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EXHIBIT 10.2
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), is entered into this 19th day of June, 2000, by and between The
Home Savings and Loan Company of Youngstown, Ohio, a savings and loan
association incorporated under Ohio Law (hereinafter referred to as the
"COMPANY"), and Xxxxxxx X. Xxxxxx, an individual (hereinafter referred to as the
"EMPLOYEE");
WITNESSETH:
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Board of Directors of the COMPANY desires to retain the services
of the EMPLOYEE as the Senior Vice President, Mortgage Banking Division of the
COMPANY;
WHEREAS, the EMPLOYEE desires to serve as Senior Vice President,
Mortgage Banking Division of the COMPANY; and
WHEREAS, the EMPLOYEE and the COMPANY desire to enter into this
AGREEMENT to set forth the terms and conditions of the employment relationship
between the COMPANY and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the COMPANY 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 COMPANY hereby employs the EMPLOYEE, and the EMPLOYEE hereby
accepts employment, as the Senior Vice President, Mortgage Banking Division of
the COMPANY. The term of this AGREEMENT shall commence on June 19, 2000, and
shall end on December 31, 2002, unless extended by the COMPANY, 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 COMPANY shall review this AGREEMENT
and, upon approval by the Board of Directors, 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 of
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directors 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.
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(a) General Duties and Responsibilities. The EMPLOYEE shall serve as
the Senior Vice President, Mortgage Banking Division of the COMPANY. Subject to
the direction of the Board of Directors of the COMPANY shall perform all duties
and shall have all powers which are commonly incident to the office Senior Vice
President, Mortgage Banking Division or which, consistent therewith, are
delegated to him by the Board of Directors.
(b) Devotion of Entire Time to the Business of the COMPANY. 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 COMPANY, United Community Financial Corp.
(hereinafter referred to as the "HOLDING COMPANY"), the sole shareholder of the
COMPANY, or any subsidiary of the COMPANY or the HOLDING COMPANY without the
prior written consent of the Board of directors of the COMPANY; 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 COMPANY 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 COMPANY.
3. COMPENSATION.
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(a) TOTAL COMPENSATION. The EMPLOYEE shall receive during the TERM
total compensation established by the Compensation Committee of the Board of
Directors. In making its determination, the Compensation Committee shall
consider the average total compensation for the Senior Vice President, Mortgage
Banking Division of a peer group of companies. The companies comprising the peer
group shall be selected by Deloitte & Touche LLP or another third party
consultant acceptable to the EMPLOYEE and the Compensation Committee of the
Board of Directors of the COMPANY. The selection of the peer group shall take
into account the asset size and performance ratios of the COMPANY, and such
other factors as the consultant considers
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appropriate under the circumstances. It is the intent of the COMPANY that the
EMPLOYEE'S total compensation shall include the following components: (1) a base
salary, payable in installments not less often than monthly; (2) cash incentive
compensation, payable not less often than annually; and (3) long term incentive
compensation. The percentage of total compensation derived from each of the
three components described in the preceding sentence shall be comparable to the
peer group average. Until the COMPANY has implemented a compensation program
which includes the three components described above, the EMPLOYEE shall receive
an annual salary of not less than $125,000.00, payable in equal installments not
less often than monthly, and cash incentive compensation payable not less often
than annually.
(b) ANNUAL REVIEW. On or before June 19th of each year, commencing in
2001, the total compensation of the EMPLOYEE shall be reviewed by the Board of
Directors of the COMPANY and shall be set at an amount not less than
$125,000.00, based upon the EMPLOYEE'S individual performance and such other
factors as the Board of Directors may deem appropriate (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 COMPANY.
(c) EMPLOYEE BENEFIT PROGRAMS. During the TERM, the EMPLOYEE shall be
entitled to participate in all formally established employee benefit, bonus,
pension, insurance, profit sharing plans, stock benefit plans and similar
programs (hereinafter collectively referred to as "BENEFIT PLANS"), in
accordance with the terms and conditions of such BENEFIT PLANS that are
maintained by the COMPANY 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 COMPANY or the HOLDING COMPANY for which senior management
personnel of the COMPANY are eligible. Notwithstanding any statement to the
contrary contained elsewhere in this AGREEMENT, the COMPANY 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
COMPANY who are eligible participants at the time.
(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 COMPANY for senior management officials of the
COMPANY. The EMPLOYEE shall be entitled to annual sick leave as established by
the Board of Directors of the COMPANY for senior management officials of the
COMPANY.
(e) EXPENSES. The COMPANY shall pay or reimburse the EMPLOYEE for
reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of his duties under this AGREEMENT, including
participation in industry-related activities.
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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 COMPANY, upon the delivery by the
COMPANY 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 COMPANY 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
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 COMPANY or the HOLDING COMPANY,
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 COMPANY to the EMPLOYEE upon the occurrence of the events
described in such subparagraphs:
(A) TERMINATION FOR CAUSE. In the event that the COMPANY 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
(hereinafter collectively referred to as "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 COMPANY 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 COMPANY 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 COMPANY'S expense under all health, life,
disability and other benefit plans of the COMPANY, as described in Section 3 (c)
of this
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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 COMPANY 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 expiration of the TERM
for any reason other than death, termination for CAUSE or termination in
connection with a CHANGE OF CONTROL, then the following shall occur:
(I) The COMPANY 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, 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 COMPANY shall continue to provide to the EMPLOYEE, at
the COMPANY'S expense, health, life, disability and other benefits, as described
in Section 3(C) 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 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 COMPANY 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. Any payments
made to the EMPLOYEE
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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 COMPANY or the HOLDING COMPANY;
(ii) the acquisition of the ability to control the election of a
majority of the directors of COMPANY or the HOLDING COMPANY
(iii) during any period of three or less consecutive years individuals
who at the beginning of such period constitute the Board of Directors
of the COMPANY or the HOLDING COMPANY cease for any reason to
constitute at least a majority thereof; provided, however, that any
individual whose election or nomination for election as a member of
the Board of Directors of the COMPANY 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 COMPANY or the HOLDING COMPANY;
(iv) the acquisition by any person or entity of "conclusive control"
of the COMPANY 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. Section 574.4(c); or
(v) 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 pursuant to the
Securities Exchange Act of 1934, as amended (hereinafter referred to as
the "EXCHANGE ACT"), or any successor thereto, whether or not any class
of securities of the Corporation is registered under the EXCHANGE ACT.
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 12C.F.R. Part 574.
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 COMPANY, other than pursuant to
Section 4(a)(ii) of this AGREEMENT, the EMPLOYEE shall not engage in the
financial
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institutions business as a director, officer, employee or consultant for any
business or enterprise which competes with the principal business of the
COMPANY or the HOLDING COMPANY or any of their subsidiaries within Mahoning,
Trumbull and Columbiana counties or any other geographic area in which the
COMPANY or the HOLDING COMPANY is doing business for the unexpired TERM of this
AGREEMENT. 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. SPECIAL REGULATORY EVENTS. Notwithstanding the provisions of Section 4 of
this AGREEMENT, the obligations of the COMPANY 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 COMPANY'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 COMPANY'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
COMPANY 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 COMPANY'S affairs by an order issued under
Section 8(e)(4) or 8(g)(1) of the FDIA, all obligations of the COMPANY 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 COMPANY 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 COMPANY, (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 COMPANY
under the authority continued 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 COMPANY or when the COMPANY is determined by 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
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(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 COMPANY or the HOLDING COMPANY from consolidating with, merging
into, or transferring all, or substantially all, of their assets to another
corporation that assumes all their obligations and undertakings hereunder. Upon
such a consolidation, merger or transfer of assets, the term "COMPANY" 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 COMPANY 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 COMPANY consents to
such disclosure or use of 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 COMPANY, its subsidiaries,
or affiliates, or any of the businesses operated by them, and the EMPLOYEE
confirms that such information constitutes the exclusive property of the
COMPANY. The EMPLOYEE shall not otherwise knowingly act or conduct himself to
the material detriment of the COMPANY, its subsidiaries, or affiliates or in a
manner which is inimical or contrary to the interests of the COMPANY.
8. NON-ASSIGNABILITY. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, by the EMPLOYEE, his
beneficiaries or legal representatives without the COMPANY'S prior written
consent; provided, however, that nothing in this Section 8 shall preclude the
EMPLOYEE from designating, a beneficiary to receive any benefits payable
hereunder upon his death or the executors, administrators or 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 COMPANY and their respective permitted
successors and assigns.
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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 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.
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 COMPANY (or any predecessor thereof) and the EMPLOYEE shall be
deemed reinstated to the full extent permitted by law, as 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 COMPANY or any predecessor of the COMPANY and the
EMPLOYEE.
17. The attached addendum #1 shall be incorporated into this agreement.
18. 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 COMPANY:
The Home Savings and Loan Company
Of Youngstown, Ohio
275 Federal Xxxxx Xxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxx 00000-0000
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If to the EMPLOYEE:
Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
IN WITNESS WHEREOF, the COMPANY 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 SAVINGS AND LOAN COMPANY
OF YOUNGSTOWN, OHIO
/s/ Xxxx Xxxx Xxxxxx By:/s/ Xxxxxxx X. XxXxx
Xxxxxxx X. XxXxx
Chief Executive Officer and
Chairman of the Board of Directors
Attest:
/s/ Xxxxx Xxxxx /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
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