Exhibit 10.6
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") dated this 13th day of
December, 1999 (the "Effective Date") by and between Belmont National Bank, a
national banking corporation (the "Bank"), and Belmont Bancorp, an Ohio
corporation (the "Holding Co." and collectively with the Bank, the "Employer"),
and Xxxxxx X. Xxxx ("Employee"). For and in consideration of the parties'
material covenants, representations and warranties made herein, the parties
agree as follows:
1. Employment and Duties.
(a) The Employer hereby employs Employee to serve as the President and
Chief Executive Officer of each of the Bank and the Holding Co. As such,
Employee shall have responsibilities, duties and authority reasonably accorded
to and expected of such position. Employer will report directly to the Board of
Directors of each of the Bank and the Holding Co. (referred to individually or
collectively, as the context shall require, the "Board"). Employee hereby
accepts this employment upon the terms and conditions herein contained and,
subject to paragraph 3 hereof, agrees to devote Employee's full time, attention
and efforts to promote and further the business of the Employer.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Employer, as such policies may be changed from time to time
by the Employer.
2. Compensation. For all services rendered by Employee, the Employer shall
compensate Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be $160,000 per
year, payable on a monthly basis in accordance with the Employer's standard
payroll procedures. On at least an annual basis, the Employer will review
Employee's performance and may make increases to such base salary if, in its
discretion, any such increase is warranted.
(b) Employee Perquisites, Benefits, Annual Bonus and Other Compensation.
Employee shall be entitled to receive additional benefits and compensation from
the Employer in such form and to such extent as specified below:
(i) For the services Employee performs during calendar year 2000, the
Board shall award to Employee such bonus, if any, as its determines in its
judgment to be appropriate. Factors which the Board shall consider in
making its determination shall be the Employee's success in improving the
quality and performance of the Bank's loan portfolio, including by reducing
the number of loans on the Bank's watch list and improving the grading of
the loans held in the portfolio. The parties acknowledge and understand
that a bonus of from $20,000 to $25,000 is anticipated if the Employee
provides exemplary service. Any such bonus shall be payable not later than
March 31, 2001.
(ii) As soon as reasonably practicable, but in no event later than
June 30, 2000, the parties shall adopt a mutually acceptable bonus plan
which provides for the payment of an annual bonus to Employee for the
services he performs during each calendar year, beginning with 2001, based
upon the Bank's achievement of a specified return on equity and/or a
specified return on assets. Any such bonus shall be payable not later than
March 31 of each year following the year for which the Bank's performance
is measured.
(iii) Employee and Employee's dependent family members shall be
entitled to participate in the health, hospitalization, disability, dental,
life and other insurance plans that the Employer may have in effect from
time to time, with benefits provided to Employee under this clause to be at
least equal to such benefits provided to executive officers of Employer
generally.
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(iv) Employee shall be reimbursed all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the performance
of Employee's services pursuant to this Agreement. All reimbursable
expenses shall be appropriately documented in reasonable detail by Employee
upon submission of any request for reimbursement, and in a format and
manner consistent with the Employer's expense reporting policy. Any
expenses in excess of $3,000 per year in the aggregate shall be approved by
the Board.
(v) Employee shall be entitled to an allowance to lease a Buick Park
Avenue or equivalent vehicle, to be replaced every three years during the
term of this Agreement.
(vi) Employee shall be entitled to use of the one of the corporate
memberships for Belmont Hills Country Club held by Employer, to be used to
promote Employer's business and affairs.
(viii) Employee shall be entitled to a grant of options to purchase
between 50,000 and 75,000 shares of the Holding Co.'s common stock under
the Belmont Bancorp 1999 Stock Option Plan Stock for Xxxxxx Xxxx, to be
adopted by the Board substantially in the form attached hereto as Annex A
(the "Plan"). Such options shall have an exercise price equal to the market
price of the Holding Co.'s common stock on the date of grant, which shall
be as determined by the Board or the committee thereof charged with
administering the Plan. Such options shall vest 20% upon grant and in equal
20% increments on each of the first four anniversaries of the date of grant
and shall be exercisable for 10 years from the date of grant, subject to
earlier termination following the termination of Employee's employment with
the Holding Co. as provided in the Plan; provided, however, that (1) if
Employer terminates Employee without cause as set forth in paragraph
5(a)(iv), the last day of the Remaining Period (as hereinafter defined)
shall be deemed the date of Employee's termination of employment, and (2)
upon the occurrence of a Change of Control (as hereinafter defined), all
outstanding options held by Employee shall immediately vest.
(ix) Employee shall be entitled to four weeks of paid vacation per
year.
(x) Employer shall provide Employee with other employee perquisites as
may be available to or deemed appropriate for Employee by the Board and
participation in all other Employer-wide employee benefits as are available
from time to time.
3. Non-Competition Agreement.
(a) Employee shall not, during the term of Employee's employment hereunder,
be engaged in any other business activity pursued for gain, profit or other
pecuniary advantage. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of this paragraph 3.
(b) In addition, Employee shall not, during the period of Employee's
employment with the Employer, and for a period of one year immediately following
the termination of Employee's employment under this Agreement (excluding from
such computation any time during which Employee is in violation of any provision
of this paragraph 3):
(i) serve as an officer, director, shareholder, owner, partner, joint
venturer, consultant or advisor to any bank, savings bank or other
financial institution within a 50 mile radius of the Bank's principal
office in St. Xxxxxxxxxxx, Ohio (except that Employee may hold up to 1% of
the capital stock of any such institution);
(ii) solicit any of Employer's customers except on Employer's behalf;
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(iii) directly or indirectly influence any of Employer's employees to
terminate their employment with Employer or accept employment with any
competitor of the Employer;
(iv) interfere with any of Employer's business relationships; or
(v) enter into any business relationship with any of Employer's
customers or suppliers, except upon prior approval of the Board after
Employee has apprised it of the nature of the relationship proposed to be
entered into and the direct or indirect compensation proposed to be
received by Employee.
(c) Because of the difficulty of measuring economic losses to the Employer
as a result of a breach of the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to the Employer for which they would
have no other adequate remedy, Employee agrees that the foregoing covenant may
be enforced by the Employer in the event of breach by Employee, by injunctions
and restraining orders.
(d) The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Employer,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Employer of such covenants.
4. Place of Performance. Employee understands that Employee may be
requested by the Board to relocate from Employee's present residence to another
geographic location in order to more efficiently carry out Employee's duties and
responsibilities under this Agreement. In such event, if Employee agrees to
relocate, the Employer will pay all relocation costs not in excess of $40,000 to
move Employee, Employee's immediate family and their personal property and
effects. Such costs may include, by way of example, but are not limited to,
pre-move visits to search for a new residence, investigate schools or for other
purposes; temporary lodging and living costs prior to moving into a new
permanent residence; duplicate home carrying costs; all closing costs on the
sale of Employee's present residence and on the purchase of a comparable
residence in the new location; and added income taxes that Employee may incur if
any relocation costs are not deductible for tax purposes. Subject to the $40,000
limitation on costs to be borne by Employer, the general intent of the foregoing
is that Employee shall not personally bear any out-of-pocket cost as a result of
the relocation, with an understanding that Employee will use Employee's best
efforts to incur only those costs which are reasonable and necessary to effect a
smooth, efficient and orderly relocation with minimal disruption to the business
affairs of the Employer and the personal life of Employee and Employee's family.
5. Term; Termination; Rights on Termination.
(a) The term of this Agreement shall begin on the Effective Date and
continue for three years (the "Term"), unless terminated sooner as herein
provided, and shall continue thereafter on a year-to-year basis on the same
terms and conditions contained herein in effect as of the time of renewal;
provided, however, that this Agreement will not continue in effect if notice of
non-renewal is provided by Employer not less than 30 days prior to the
expiration of the then current term. This Agreement and Employee's employment
may be terminated in any one of the following ways:
(i) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
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(ii) Disability. If, as a result of incapacity due to physical or
mental illness or injury, Employee shall have been absent from full-time
duties hereunder for four consecutive months, then 30 days after receiving
written notice (which notice may occur before or after the end of such four
month period, but which shall not be effective earlier than the last day of
such four month period), the Employer may terminate Employee's employment
hereunder provided Employee is unable to resume full-time duties with or
without reasonable accommodation at the conclusion of such notice period.
Also, Employee may terminate Employee's employment hereunder if Employee's
health should become impaired to an extent that makes the continued
performance of Employee's duties hereunder hazardous to Employee's physical
or mental health or life, provided that Employee shall have furnished the
Employer with a written statement from a qualified doctor to such effect
and provided, further, that, at the Employer's request made within 30 days
of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Employer who is reasonably
acceptable to Employee or Employee's doctor.
Employee shall continue to receive from the Employer (whether directly
and/or through any disability insurance policy) (1) for the balance of the
period that this Agreement would have remained in effect absent such
termination for disability (but without any subsequent renewal) (the
"Remaining Period") plus a period of six months following the termination
of Employee's employment (the "Severance Period" and, together with the
Remaining Period, the "Reference Period") the base salary at 70% of the
rate being paid to the Employee immediately prior to his termination,
payable monthly, (2) if not previously paid, the bonus for the calendar
most recently ended prior to the termination of Employee's employment for
disability and, for any subsequent year during the Remaining Period, 70% of
the bonus that would have been payable had Employee's employment continued,
payable by March 31 of the year following the year for which the bonus is
calculated, and (3) for the Reference Period, the other benefits specified
in paragraph 2.
(iii) Good Cause. The Employer may terminate the Agreement immediately
for good cause in the event that the Employee (1) commits an act of
dishonesty, fraud, embezzlement, or breach of trust against the Employer
(including any misrepresentation to the Board), or an act which he knows to
be in violation of his duties to the Employer, which act is materially
injurious to the Employer's business or reputation and is not remedied
within 10 days after notice thereof by the Employer; (2) breaches this
Agreement or fails to adequately render services or perform his obligations
to the Employer, which act or failure is materially injurious to the
Employer's business or reputation and is not remedied within 10 days after
notice thereof by the Employer; (3) commits acts amounting to gross
negligence or willful misconduct which are materially injurious to the
Employer's business or reputation and is not remedied within 10 days after
notice thereof by the Employer; (4) is convicted of a felony, a crime of
moral turpitude or any crime involving the Employer or his duties under
this Agreement; or (5) tests positive to the use of any illegal drug; or
(6) abuses alcohol or any other drug and fails to enter the rehabilitation
program or undertake the plan of treatment prescribed by the Board, fails
to comply with the conditions of such program or plan of treatment or fails
to comply with the maintenance conditions prescribed following such program
or plan of treatment. In the event of a termination for good cause,
Employee shall have no right to receive any further compensation or
benefits hereunder.
(iv) Without Cause. At any time after the commencement of employment,
the Employer or Employee may, without cause, terminate this Agreement and
Employee's employment, effective 30 days after written notice is provided
to the other.
Should Employee be terminated by the Employer without cause, then,
unless Employee is entitled to compensation under paragraph 5(a)(vi)
hereof, Employee shall continue to receive from the Employer (1) for the
Reference Period the base salary at the rate being paid to the Employee
immediately prior to his termination, payable monthly, (2) if not
previously paid, the bonus for the calendar most recently ended prior to
the termination of Employee's employment and, for any subsequent year
during the Remaining Period, a amount equal to the greater of (A) the bonus
that would have been payable had Employee's employment continued or (B) the
last bonus earned by Employee prior to his termination without cause, in
either case
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payable by March 31 of the year following the year for which the bonus is
calculated, and (3) for the Reference Period, the other benefits specified
in paragraph 2.
Except as otherwise provided in paragraph 5(a)(vi), if Employee
voluntarily terminates his employment with the Employer, Employee shall
receive no further compensation or benefits hereunder.
(v) Failure to Renew. The termination of Employee's employment by
reason of Employer's failure to renew this Agreement shall be treated as a
termination by reason of disability, good cause or without cause, as the
case may be, and the applicable provisions of this paragraph 5 shall be
applied. In such instance, there shall be no Remaining Period, and
Reference Period and the Severance Period shall be coextensive.
(vi) Change of Control. If (A) the Employer terminates the Employee's
employment (including by failing to renew this Agreement) within two years
following the occurrence of a Change of Control (as hereinafter defined),
unless such termination is by reason of the death or disability of Employee
or the Employer's termination of Employee for good cause as specified in
paragraph 5(a)(iii), or (B) the Employee voluntary terminates his
employment (including by failing to renew this Agreement) within six months
following the occurrence of a Change of Control, the Employer shall
repurchase from Employee his personal residence in the St. Xxxxxxxxxxx,
Ohio area for the price paid by Employee, and shall pay to Employee, within
90 days after such termination, a lump sum payment equal to 299% of the sum
of (1) his annualized base salary at the rate being paid to the Employee
immediately prior to the termination of his employment, payable monthly,
and (2) the most recent bonus earned by Employee (which, if it has been
earned but not paid to Employee for the year most recently ended prior to
the termination of Employee's employment, such bonus shall be paid
independently (and without reduction) of this lump sum payment).
A "Change of Control" shall mean:
(1) either the Bank or the Holding Co. sells or otherwise transfers
all or substantially all of its assets to another corporation or
other entity and, as a result of such sale or transfer, less than
a majority of the combined voting power of the then outstanding
securities of such other corporation or entity immediately after
such transaction is held in the aggregate by the holders of
securities of any class or series entitled to vote generally in
the election of directors ("Voting Stock") of the Bank or Holding
Co. immediately prior to such sale or transaction;
(2) either the Bank or the Holding Co. is merged, consolidated or
reorganized into or with another corporation or other entity, and
as a result of such merger, consolidation or reorganization, less
than a majority of the combined voting power of the then
outstanding securities of such corporation or entity immediately
after such transaction is held in the aggregate by the holders of
Voting Stock of the Bank or Holding Co. immediately prior to such
transaction;
(3) any person or group of persons, as defined in Rule 13d-5 of the
Rules under the Securities Exchange Act of 1934, as amended
("Group") becomes the beneficial owner, directly or indirectly,
of a majority of the Voting Stock of the Holding Co.; or
(4) any person or Group, other than the Holding Co., becomes the
beneficial owner, directly or indirectly, of a majority of the
Voting Stock of the Bank.
(b) Effect of Termination. Upon termination of this Agreement for any
reason provided above, Employee shall be entitled to receive all compensation
earned and all benefits and reimbursements due through the effective date of
termination. Additional compensation subsequent to termination, if any, will be
due and payable to Employee only to the extent and in the manner expressly
provided herein. All other rights and obligations of the
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Employer and Employee under this Agreement shall cease as of the effective date
of termination, except that the Employer's obligations under paragraph 8 herein
and Employee's obligations under paragraphs 3, 6 and 7 herein shall survive such
termination in accordance with their terms unless otherwise provided herein.
(c) Employee recognizes and understands that the Bank must obtain the
approval or a waiver of the Comptroller of the Currency and the Holding Co. must
obtain the approval or a waiver from the Federal Reserve Bank of Cleveland for
Employee's appointment to become effective. Accordingly, notwithstanding
anything to the contrary herein contained, if such waivers or approvals are not
obtained, Employer may immediately terminate Employer's employment hereunder. In
such event, Employee shall be entitled to receive an amount equal to his base
salary for a three month period, payable in a lump sum within 30 days after such
termination, and Employee shall not be bound by the provisions of paragraph 3(b)
at any time following such termination.
6. Return of Employer Property. All records, business plans, financial
statements, manuals, memoranda, lists and other property delivered to or
compiled by Employee by or on behalf of the Employer or its representatives or
customers which pertain to the business of the Employer shall be and remain the
property of the Employer, and be subject at all times to its discretion and
control. Likewise, all correspondence, reports, records, charts, advertising
materials and other similar data pertaining to the business, activities or
future plans of the Employer which is collected by Employee shall be delivered
promptly to the Employer without request by it upon termination of Employee's
employment.
7. Proprietary Information; Trade Secrets. Employee agrees that Employee
will not disclose the terms of the Employer's relationships or agreements with
its customers or any other proprietary information or trade secrets of either
whether in existence or proposed, to any person, firm, partnership, corporation
or business for any reason or purpose whatsoever.
8. Indemnification. In the event Employee is made a party to any
threatened, pending or contemplated action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the Employer
against Employee), by reason of the fact that Employee is or was performing
services under this Agreement, then the Employer shall indemnify Employee
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement, as actually and reasonably incurred by Employee in
connection therewith. In the event that both Employee and the Employer are made
a party to the same third party action, complaint, suit or proceeding, the
Employer agrees to engage counsel, and Employee agrees to use the same counsel,
provided that if counsel selected by the Employer shall have a conflict of
interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Employer shall pay all reasonable attorneys'
fees of such separate counsel. The Employer shall not be required to pay the
fees of more than one law firm except as described in the preceding sentence,
and shall not be required to pay the fees of more than two law firms under any
circumstances. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge Employee's duties under this
Agreement, Employee cannot be held liable to the Employer for errors or
omissions so long as Employee has acted in good faith and in a manner he
reasonably believes to be in the best interests of the Employer.
9. No Prior Agreements. Employee hereby represents and warrants to the
Employer that the execution of this Agreement by Employee and Employee's
employment by the Employer and the performance of Employee's duties hereunder
will not violate or be a breach of any agreement with a former employer, client
or any other person or entity. Further, Employee agrees to indemnify the
Employer for any claim, including, but not limited to, attorneys' fees and
expenses of investigation, by any such third party that such third party may now
have or may hereafter come to have against the Employer based upon or arising
out of any non-competition agreement, invention or secrecy agreement between
Employee and such third party which was in existence as of the date of this
Agreement.
10. Assignment; Binding Effect. Employee understands that Employee has been
selected for employment by the Employer on the basis of Employee's personal
qualifications, experience and skills. Employee agrees, therefore, that Employee
cannot assign all or any portion of Employee's performance under this Agreement.
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Subject to the preceding two sentences, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their
respective heirs, legal representatives, successors and assigns.
11. Complete Agreement. This Agreement sets forth the entire agreement of
the parties hereto relating to the subject matter hereof and supersedes any
other employment agreements or understandings, written or oral, between the
Employer and Employee. This Agreement is not a promise of future employment.
Employee has no oral representations, understanding or agreements with the
Employer or any of its officers, directors or representatives covering the same
subject matter as this Agreement. This written Agreement is the final, complete
and exclusive statement and expression of the agreement between the Employer and
Employee and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreement. This written Agreement may not be later modified except by a
further writing signed by a duly authorized officer of the Employer and
Employee, and no term of this Agreement may be waived except by writing signed
by the party waiving the benefit of such term.
12. Notice. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To The Employer: Belmont National Bank and Belmont Bancorp
000 Xxxx Xxxx Xxxxxx
Xx. Xxxxxxxxxxx, XX 00000
To Employee: Xxxxxx X. Xxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Notice shall be deemed given and effective on the earlier of three days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually received
by means of hand delivery, delivery by Federal Express or other courier service,
or by facsimile transmission. Either party may change the address for notice by
notifying the other party of such change in accordance with this paragraph.
13. Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
14. Enforceability. If any provision or part thereof of this Agreement for
any reason shall be validly held by an official body to be invalid or
unenforceable, the valid and enforceable provisions or parts thereof shall
continue to be given effect and bind the Employer and Employee.
15. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Ohio without regard for its conflicts of
laws principles.
16. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Belmont National Bank
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By:
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Name:
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Title:
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Belmont Bancorp
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By:
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Name:
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Title:
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Xxxxxx X. Xxxx
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