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Exhibit 10.4
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), is entered into this 1st day of January, 1998, by and between The
Home Loan Savings Bank, a savings and loan association incorporated under Ohio
law (hereinafter referred to as the "BANK"), and Xxxxxx X. Xxxxxxxx, an
individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the President of the
BANK;
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the BANK desires to retain the services of
the EMPLOYEE as the President of the BANK;
WHEREAS, the EMPLOYEE desires to continue to serve as the President of
the BANK; and
WHEREAS, the EMPLOYEE and the BANK desire to enter into this AGREEMENT
to set forth the terms and conditions of the employment relationship between the
BANK and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the BANK and the EMPLOYEE hereby agree as follows:
1. Employment and Term.
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(a) TERM. Upon the terms and subject to the conditions of this
AGREEMENT, the BANK hereby employs the EMPLOYEE, and the EMPLOYEE hereby accepts
employment, as the President of the BANK. The term of this AGREEMENT shall
commence on the date hereof and shall end on December 31, 2000, unless extended
by the BANK, with the consent of the EMPLOYEE, as provided in subsection (b) of
this Section 1 (hereinafter referred to, together with such extensions, as the
"TERM").
(b) EXTENSION. On or before each anniversary of the date of this
AGREEMENT, the Board of Directors of the BANK shall review this AGREEMENT,
document its justification and approval of this AGREEMENT in the board minutes,
and the TERM shall be extended for a one-year period beyond the then effective
expiration date, provided the Board of Directors determines that this AGREEMENT
should be extended. Any such extension shall be subject to the written consent
of the EMPLOYEE.
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2. Duties of the Employee.
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(a) GENERAL DUTIES AND RESPONSIBILITIES. The EMPLOYEE shall serve as
the President of the BANK. Subject to the direction of the Board of Directors of
the BANK, the EMPLOYEE shall have responsibility for the general management of
the business and affairs of the BANK and shall perform all duties and shall have
all powers which are commonly incident to the office of President or which,
consistent therewith, are delegated to him by the Board of Directors. Such
duties shall include, but not be limited to, (i) managing the day to day
operations of the BANK, (ii) managing the efforts of the BANK to comply with
applicable laws and regulations, (iii) marketing the BANK and its services, (iv)
supervising other employees of the BANK, (v) providing reports to the Board of
Directors of the BANK regarding the affairs and conditions of the BANK, and (vi)
making recommendations to the Board of Directors of the BANK concerning the
strategies, capital structure, tactics and general operations of the BANK.
(b) DEVOTION OF ENTIRE TIME TO THE BUSINESS OF THE BANK. 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 BANK, Home Loan Financial Corporation (hereinafter
referred to as the "HOLDING COMPANY"), the sole shareholder of the BANK, or any
subsidiary of the BANK or the HOLDING COMPANY without the prior written consent
of the Board of Directors of the BANK; provided, however, that the EMPLOYEE
shall not be precluded from (i) vacations and other leave time in accordance
with Section 3(d) 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 meetings and serving as an officer, director or
trustee of a state or national trade association or Federal Home Loan Bank, (iv)
serving as an officer or director of the HOLDING COMPANY or any subsidiary of
the BANK or the HOLDING COMPANY 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 BANK.
3. Compensation.
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(a) SALARY. The EMPLOYEE shall receive during the TERM an annual salary
payable in equal installments not less often than monthly. The amount of such
annual salary shall be $165,000 until changed by the Board of Directors of the
BANK in accordance with Section 3(b) below.
(b) ANNUAL SALARY REVIEW. On or before each anniversary of the date of
this AGREEMENT, the annual salary of the EMPLOYEE shall be reviewed by the Board
of Directors of the BANK and shall be set at an amount not less than $165,000,
based upon the EMPLOYEE's individual performance and the overall profitability
and financial condition of the BANK (hereinafter referred to as the "ANNUAL
REVIEW"). The results of the ANNUAL REVIEW shall be reflected in the minutes of
the Board of Directors of the BANK.
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(c) EMPLOYEE BENEFIT PROGRAMS. During the TERM, the EMPLOYEE shall be
entitled to participate in all formally established employee benefit, bonus,
pension and profit sharing plans and similar programs that are maintained by the
BANK or the HOLDING COMPANY from time to time and all employee benefit plans or
programs hereafter adopted in writing by the Board of Directors of the BANK or
the HOLDING COMPANY for which senior management personnel of the BANK are
eligible, including any employee stock ownership plan, stock option plan or
other stock benefit plan (hereinafter collectively referred to as "BENEFIT
PLANS") in accordance with the terms and conditions of such BENEFIT PLANS,
including, but not limited to, satisfaction of any participation or vesting
requirements. Notwithstanding any statement to the contrary contained elsewhere
in this AGREEMENT, the BANK 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.
(d) 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 of Directors of the BANK for senior management officials of the BANK. The
EMPLOYEE shall be entitled to annual sick leave as established by the Board of
Directors of the BANK for senior management officials of the BANK.
(e) EXPENSES. In addition to any compensation received under Section
3(d), the BANK shall pay or reimburse the EMPLOYEE for all reasonable travel,
entertainment and miscellaneous expenses incurred in connection with the
performance of his duties under this AGREEMENT, including participation in
industry-related activities.
4. Termination of Employment.
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(a) GENERAL. In addition to the termination of the employment of the
EMPLOYEE upon the expiration of the TERM, the employment of the EMPLOYEE shall
terminate at any other time during the TERM (i) at the option of the BANK upon
the delivery by the BANK 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 BANK if, in connection with a CHANGE IN CONTROL
(hereinafter defined), 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 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 the BANK or the
HOLDING COMPANY or 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 the commencement of the TERM of this AGREEMENT) or the
EMPLOYEE's compensation or other benefits provided under this AGREEMENT are
reduced, unless the benefit reductions are part of a Company-wide reduction. For
purposes of this AGREEMENT, an event shall be deemed to have occurred "in
connection
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with a CHANGE OF CONTROL" if such event occurs within one year before or after a
CHANGE OF CONTROL. The following subsections (A), (B) and (C) of this Section
4(a) shall govern the obligations of the BANK to the EMPLOYEE upon the
occurrence of the events described in such subparagraphs:
(A) TERMINATION FOR JUST CAUSE. In the event that the BANK 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, regulation or final cease-and-desist order (other than traffic violations
or other minor offenses), conviction of a felony or for fraud or embezzlement,
or material breach of any provision of this AGREEMENT (hereinafter collectively
referred to as "JUST CAUSE"), the EMPLOYEE shall not receive, and shall have no
right to receive, any compensation or other benefits for any period after such
termination.
(B) TERMINATION IN CONNECTION WITH CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated by the BANK in connection with a
CHANGE OF CONTROL for any reason other than JUST CAUSE or is terminated by the
EMPLOYEE as provided in Section 4(a)(ii) above, then the following shall occur:
(I) The BANK 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 (hereinafter collectively referred to as "SECTION 280G");
(II) The EMPLOYEE, his dependents, beneficiaries and estate shall
continue to be covered at the BANK's expense under all health, life, disability
and other benefit plans of the BANK 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 BANK 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 before the expiration of the
TERM not for JUST CAUSE and not in connection with a CHANGE OF CONTROL, then the
following shall occur:
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(I) The BANK shall be obligated to continue to pay on a monthly
basis, until the expiration of the TERM, to the EMPLOYEE, his designated
beneficiaries or his estate, the annual salary in effect at the time of
termination pursuant to Section 3 above, plus a cash bonus equal to the cash
bonus, if any, paid to the EMPLOYEE in the twelve month period prior to the
termination of employment;
(II) The BANK shall continue to provide to the EMPLOYEE, at the
BANK's expense, health, life, disability and other benefits 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
(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 BANK hereunder, except
as specifically stated in subparagraph II 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. Payments
pursuant to this Section 4. Any payments made to the EMPLOYEE pursuant to this
AGREEMENT are subject to and conditioned upon their compliance with 12 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
(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 BANK or the HOLDING COMPANY; (ii)
the acquisition of the ability to control the election of a majority of the
directors of the BANK or the HOLDING COMPANY; (iii) during any period of up to
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the BANK or the HOLDING COMPANY cease for
any reason to constitute at least two-thirds thereof; provided, however, that
any individual whose election or nomination for election as a member of the
Board of Directors of the BANK or the HOLDING COMPANY 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 BANK or the HOLDING
COMPANY; or (iv) the acquisition by any person or entity of "conclusive control"
of the BANK within the meaning of 12 C.F.R. Section 574.4(a), or the acquisition
by any person or entity of "rebuttable control" within the meaning of 12 C.F.R.
Section 574.4(b) that has not been rebutted in accordance with 12 C.F.R.
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Section 574.4(c). For purposes of this paragraph, the term "person" refers to an
individual or corporation, partnership, trust, association or other
organization, but does not include the EMPLOYEE and any person or persons with
whom the EMPLOYEE is "acting in concert" within the meaning of 12 C.F.R. Part
574.
5. SPECIAL REGULATORY EVENTS. Notwithstanding the provisions of Section 4
of this AGREEMENT, the obligations of the BANK to the EMPLOYEE shall be as
follows in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the BANK's affairs by a notice served under
section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), the BANK's obligations under this AGREEMENT shall be
suspended as of the date of service of such notice, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the BANK shall pay the
EMPLOYEE all or part of the compensation withheld while the obligations in this
AGREEMENT were suspended and reinstate, in whole or in part, any of the
obligations that were suspended;
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the BANK's affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the FDIA, all obligations of the BANK under this
AGREEMENT shall terminate as of the effective date of such order; provided,
however, that vested rights of the EMPLOYEE shall not be affected by such
termination;
(c) If the BANK is in default, as defined in section 3(x)(1) of the
FDIA, all obligations under this AGREEMENT shall terminate as of the date of
default; provided, however, that vested rights of the EMPLOYEE shall not be
affected;
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the BANK, (i) by the Director of the
Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his or
her designee, at the time that the Federal Deposit Insurance Corporation enters
into an agreement to provide assistance to or on behalf of the BANK under the
authority contained in Section 13(c) of the FDIA or (ii) by the Director of the
OTS, or his or her designee, at any time the Director of the OTS approves a
supervisory merger to resolve problems related to the operation of the BANK or
when the BANK is determined by the Director of the OTS to be in an unsafe or
unsound condition; provided, however that no vested rights of the EMPLOYEE shall
not be affected by any such termination; and
(e) The provisions of this Section 5 are governed by the requirements
of 12 C.F.R. Section 563.39(b) and in the event that any statements in this
Section 5 are inconsistent with 12 C.F.R. Section 563.39(b), the provisions of
12 C.F.R. Section 563.39(b) shall be controlling.
6. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT
shall preclude the BANK or the HOLDING COMPANY from consolidating with, merging
into, or transferring
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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, the term "BANK" as used herein, shall mean such
other corporation or entity, and this AGREEMENT shall continue in full force and
effect.
7. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the BANK and its customers and businesses. The EMPLOYEE agrees and covenants not
to disclose or use for his own benefit, or the benefit of any other person or
entity, any confidential information, unless or until the BANK consents to such
disclosure or use or such 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 BANK, its subsidiaries, or
affiliates, or to any of the businesses operated by them, and the EMPLOYEE
confirms that such information constitutes the exclusive property of the BANK.
The EMPLOYEE shall not otherwise knowingly act or conduct himself to the
material detriment of the BANK, its subsidiaries, or affiliates or in a manner
which is inimical or contrary to the interests of the BANK.
8. NON-ASSIGNABILITY. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries or legal
representatives without the BANK's prior written consent; provided, however,
that nothing in this Section VIII 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.
9. 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.
10. BINDING AGREEMENT. This AGREEMENT shall be binding upon, and inure
to the benefit of, the EMPLOYEE and the BANK and their respective permitted
successors and assigns.
11. AMENDMENT OF AGREEMENT. This AGREEMENT may not be modified or amended,
except by an instrument in writing signed by the parties hereto.
12. 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.
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13. 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 BANK (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.
14. 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.
15. 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, except to the extent that
federal law is governing.
16. EFFECT OF PRIOR AGREEMENTS. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the BANK or any predecessor of the BANK and the EMPLOYEE.
17. 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 BANK:
The Home Loan Savings Bank
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
If to the EMPLOYEE:
Xx. Xxxxxx X. Xxxxxxxx
000 X. Xxxx Xxxxxx
Xxxx Xxxxxxxxx, Xxxx 00000
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IN WITNESS WHEREOF, the BANK 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: The Home Loan Savings Bank
____________________________ By: _______________________________
Xxxxxx X. Xxxxx
its Chairman of the Board
Attest:
____________________________ ___________________________________
Xxxxxx X. Xxxxxxxx
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