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EXHIBIT 10 - MATERIAL CONTRACTS
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") made by and between MR.
MONEY FINANCE CO., an Ohio corporation (the "Employer") and XXXXXX X. XXXXX (the
"Employee"), WITNESSETH THAT:
WHEREAS, the Employer has been organized as a finance company to
provide non-conforming lending to eligible customers; and
WHEREAS, the Employer will retain the Employee to start its business
operations and to provide the services described herein; and
WHEREAS, the Employee has provided to the Employer certain financial
projections which the parties have used to jointly develop a pro forma (attached
hereto as "Exhibit A") and which each believes is a reasonable basis for
proceeding herein;
WHEREAS, the Employee desires to accept employment with the Employer
upon the terms and conditions described herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions contained herein, the parties agree as follows:
1. EMPLOYMENT AND TERM. The Employer hereby agrees to retain the
Employee, and the Employee hereby accepts employment, based upon the terms and
conditions set forth in this Agreement. This Agreement shall commence on the
third day of April, 2000 and continue until it is terminated in accordance with
its provisions (the "Term"). In the event that the Employer's application for a
license under the Ohio Mortgage Loan Act (the "License") is denied, or in the
event that the License has not been granted by August 15, 2000, then either
party shall have the option to terminate this Agreement immediately upon written
notice to the other party. In addition, either party shall have the option to
terminate the Agreement on December 31, 2003 (the "First Option"). In the event
that a party desires to exercise the First Option to terminate the Agreement,
that party shall give to the other party written notice of its or his intention
to exercise the option on or before June 30, 2003. If neither party gives notice
as provided herein, then the First Option to terminate shall lapse, and the
Agreement shall continue until December 31, 2005. On December 31, 2005 and on
the same day of each year thereafter, the Agreement will be automatically
renewed for one (1) year, unless either party shall have given the other party
notice of its or his intention to terminate the Agreement at least one hundred
eighty (180) days in advance of such renewal date.
2. DUTIES. During the Term, the Employee shall be employed as
president and chief executive officer of the Employer. The Employee's duties
shall include direct responsibility for organizing, administering and conducting
the Employer's business operations. The parties agree that the Employer shall
operate two (2) business locations approved by the Employer, at least one of
which shall be either within the City of Sandusky, Ohio or within two (2) miles
of corporate limits of the City of Sandusky, Ohio. The Employee shall be
responsible for establishing, staffing and managing each of such locations. The
Employee shall be active in the day-to-day operations of the Employer, shall
make loans on its behalf and shall use his best reasonable efforts to promote
its business. The Employee shall devote his full time to the business of the
Employer and shall assiduously pursue the enlargement, more efficient function
and increase in profits of that business. The Employee shall be subject to the
supervisory authority of the Employer's board of directors and shall be governed
by the loan policies approved by its board of directors. The Employer's board of
directors will conduct such reviews of the loan portfolio of the Employer as the
board of directors determines are appropriate. The Employer shall assure that
the Employee serves as a member of the board of directors of Employer during the
Term of this Agreement.
3. COMPENSATION. During the Term, in consideration of the
Employee's performance of his duties and obligations described herein, the
Employer shall provide the Employee with the compensation described herein. The
Employee's compensation shall be subject to and reduced by any applicable
withholding, social security or other taxes and any other legally required
deductions.
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a. INITIAL PAYMENTS. The Employer shall pay to or for
the Employee one-time lump-sum payments as follows:
i. Upon complete execution of this Agreement,
Forty-Five Thousand Dollars ($45,000.00).
From such payment, the Employee's expenses of
moving his residence shall be paid directly
to the mover, and the balance shall be paid
to the Employee; and
ii. Upon issuance of the License, Thirty Thousand
Dollars ($30,000.00).
(The two foregoing payments are jointly referred to as the "Initial
Payments"). In the event that either party exercises its option to
terminate this Agreement because the application for the License has been
denied or has not been granted by August 15, 2000, then the Employee shall
repay to the Employer any part of the Initial Payments previously paid to
him or paid for his moving expenses.
The Initial Payments shall compensate the Employee for his expenses incurred to
move his residence as required by paragraph 4 herein. The Employee shall
retain the amount of the Initial Payments in excess of his moving expenses
as compensation for the restrictive covenants and the other obligations
accepted by the Employee herein. If, before December 31, 2003, the Employee
breaches this Agreement or the Employer terminates it for cause as
described in this Agreement, then the Employee shall repay to the Employer
that portion of the Initial Payments calculated as follows:
i. If the breach or termination for cause occurs
prior to December 31, 2001, the total of the
entire Initial Payments shall be repaid by the
Employee.
ii. If the breach or termination for cause occurs at any
time between January 1, 2002 and December 31, 2002,
two-thirds (2/3) of the total of the Initial Payments
shall be repaid by the Employee.
iii. If the breach or termination for cause occurs at any
time between January 1, 2003 and December 31, 2003,
one-third (1/3) of the total of the Initial Payments
shall be repaid by the Employee.
Any repayment due to the Employer in accordance with this paragraph 3a
shall be paid by the Employee within thirty (30) days after the
termination of this Agreement.
b. BASE SALARY. During the Term, the Employer shall pay
to the Employee a gross base salary calculated at the rate of Eighty
Thousand Dollars ($80,000.00) per annum. The base salary shall be paid
in equal biweekly installments on the same day that the executive
officers of other subsidiaries of First Citizens Banc Corp. are paid.
c. INCENTIVE COMPENSATION. During the Term, the
Employer shall pay to the Employee any incentive compensation due based
upon the following calculations
i. INCENTIVE COMPENSATION FOR THE PERIOD ENDING
DECEMBER 31, 2001. In the event that the Employer suffers a total
pretax loss which is less than Two Hundred Forty-Three Thousand One
Hundred Ninety-Eight Dollars ($243,198.00) for the period beginning on
the first day of the Term and ending on December 31, 2001, then the
Employer shall pay to the Employee incentive compensation in the amount
of either Sixteen Thousand Dollars ($16,000.00) or twenty percent (20%)
of the Employer's pretax profit, whichever is greater.
ii. INCENTIVE COMPENSATION FOR THE CALENDAR YEARS 2002
AND 2003. The Employer shall pay to the Employee
twenty percent (20%) of its pretax profit for the
calendar years 2002 and 2003.
iii. INCENTIVE COMPENSATION FOR THE CALENDAR YEARS
BEGINNING WITH 2004. In the event that neither party
has exercised its options to terminate this
Agreement, beginning for the
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calendar year 2004 and continuing for each year of
the Term thereafter, the Employer shall pay to the
Employee ten percent (10%) of its pretax profits for
that calendar year. In addition, for each such year,
the Employer shall pay to the Employee fifty percent
(50%) of the amount by which the Employer's pretax
profit for the calendar year in question exceeds its
pretax profit for the immediately preceding year.
During the calendar year 2002 and during each year of the Term
thereafter, the Employer shall make a preliminary estimate of its
pretax profits for the first six (6) months of each such calendar year
using the information and records available to it. By August 15 of each
such year, the Employer shall make an advance payment of one-half (1/2)
of the estimated incentive compensation due to the Employee based upon
such pretax profits for the six (6) month period which advance payment
shall be deducted from the incentive compensation due to the Employee
for that calendar year. Any incentive compensation due to the Employee
for the period ending December 31, 2001 and the balance of any
incentive compensation due for each calendar year of the Term
thereafter shall be paid to the Employee by the next succeeding April
30. Termination of this Agreement shall not affect the Employee's right
to incentive compensation due for a completed prior year but shall
terminate his right to any incentive compensation for any period after
the previous completed year. For purposes of this paragraph, the
Employer's "pretax profit" or "pretax loss" shall be the amount of the
"taxable income" shown on its U.S. Corporation Income Tax Return.
d. FRINGE BENEFITS. During the Term, the Employer
shall make available to the Employee fringe benefits, including medical,
retirement and vacation benefits, upon the same terms and conditions
that are applicable to the executive officers of other subsidiaries of
First Citizens Banc Corp. with the same duration of employment as the
Employee.
4. RESIDENCE. Immediately upon complete execution of this
Agreement, the Employee shall move to and establish his residence within Erie
County, Ohio. The Employee shall maintain his residence within such area during
the Term of this Agreement.
5. TERMINATION. The Employer shall have the right to terminate the
Employee's employment for Cause (as defined herein). "Cause" shall consist of
any one or more of the following:
(a) Inability or failure of the Employee to perform his
duties;
(b) Any dishonesty or defalcation by Employee whether it
occurred in securing his employment or in performing his duties;
(c) Any employment, activity or circumstance which the Employer
reasonably deems to be in conflict with the Employee's duties or to
present a risk of injury or harm to the Employer;
(d) Employee's breach of or failure to comply with any
provision or term of this Agreement; or
(e) Employee's performance of any act, or bad faith failure to
take any action which detrimentally affects the Employer's interest or
the Employee's ability to perform his duties.
If the Employee's employment is terminated in accordance with
this paragraph 5, then upon the effective date of termination, the Employer
shall only be obligated to pay the Employee that proportionate part of the
Employee's base salary which is allocable solely to the period prior to
termination, less any sums previously paid for such period. In the event that
the Employee's employment is terminated in accordance with this paragraph, the
Employer shall also have no obligation to pay any incentive compensation due
after the date of such termination for the year during which termination
occurred.
6. RETURN OF PROPERTY. Upon the termination of this Agreement
for any reason, the Employee will immediately surrender to the Employer, in good
condition, the books, accounts, records, memoranda, keys, computer disks,
computer passwords, any credit cards, and any other property or information of
any nature, tangible or intangible, which are in Employee's possession or under
his control and which belong to the Employer. In the event that any of such
items are not returned, the Employer shall have the right to recover such
property or to recover or deduct from any compensation payable to the Employee
the value, or, at the Employer's sole option, the replacement costs of such
items, plus all proper and reasonable costs, attorneys' fees and expenses
incurred in searching for, taking, removing, and recovering such property or its
value or replacement cost.
7. RESTRICTIVE COVENANT. The Employee acknowledges that his
employment with the Employer will provide him with information concerning the
market for the Employer's financial products, will acquaint him with the
customers and potential customers for such products and will furnish him with
substantial confidential business information concerning the Employer. As a
result, the Employee acknowledges that it would be unfair for him to accept
employment with a competitor of the Employer or to otherwise compete with the
business of the Employer. Therefore, in consideration of the Employer's
execution of this Agreement, and particularly in consideration of its
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initial payment described herein, the Employee agrees that, during the Term of
this Agreement and for a period of two (2) years after its termination for any
reason:
(a) The Employee shall not, within the corporate limits of
Sandusky, Ohio or at any location within fifty (50) miles of the
corporate limits of Sandusky, Ohio, directly or indirectly, own,
manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation, or
control of any business similar to, or in competition with, any aspect
of the business of the Employer.
(b) The Employee shall not, directly or indirectly, solicit,
encourage, entice, or induce any employee of the Employer to terminate
his or her employment relationship with the Employer.
(c) The Employee shall not solicit, attempt to solicit, or
call on any customer of the Employer, or induce or attempt to induce
any customer to cease doing business with the Employer.
(d) The Employee shall not interfere with or otherwise
attempt to damage or prejudice any business relationship of the
Employer.
8. CONFIDENTIALITY. The Employee agrees that all knowledge or
information concerning the Employer's business operations, business plans,
finances, financial products, customers, marketing and interest-setting policies
and the names and financial information concerning all persons or entities that
do business with the Employer, except information which is now or hereafter
becomes part of the public domain through no fault of the Employee, constitute
"Confidential Information" of the Employer. The Employee agrees that he shall
not divulge or disclose any Confidential Information of the Employer and shall
not use Confidential Information of the Employer for his benefit or to the
detriment of the Employer.
9. SURVIVAL, INDEPENDENT CONSTRUCTION AND REMEDIES. The covenants
and obligations of the Employee contained in paragraphs 7 and 8 of this
Agreement shall survive any termination of this Agreement. They are of the
essence of this Agreement and shall be construed as independent of any other
provisions of this Agreement. The existence of a claim or cause of action of the
Employee against the Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Employer of
these covenants and provisions.
The Employee acknowledges that a breach of any of the provisions of
paragraphs 7 or 8 will cause continuing and irreparable harm to the Employer for
which it would not be compensated adequately by money damages. The Employee
agrees that, in the event of an actual or threatened breach, in addition to any
other remedies available to it, the Employer should be entitled to immediate and
permanent injunctions to prevent the Employee from such activity.
10. ASSIGNMENT. The Employee's rights and obligations under this
Agreement are personal and are not transferable by assignment or otherwise, and
any attempt to do so shall be void. The Employer's rights and obligations under
this Agreement are assignable if such assignment is related to the sale or
transfer of substantially all of the assets of the Employer.
11. NOTICE. All notices, requests, demands or instructions may,
or, when required by this Agreement, shall, be in writing and delivered in
person or sent by certified mail (or regular mail if the certified mail is
returned unclaimed) postage prepaid and addressed as follows:
TO THE EMPLOYER: Mr. Money Finance Co.
c/o The Citizens Banking Company
X.X. Xxx 0000
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx
TO THE EMPLOYEE: Xxxxxx X. Xxxxx
A notice shall be effective upon the actual receipt of it, except in the case of
notice by regular mail, which shall be deemed effective three (3) days after it
is delivered to the U.S. Postal Service. Either party may, by notice to the
other, change its or his address for the purpose of any future notice to that
party.
12. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in a manner that is effective and valid under
applicable law, but, if any provision of this Agreement is held to be invalid,
illegal, or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of the invalidity,
illegality, or unenforceability in that jurisdiction. The remainder of this
Agreement, and the application of the provision to other persons and
circumstances or in other jurisdictions, shall not be affected thereby, and the
intent of the parties as set forth herein shall
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be enforced to the fullest extent permitted by law. The parties shall attempt to
replace any invalid provision with a legally valid provision which follows the
original intent of the parties as closely as possible.
13. TITLES AND CAPTIONS. All titles and captions are for
convenience only, and do not form a substantive part of this Agreement, and
shall not restrict or enlarge any substantive provisions of this Agreement.
14. PRONOUNS. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or plural, as
the identity of the person or persons may require.
15. WAIVER OR MODIFICATION. No provisions of this Agreement may be
waived, changed, modified or discharged orally but only by an agreement in
writing signed and executed by the party against whom enforcement of any waiver,
change, modification or discharge is sought. No delay on the part of any party
in the exercise of any rights or remedy shall operate as a waiver thereof. The
failure of either party to insist in any one or more instances, upon the
performance of any of the terms or conditions of this Agreement shall not be
construed as a waiver or relinquishment of any right granted hereunder or of the
future performance of any such term, covenant or condition, but the obligations
of either party with respect thereto shall continue in full force and effect.
16. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties and supersedes any prior understandings and
agreements between them respecting the within subject matter. There are no
representations, agreements or understandings, oral or written, between or among
the parties hereto relating to the subject matter of this Agreement which are
not fully expressed herein.
17. BINDING EFFECT. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties, their heirs, executor, successors and
assigns.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
this third day of April, 2000.
SIGNED AND ACKNOWLEDGED EMPLOYER:
IN THE PRESENCE OF:
/s/Xxxxxxx X. Xxxxxxxxx By: /s/Xxxxx X. Xxxxxx
Witness
/s/Xxxxxxx X. Xxxxxxxx
Witness
EMPLOYEE:
/s/Xxxxxxx X. Xxxxxxxxx /s/Xxxxxx X. Xxxxx
Witness
/s/Xxxxxxx X. Xxxxxxxx
Witness
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