Exhibit 10.8
AGREEMENT
AGREEMENT, dated this 29th day of September 1997, among First Defiance
Financial Corp. ("First Defiance") an Ohio-chartered corporation and savings and
loan holding company, First Federal Savings and Loan ("First Federal"), a
federally chartered savings bank, both of which are located in Defiance, Ohio,
and Xxxx X. Xxxx (the "Executive"). First Defiance and First Federal are
referred to jointly herein as the "Companies."
W I T N E S S E T H:
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WHEREAS, the Executive is presently Sr. Vice President and Treasurer,
C.F.O. of the Companies of the Companies; and
WHEREAS, the Companies desire to be ensured of the Executive's continued
active participation in the business of the Companies; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Companies and in consideration of the Executive's agreeing to remain in the
employ of the Companies, the parties desire to specify the terms of such
employment;
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings set
forth below for the purposes of this Agreement:
(a) Annual Compensation. The Executive's "Annual Compensation" for purposes
of this Agreement shall be deemed to mean the average annual Compensation paid
to the Executive by the Companies during the five most recent taxable years
ending during the calendar year in which the Notice of Termination occurs or
such portion of such period in which the Executive served as Sr. Vice President
and Treasurer, C.F.O.
(b) Base Salary. "Base Salary" shall have the meaning set forth in Section
3(a) hereof.
(c) Bonus. "Bonus" shall have the meaning set forth in Section 3(a) hereof.
(d) Cause. Termination of the Executive's employment for "Cause" shall mean
termination because of personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or
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similar offenses) or final cease-and-desist order or material breach of any
provision of this Agreement. For purposes of this paragraph, no act or failure
to act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest of the
Companies.
(e) Change in Control of First Defiance. "Change in Control of First
Defiance shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange Act") or any
successor thereto, whether or not First Defiance is registered under Exchange
Act; provided that, without limitation, such a change in control shall be deemed
to have occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner"(as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
First Defiance representing 25% or more of the combined voting power of the then
outstanding securities of First Defiance; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of First Defiance cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(f) Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
(g) Compensation. "Compensation" shall have the meaning set forth in
Section 3(a) hereof.
(h) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
give or as specified in such Notice.
(i) Disability. Termination by the Companies of the Executive's employment
based on "Disability" shall mean termination because of any physical or mental
impairment which qualifies the Executive for disability benefits under the
applicable long-term disability plan maintained by the Companies or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(j) Good Reason. Termination by the Executive of the Executive's employment
for "Good Reason" shall mean termination by the Executive base on:
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(i) Without the Executive's express written consent, the assignment by the
Companies to the Executive of any duties which, in the Executive's good faith
determination, are materially inconsistent with the Executive's positions,
duties, responsibilities and status with the Companies immediately prior to such
assignment, or in the event of a Change in Control, immediately prior to such a
Change in Control of First Defiance, or, in the Executive's good faith
determination, a material change in the Executive's reporting responsibilities,
titles or offices as an employee and as in effect immediately prior to such
change or, in the event of a Change in Control, immediately prior to such a
Change in Control of First Defiance; or any removal of the Executive from or any
failure to re-elect the Executive to any of such, except in connection with the
termination of the Executive's employment for Cause, Disability or Retirement or
as a result of the Executive's death or by the Executive other than for Good
Reason;
(ii) Without the Executive's express written consent, a reduction by the
Companies in the Executive's Base Salary as the same may be increased from time
to time or fringe benefits;
(iii) The principal executive office of the Companies is relocated outside
of the Defiance, Ohio area or, without the Executive's express written consent,
the Companies require the Executive to be based anywhere other than an area in
which the Companies' principal executive office is located, except for required
travel on business of the Companies to an extent substantially consistent with
the Executive's present business travel obligations;
(iv) Without the Executive's express written consent, the Companies fail to
provide the Executive with the same fringe benefits that were provided to the
Executive immediately prior to a Change in Control of First Defiance, or with a
package of fringe benefits (including paid vacations) that, though one or more
of such benefits may vary from those in effect immediately prior to such Change
in Control, is substantially comparable in all material respects to such fringe
benefits taken as a whole;
(v) Any purported termination of the Executive's employment for Cause,
Disability or Retirement which is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (j) below; or
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(vi) The failure by First Defiance to obtain the assumption of and
agreement to perform this Agreement by any successor as contemplated in Section
9 hereof.
(k) IRS. IRS shall mean the Internal Revenue Service.
(l) Notice of Termination. Any purported termination by the Companies for
Cause, Disability or Retirement or by the Executive for Good Reason shall be
communicated by written "Notice of Termination" to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Executive's employment under the provision
so indicated, (iii) specifies a Date of Termination, which shall be not less
than thirty (30) nor more than ninety (90) days after such Notice of Termination
is given, except in the case of the Companies' termination of Executive's
employment for Cause; and (iv) is given in the manner specified in Section 10
hereof.
(m) Retirement. Termination by the Companies of the Executive's employment
based on "Retirement" shall mean voluntary termination by the Employee in
accordance with the Companies' retirement policies, including early retirement,
generally applicable to their salaried employees.
2. Term of Employment.
(a) The Companies hereby employ the Executive as Sr. Vice President and
Treasurer, C.F.O. and Executive hereby accepts said employment and agrees to
render such services to the Companies on the terms and conditions set forth in
this Agreement. The term of employment under this Agreement shall be a
three-year term, commencing on the date of this Agreement. However, at a meeting
of the Companies' Board of Directors no more than 30 days prior to the first
anniversary of the date of this Agreement and each anniversary thereafter, the
Boards of Directors of the Companies shall consider and review (with appropriate
corporate documentation thereof, and after taking into account all relevant
factors including the Executive's performance hereunder and the merits of a
three-year agreement) a one-year extension of the term under this Agreement, and
the term shall continue to extend, unless either the Board of Directors does not
approve such extension and provides written notice to the Executive of such
event or the Executive gives written notice to the Companies of the Executive's
election not to extend the term, in each case, with such written notice to be
given not less than thirty (30) days prior to any such anniversary date.
References herein to the term of this Agreement shall refer both to the initial
term and successive terms.
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(b) During the term of this Agreement, the Executive shall perform such
executive services for the Companies as may be consistent with his titles and
from time to time assigned to him by the Companies' Boards of Directors.
3. Compensation and Benefits.
(a) The Companies shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base annual salary ("Base
Salary"), which may be increased from time to time in such amounts as may be
determined by the Companies' Boards of Directors and may not be decreased
without the Executive's express written consent. In addition to his Base Salary,
the Executive shall be entitled to receive during the term of this Agreement
such bonus payments as may be determined by the Boards of Directors of the
Companies (the "Bonus"). The Executive's Base Salary and Bonus are referred to
herein as his "Compensation." Compensation levels shall be determined by the
Boards of Directors of the Companies pursuant to the guidelines set forth in the
1993 Incentive Bonus Program attached hereto as Exhibit A.
(b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, deferred compensation, profit sharing, stock option, management
recognition, employee stock ownership, or other plans, benefits and privileges
given to employees and executives of the Companies, to the extent commensurate
with his then duties and responsibilities, as fixed by the Board of Directors of
the Companies. The Companies shall not make any changes in such plans, benefits
or privileges which would adversely affect Executive's rights or benefits
thereunder, unless such change occurs pursuant to a program applicable to all
executive officers of the Companies and does not result in a proportionately
greater adverse change in the rights of or benefits to Executive as compared
with any other executive officer of the Companies. Nothing paid to Executive
under any plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to Executive pursuant
to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled to paid
annual vacation in accordance with the policies as established from time to time
by the Boards of Directors of the Companies, which shall in no event be less
than four weeks per annum. Executive shall not be entitled to receive any
additional compensation from the Companies for failure to take a vacation, nor
shall Executive be able to accumulate unused vacation time from one year to the
next, except to the extent authorized by the Boards of Directors of the
Companies.
4. Expenses. The Companies shall reimburse Executive or otherwise provide
for or pay for all reasonable expenses incurred by Executive in furtherance or
in connection with the business of the Companies, including, but not by way of
limitation,
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traveling expenses and all reasonable entertainment expenses (whether incurred
at the Executive's residence, while traveling or otherwise), subject to such
reasonable documentation and other limitations as may be established by the
Boards of Directors of the Companies. If such expenses are paid in the first
instance by Executive, the Companies shall reimburse the Executive therefor.
5. Termination.
(a) The Companies shall have the right, at any time upon prior Notice of
Termination, to terminate the Executive's employment hereunder for any reason,
including without limitation termination for Cause, Disability or Retirement and
Executive shall have the right upon prior Notice of Termination to terminate his
employment hereunder for any reason.
(b) In the event that (i) Executive's employment is terminated by the
Companies for Cause, Disability or Retirement or in the event of the Executive's
death, or (ii) Executive terminates his employment hereunder other than for Good
Reason, Executive shall have no right pursuant to this Agreement to compensation
or other benefits for any period after the applicable Date of Termination.
(c) In the event that Executive's employment is terminated by the Companies
for other than Cause, Disability, Retirement or the Executive's death or such
employment is terminated by the Executive (i) due to failure by the Companies to
comply with any material provision of this Agreement, which failure has not been
cured within twenty-five (25) days after a notice of non-compliance has been
given by Executive to the Companies, or (ii) for Good Reason, then the Companies
shall, subject to the provisions of Section 6 hereof, if applicable
(1) pay to the Executive, at the option of the Executive, in a lump
sum payment or in thirty-six (36) equal monthly installments beginning with
the first business day of the month following the Date of Termination, an
amount equal to 2.99 times the Annual Compensation.
(2) maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time
employment by another employer (provided that the Executive is entitled
under the terms of such employment to benefits substantially similar to
those described in this subparagraph (2)), at no cost to the Executive, the
Executive's continued participation in all group insurance, life insurance,
health and accident, disability and other employee benefit plans, programs
and arrangements in which the Executive was entitled to participate
immediately prior to the Date of Termination (other than retirement plans
or stock compensation plans of the
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Companies), provided that in the event that the Executive's participation
in any plan, program or arrangement as provided in this subparagraph (2) is
barred, or during such period any such plan, program or arrangement is
discontinued or the benefits thereunder are materially reduced, the
Companies shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to receive
under such plans, programs and arrangements immediately prior to the Date
of Termination.
6. Limitation of Benefits under Certain Circumstances. If the payments and
benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which Executive has the right to receive from the
Companies, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits pursuant to Section 5 hereof shall be reduced,
in the manner determined by the Executive, by the amount, if any, which is the
minimum necessary to result in no portion of the payments and benefits under
Section 5 being non-deductible to either of the Companies pursuant to Section
280G of the Code and subject to the excise tax imposed under Section 4999 of the
Code. The determination of any reduction in the payments and benefits to be made
pursuant to Section 5 shall be based upon the opinion of independent tax counsel
selected by the Companies' independent public accountants and paid by the
Companies. Such counsel shall be reasonably acceptable to the Companies and
Executive; shall promptly prepare the foregoing opinion, but in no event later
than thirty (30) days from the Date of Termination; and may use such actuaries
as such counsel deems necessary or advisable for the purpose. In the event that
the Companies and/or the Executive do not agree with the opinion of such
counsel, (i) the Companies shall pay to the Executive the maximum amount of
payments and benefits pursuant to Section 5, as selected by the Executive, which
such opinion indicates that there is a high probability do not result in any of
such payments and benefits being non-deductible to the Companies and subject to
the imposition of the excise tax imposed under Section 4999 of the Code and (ii)
the Companies may request, and Executive shall have the right to demand that the
Companies request, a ruling from the IRS as to whether the disputed payments and
benefits pursuant to Section 5 hereof have such consequences. Any such request
for a ruling from the IRS shall be promptly prepared and filed by the Companies,
but in no event later than thirty (30) days from the date of the opinion of
counsel referred to above, and shall be subject to the Executive's approval
prior to filing, which shall not be unreasonably withheld. The Companies and
Executive agree to be bound by any ruling received from the IRS and to make
appropriate payments to each other to reflect any such rulings, together with
interest at the applicable federal rate provided for in Section 7872(f)(2) of
the Code. Nothing contained herein shall result in a reduction of any payments
or benefits to which the Executive may be entitled upon termination of
employment under any circumstances other than as specified in this Section 6, or
a reduction in the payments and benefits specified in Section 5 below zero.
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7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Companies pursuant to employee benefit plans
of the Companies or otherwise.
8. Withholding. All payments required to be made by the Companies hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Companies may reasonably
determine should be withheld pursuant to any applicable law or regulation.
9. Assignability. The Companies may assign this Agreement and their rights
hereunder in whole, but not in part, to any corporation, bank or other entity
with or into which either of the Companies may hereafter merge or consolidate or
to which either of the Companies may transfer all or substantially all of their
respective assets, if in any such case said corporation, bank or other entity
shall by operation of law or expressly in writing assume all obligations of the
Companies hereunder as fully as if it had been originally made a party hereto,
but may not otherwise assign this Agreement or its rights hereunder. The
Executive may not assign or transfer this Agreement or any rights or obligations
hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective address set forth below:
To First Defiance: First Federal Savings and Loan
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
To First Federal: First Federal Savings and Loan
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
To the Executive: Xxxx X. Xxxx
0000 Xxxxxxxxx
Xxxxxxxx, Xxxx 00000
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11. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Boards of Directors of the Companies to sign on
their behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of Ohio.
13. Nature of Obligations. Nothing contained herein shall create or require
the Companies to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Companies hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Companies.
14. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Actions. The following provisions shall be applicable to the
parties to the extent that they are required to be included in the employment
agreements between a savings association and its employees pursuant to Section
563.39 (b) of the Regulations Applicable to All Savings Associations, 12 C.F.R.
ss.563.39(b), or any successor thereto, and shall be controlling in the event of
a conflict with any other provision of this Agreement, including without
limitation Section 5 hereof.
(a) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Companies' affairs pursuant to notice
served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance
Act ("FDIA")(12 U.S.C. ss.ss.1818 (e)(3) and 1818(g)(1)), the Companies'
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Companies may, in their discretion: (i) pay
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Executive all or part of the compensation withheld while its obligations under
this Agreement were suspended, and (ii) reinstate (in whole or in part) any of
its obligations which were suspended.
(b) If Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Companies' affairs by an order issued under
Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. ss.ss.1818(e)(4) and
(g)(1)), all obligations of the Companies under this Agreement shall terminate
as of the effective date of the order, but vested rights of Executive and the
Companies as of the date of termination shall not be affected.
(c) If the Companies are in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. 1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of Executive and the
Companies as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated pursuant to 12
C.F.R. 563.39(b)(5) (except to the extent that it is determined that
continuation of the Agreement for the continued operation of the Companies is
necessary): (i) by the Director of the Office of Thrift Supervision ("OTS"), or
his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
or Resolution Trust Corporation enters into an agreement to provide assistance
to or on behalf of First Federal under the authority contained in Section 13 (c)
of the FDIA (12 X.X.X.xx. 1823(c)); or (ii) by the Director of the OTS, or
his/her designee, at the time the Director or his/her designee approves a
supervisory merger to resolve problems related to operation of the Companies or
when the Companies are determined by the Director of the OTS to be in an unsafe
or unsound condition, but vested rights of Executive and the Companies as of the
date of termination shall not be affected.
18. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payment made to the Executive 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.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.
Attest: FIRST DEFIANCE FINANCIAL CORP.
/s/ Xxxx X. Xxxxxxxx By:/s/ Xxx X. Xxx Xxxxxxx
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Xxxx X. Xxxxxxxx, Secretary Xxx X. Xxx Xxxxxxx, Chairman of
the Board of Directors
Attest: FIRST FEDERAL SAVINGS & LOAN
/s/ Xxxx X. Xxxxxxxx By:/s/ Xxx X. Xxx Xxxxxxx
-------------------- -------------------------
Xxxx X. Xxxxxxxx, Secretary Xxx X. Xxx Xxxxxxx, Chairman of
the Board of Directors
Witness:
/s/ Xxxx X. Xxxxxxxx /s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
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