 of the Employer's
operating profit; (2) 6% of the next $250,000 of the Employer's operating
profit; (3) 8% of the next $250,000 of the Employer's operating profit; (4) 10%
of the next $250,000 of the Employer's operating profit; (5) 12% of the
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next $250,000 of the Employer's operating profit; (6) 8% of the next $250,000 of
the Employer's operating profit; and (7) 10% of any amount of the Employer's
operating profit over $2.0 million.
For purposes of this provision, the term "operating profit" shall
mean the sum of the profits or losses of each of the Employer's subsidiaries,
less the amount of bonuses paid to members of the Municipal Department of
Xxxxxx, Xxxx & Co., Inc., the Capital Markets Group of Xxxxxx, Wick & Co., Inc.
and the administrative and operations department of the Employer.
(d) COMMISSIONS. The Employee shall be entitled to any and all
commissions and fees earned on client accounts in accordance with the formally
established commission and fee programs of the Employer or its applicable
subsidiary.
(e) EMPLOYEE BENEFIT PROGRAMS. During the Term, the Employee shall
be entitled to participate in all formally established employee benefit, bonus,
pension, insurance and profit sharing plans and similar programs that are
maintained by the Employer from time to time and all employee benefit plans or
programs hereafter adopted in writing by the Board for which senior management
personnel of the Employer are eligible (collectively, "Benefit Plans"), in
accordance with the terms and conditions of such Benefit Plans. Notwithstanding
any statement to the contrary contained elsewhere in this Agreement, the
Employer may at any time discontinue or terminate any Benefit Plan now existing
or hereafter adopted, to the extent permitted by the terms of such Benefit Plan,
and shall not be required to compensate the Employee for such discontinuance or
termination to the extent such discontinuance or termination pertains to all
employees of the Employer who are eligible participants at the time.
(f) 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, in accordance with the policies periodically established by the
Board for senior management officials of the Employer. The Employee shall be
entitled to annual sick leave as established by the Board for senior management
officials of the Employer.
(g) EXPENSES. The Employer shall pay or reimburse the Employee in
the amount of $666.67 per month for all reasonable travel, entertainment and
miscellaneous expenses incurred by Employee, in connection with the performance
of his duties under this Agreement, including, but not limited to, up to $8,000
in expenses related to membership in the Youngstown Country Club.
4. TERMINATION OF EMPLOYMENT.
(a) GENERAL. The employment of the Employee shall terminate at any
time during the Term (i) at the option of the Employer, upon the delivery by the
Employer of written notice of termination to the Employee, or (ii) at the option
of the Employee, upon delivery by the Employee of written notice of termination
to the Employer if the present capacity or circumstances in which the Employee
is employed are materially adversely changed (including, but not limited to, a
material reduction in responsibilities or authority or the assignment of duties
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or responsibilities substantially inconsistent with those normally associated
with the Employee's position described in Section 2(a) of this Agreement, change
of title or removal as a director of UCFC, the Employer or any subsidiary of the
Employer, the requirement that the Employee regularly perform his principal
executive functions more than thirty-five (35) miles from his primary office as
of the date of this Agreement or the Employee's benefits provided under this
Agreement are reduced, unless the benefit reductions are part of a company-wide
reduction). The following subsections (A), (B) and (C) of this Section 4(a)
shall govern the obligations of the Employer to the Employee upon the occurrence
of the events described in such subparagraphs:
(A) TERMINATION FOR CAUSE. In the event that the Employer terminates
the employment of the Employee during 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 or regulation (other than traffic violations or other minor offenses), or
final cease-and-desist order or material breach of any provision of this
Agreement ("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 IN CONNECTION WITH CHANGE OF CONTROL. In the event
that the employment of the Employee is terminated by the Employer in connection
with a Change of Control (hereinafter defined) for any reason other than Cause
or is terminated by the Employee as provided in Section 4(a)(ii) above, then the
following shall occur:
(I) The Employer shall promptly pay to the Employee or to his
beneficiaries, dependents or estate an amount equal to the product of 2.99
multiplied by the Employee's "base amount" as defined in Section 280G(b)(3) of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder ("Section 280G");
(II) The Employee shall continue to be covered at the Employer's
expense under all health, life and disability plans of the Employer, as
described in Section 3(c) of this Agreement, in which the Employee was a
participant prior to the effective date of the termination of his employment as
if the Employee were still employed under this Agreement until the earlier 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; 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 Employer hereunder,
except as specifically stated in subparagraph (II) above.
(C) TERMINATION NOT IN CONNECTION WITH CHANGE OF CONTROL. In the
event that the employment of the Employee is terminated by the Employer before
the expiration of the
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Term for any reason other than death, disability, termination for Cause or
termination in connection with a Change of Control, then the following shall
occur:
(I) The Employee shall continue to participate in the retention
plan established pursuant to Section 6.10 of the Merger Agreement;
(II) The Employer shall be obligated to continue to pay on at
least a monthly basis, until the expiration of the Term, to the Employee, his
designated beneficiaries or his estate, the total compensation in effect at the
time of termination pursuant to Section 3 above;
(III) The Employer shall continue to provide to the Employee, at
the Employer's expense, health, life and disability benefits, as described in
Section 3(e) of this Agreement, 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 on which the Employee is
included in another employer's benefit plans as a full-time employee; and
(IV) 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,
except as specifically stated in subparagraph III above.
(b) DEATH OF THE EMPLOYEE. The Term shall automatically expire upon
the death of the Employee. In such event, 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. In the event that any payments
pursuant to this Section 4 would result in the imposition of a penalty tax
pursuant to Section 280G, such payments shall be reduced to the maximum amount
which may be paid under Section 280G without exceeding such limits.
(d) 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 UCFC;
(ii) the acquisition of the ability to control the election of a
majority of the directors of the Employer or UCFC;
(iii) prior to ____________, 2002, individuals who constitute the
Board of Directors of the Employer or UCFC as of the date of this
Agreement cease for any reason to constitute at least a majority
thereof; provided, however, that any
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individual whose election or nomination for election as a member of
the Board of Directors of the Employer or UCFC 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 UCFC and no effect shall be given to changes in the
composition of the Board due to the death, disability, retirement or
resignation of any such person; or
(iv) an event that would be required to be reported in response to
Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor thereto, whether or not any class of
securities of UCFC is registered under the Exchange Act.
Notwithstanding the foregoing, the acquisition by UCFC of the stock of the
Employer in accordance with the Merger Agreement shall not constitute a Change
of Control.
For purposes of this Agreement, an event shall be deemed to have
occurred "in connection with a Change of Control" if such event occurs within
one year before or after a Change of Control.
(e) TERMINATION BY EMPLOYEE. If the Employee terminates this
Agreement without the written consent of the Employer, other than pursuant to
Section 4(a)(ii) of this Agreement, the Employee hereby agrees that during the
unexpired Term: (i) he will not, and will not permit any of his affiliates to,
alone, together or in association with others, either as principal, agent,
owner, shareholder, officer, director, partner, lender, investor, independent
contractor, consultant or in any other capacity, engage in, have a financial
interest in or be in any way connected or affiliated with, or render advice or
services to any person that engages in a business that would compete with the
principal business of the Employee or UCFC or any of their subsidiaries within
Mahoning, Trumbull, Columbiana, Portage, Cuyahoga, Xxxxxx or Xxxxx Counties,
Ohio, Xxxxxx or Venango Counties, Pennsylvania, or any contiguous counties in
which the Employer or UCFC is doing business; and (ii) he will not, and will not
permit any affiliate, directly or indirectly, to solicit, divert, take away or
interfere with, the relationship of the Employer with any person who is or was a
customer, or employee or supplier of the Employer at any time during the last
twenty-four (24) month period immediately prior to the date of this Agreement.
For purposes of this provision, the term "affiliate" of any specified
person shall mean (i) a person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified person; (ii) any relative or spouse of such person, or any
relative of such spouse, any one of whom has the same home as such person; (iii)
any trust or estate in which such person or any of the persons specified in (ii)
collectively own ten percent or more of the total beneficial interest or of
which any of such persons serve as trustee, executor or in any similar capacity;
or (iv) any corporation or other organization in which such person or any of the
persons specified in (ii) are the beneficial owners collectively of ten percent
or more of any class of equity securities or ten percent or more of the equity
interest. For
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the purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings relative to the foregoing.
For purposes of this provision, the term "person" refers to an individual
or corporation, partnership, trust, association or other organization.
This provision shall not apply in the event of the termination of the
employment of the Employee by the Employer prior to the expiration of the Term
or the termination of the employment of the Employee by the Employee pursuant to
Section 4(a)(ii) of this Agreement.
5. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this Agreement shall
preclude the Employer or UCFC from consolidating with, merging into, or
transferring all, or substantially all, of their assets to another corporation
that assumes all of their obligations and undertakings hereunder. Upon such a
consolidation, merger or transfer of assets, and subject to the provisions
pertaining to a Change of Control contained herein, the term "Employer" as used
herein, shall mean such other corporation or entity, and this Agreement shall
continue in full force and effect.
6. CONFIDENTIAL INFORMATION. The Employee acknowledges that during his
employment he will learn and have access to confidential information regarding
the Employer and UCFC and its customers and businesses ("Confidential
Information"). 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 and UCFC consent in writing to such
disclosure or use or the Confidential Information 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 or
UCFC, their subsidiaries, or affiliates, or to any of the businesses operated by
them, and the Employee confirms that the Confidential Information constitutes
the exclusive property of the Employer or UCFC. The Employee shall not
otherwise knowingly act or conduct himself to the material detriment of the
Employer or UCFC, their subsidiaries, or affiliates or in a manner which is
inimical or contrary to the interests of the Employer or UCFC.
7. NON-ASSIGNABILITY. Neither this Agreement nor any right or interest
hereunder shall be assignable by the Employee, his beneficiaries or legal
representatives without the Employer's prior written consent; provided, however,
that nothing in this Section 7 shall preclude the Employee from designating a
beneficiary to receive any benefits payable hereunder upon his death or 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.
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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 to the full extent permitted by law, 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.
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:
Xxxxxx Xxxx Corp.
Xxxx Xxxxxx Xxx, Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Attention: Secretary
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With a copy to:
United Community Financial Corp.
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Chairman of the Board
If to the Employee:
Xxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxx Xxxxx
Xxxxxx, 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: Xxxxxx Xxxx Corp.
--------------------------- By:------------------------------
------------------------------
its---------------------------
Attest:
--------------------------- ---------------------------------
Xxxxxx X. Xxxxxxxx
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