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EXHIBIT 10 A. EMPLOYMENT CONTRACT OF XXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT
This Agreement is made this 25th day of August, 1997, by and between
Project A, Inc., an Ohio corporation hereinafter called the "Corporation" and,
Xxxxxx X. XxXxxx hereinafter called the "Employee."
WHEREAS, the Board of Directors of the Corporation believes that the
future services of the Employee in the capacity of President and Chief Executive
Officer will be of great value to the Corporation; and
WHEREAS, the Corporation has been formed for the purpose of chartering
and operating a wholly owned commercial banking subsidiary which will engage in
the general business of banking, hereinafter the "Bank"; and
WHEREAS, the Employee is willing to continue in the employ of the
Corporation on a full-time basis for the term of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto have agreed and do hereby
mutually agree as follows:
1. Term -- Agreement to Serve
The Corporation hereby employs for itself or its subsidiaries
(hereinafter sometimes collectively referred to as "Corporation"), the
services of Employee for a period commencing as of the date first
written above and terminating December 31, 2001 (the "Termination
Date"), subject to the rights of earlier termination hereinafter set
forth, to perform the duties of President and Chief Executive Officer.
The Employee hereby accepts such employment in consideration of the
compensation and the other terms and conditions herein provided, and
agrees to serve the Corporation well and faithfully and to devote his
best efforts to such employment as long as it shall continue hereunder.
During the period of such employment, the Employee will devote all of
his time and attention -- reasonable vacations, periods of illness and
the like excepted -- to the affairs of the Corporation. In connection
with his agreement to provide services hereunder, Employee agrees to
relocate to Xxxxxx County, Ohio within one year of the commencement of
operations of the Bank.
2. Base Salary and Fringe Benefits
Except as otherwise provided herein, as compensation for these services
hereunder, the Corporation will pay to Employee, in installments and on
dates in accordance with its normal payroll, during the period of his
employment hereunder, a base salary at the aggregate rate of One
hundred twenty-five thousand dollars ($125,000) per year, subject to
the right of the parties, by mutual agreement, to adjust such rate
upward on a basis no less favorable than upward adjustments provided as
a class to other senior Employees of the Corporation, in respect of any
future calendar year or years after the date hereof, hereinafter "Base
Pay".
In addition the Corporation shall:
(a) Pay for and provide to the Employee for his exclusive use a
full-sized automobile, the make and model of which shall be of
the Corporation's choosing, equipped with a car phone.
(b) Provide $250,000 in term life insurance, payable to the
beneficiary of Employee's choice.
(c) Provide four weeks paid vacation annually.
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(d) Pay all of Employee's reasonable moving expenses incurred in
connection with his initial relocation to Xxxxxx County.
(e) Pay for and provide to Employee reasonable and customary
disability insurance. In the event the parties are unable to
agree on what shall constitute "reasonable and customary" the
decision of the Corporation shall be conclusive, provided,
however, that such insurance shall provide Employee with a
monthly disability insurance payment equal to not less than
60% of his monthly Base Pay.
(f) Reimburse Employee for any costs incurred in connection with
his continuation of family medical insurance pursuant to his
"COBRA" rights for a period of eighteen months commencing as
of the date first written above.
3. Bonus and Options
(a) Employee will be eligible for Corporation's employee bonus
plan as the same may be in effect from time to time.
(b) Employee shall receive a cash bonus equal to $25,000 upon the
commencement of operations of the Bank.
(c) The Corporation hereby grants to Employee options to purchase
that number of shares of the Corporation which constitute 10%
of the outstanding shares of the Corporation (the "Options"),
computed prior to the grant of such options, upon the
commencement of operations of the Bank. The per share exercise
price of the Options granted herein shall be: (i) the per
share price, adjusted for any stock dividends or splits at
which the Corporation sells shares of its common stock to the
public prior to the commencement of operations of the Bank
(the "Base Price") for 70% of the options granted hereunder,
and (ii) 160%, 180% and 200% of the Base Price for each of the
remaining 10% increments respectively. The Options granted
hereunder shall be nonqualified stock options.
(i) Such Options shall become vested upon commencement of
operations of the Bank and thereafter exercisable on
or after December 31, 2001.
(ii) The Options shall expire, unless properly exercised
prior thereto, ten years from the date first written
above, or 30 days following termination of
employment, whichever shall first occur.
(iii) Notwithstanding paragraph 3.c(i) and (ii), of this
Agreement, the Options shall become fully vested and
may be exercised by Employee or his personal
representative, within the 180 day period following
the termination of employment of Employee pursuant to
paragraph 4(b) or 4(d) of this Agreement, or within a
period of one (1) year following the termination of
employment of Employee pursuant to paragraph 4(f) of
this Agreement. All unexercised Options shall
automatically expire and Employee will forfeit all
rights thereto upon termination of Employment
pursuant to paragraph 4(c) or 4(e) hereof.
(iv) The terms of the Options set forth herein and such
other terms and conditions as the Board of Directors
of the Corporation shall determine not inconsistent
with the terms of this Agreement, shall be set forth
in a written stock option plan adopted by the Board
of Directors of the Corporation and a written grant
form executed by the Corporation and the Employee
prior to the commencement of operations of the Bank.
Among other things the written grant form shall
provide for the Cashless Exercise of the Options, as
hereinafter defined. Cashless Exercise shall mean the
issuance by the Corporation in exchange for the
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cancellation of the Option, shares of the Corporation
equal in market value to the difference in the market
value of the Corporation's shares over the Option
exercise price, provided that the Corporation and the
Employee must be able to agree on the market value of
the Corporation's shares. In the event the
Corporation and Employee are unable to agree as to
the market value of the Corporation shares, Employee
shall not be entitled to the right of Cashless
Exercise.
4. Termination of Employment
The employment of the Employee under the terms of this Agreement shall
cease and terminate as follows:
(a) Expiration of Term
On the Termination Date; or,
(b) Death
On the date of his death; or,
(c) Termination by the Corporation with Cause
For Cause at any time by action of the Board. For purposes
hereof, the term "Cause" shall mean the Employee's willful and
repeated failure to perform his duties under this Employment
Agreement, which failure has not been cured within thirty (30)
days after the Corporation gives notice thereof to the
Employee; it being expressly understood that negligence or bad
judgment shall not constitute "Cause" so long as such act or
omission shall be without intent of personal profit and is
reasonably believed by the Employee to be in or not adverse to
the best interests of the Corporation; or,
(d) Disability
Upon receipt by the Employee of written notice from the
Corporation that, in its opinion, based on reliable medical
evidence, the Employee is unable by reason of permanent
physical or mental disability to continue the proper
performance of his duties hereunder. For purposes of this
Employment Agreement, the Employee's "permanent disability"
shall be deemed to have occurred after one hundred eighty
(180) consecutive days, during which one hundred eighty (180)
days the Employee, by reason of his physical or mental
disability or illness, shall have been unable to discharge his
duties under this Employment Agreement. The date of permanent
disability shall be such one hundred eightieth (180th) day. In
the event either the Corporation or the Employee, after
receipt of notice of the Employee's permanent disability from
the other, dispute that the Employee's permanent disability
shall have occurred, the Employee shall promptly submit to
physical examinations by three physicians in the Cleveland,
Ohio, area and, unless two of such physicians shall issue
their written statement to the effect that in their opinion,
based on their diagnosis, the Employee is capable of resuming
his employment and devoting his full time and energy to
discharging his duties within sixty (60) days after the date
of such statement, such permanent disability shall be deemed
to have occurred; or,
(e) Termination by the Corporation - Non Commencement of
Operations
At the election of the Corporation, on or after that date
which is 18 months from the date first written above if the
Corporation has not, as of the date it elects to terminate
Employee hereunder, commenced operations of the Bank; or
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(f) Termination by the Corporation without Cause
At the election of the Corporation, at any time during the
term of this Agreement without cause.
Upon termination of employment of the Employee pursuant to paragraph
4(a), (b), (c), (d), (e) or (f) above, the Employee shall be entitled
to receive the amount of Base Pay provided for in paragraph 2 hereof
through the date of his termination of employment and any unexercised
Options held by Employee shall be governed by paragraph 3 hereof. In
addition, in the event of the termination of employment of Employee
pursuant to paragraph 4(f) above, the Corporation shall pay to the
Employee a lump sum severance payment in an amount equal to eighteen
(18) months of Base Pay.
5. Covenant Not to Compete
(a) Throughout the term of this Agreement and for a period of two
years thereafter, Employee agrees that he will not, except on
behalf of the Corporation or with the written consent of the
Corporation,
(i) engage in any business activity, directly or
indirectly, on his own behalf or as a partner,
stockholder (except by ownership of less than 1% of
the outstanding stock of a publicly held corporation),
director, trustee, principal, agent, employee,
consultant or otherwise of any person, firm or
corporation, which is competitive with any activity in
which the Corporation or any parent, subsidiary or
affiliate of the Corporation is engaged at the time,
(ii) allow the use of his name by or in connection with any
business which is competitive with an activity in
which the Corporation or any parent, subsidiary or
affiliate of the Corporation is engaged, or
(iii) offer employment to or employ, for himself or on
behalf of any competitor of the Corporation or any
parent, subsidiary or affiliate thereof, any person
who at any time within the prior three years shall
have been employed by the Corporation or any parent,
subsidiary or affiliate of the Corporation.
(b) The parties acknowledge that this paragraph 5 is fair and
reasonable under the circumstances. It is the desire and
intent of the parties that the provisions of this paragraph 5
shall be enforced to the fullest extent permitted by law.
Accordingly, if any particular portion of this paragraph 5
shall be adjudicated to be invalid or unenforceable, this
paragraph 5 shall be deemed amended to
(i) reform the particular portion to provide for such
maximum restrictions as will be valid and
enforceable, or if that is not possible,
(ii) delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such reformation or
deletion to apply only with respect to the operation
of this paragraph 5 in the particular jurisdiction in
which such adjudication is made.
(c) The provisions of this paragraph 5 shall not apply in the
event the employment of the Employee is terminated by the
Corporation pursuant to paragraph 4(e) of this Agreement.
(d) During the term of Employee's employment hereunder, the
covenants contained in this paragraph 5 shall apply without
regard to geographic location. Upon the termination of
Employee's employment, the covenants contained in this
paragraph 5 shall be limited to Xxxxxx County, Ohio and
contiguous counties, except for Cuyahoga County.
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6. Inventions, Discoveries and Improvements
The Employee hereby agrees to assign and transfer to the Corporation,
its successors and assigns, his entire right, title and interest in and
to any and all inventions, discoveries, trade secrets and improvements
thereto which he may discover or develop, either solely or jointly with
others, during his employment hereunder and for a period of one year
after termination of such employment, which would relate in any way to
the business of the Corporation or any parent, subsidiary or affiliate
of the Corporation, together with all rights to letters patent,
copyrights or trademarks which may be granted with respect thereto.
Immediately upon making or developing any invention, discovery, trade
secret or improvement thereto, Employee shall notify the Corporation
thereof and shall execute and deliver to the Corporation, without
further compensation, such documents as may be necessary to assign and
transfer to the Corporation his entire right, title and interest in and
to such invention, discovery, trade secret or improvement thereto, and
to prepare or prosecute applications for letters patent with respect to
the same in the name of the Corporation.
7. Confidential Information
Employee shall not at any time, in any manner, while employed by the
Corporation or thereafter, either directly or indirectly, except in the
course of carrying out the Corporation's business or as previously
authorized in writing on behalf of the Corporation, disclose or
communicate to any person, firm, or corporation, any information of any
kind concerning any matters affecting or relating to the Corporation's
business or any of its data, figures, projections, estimates, customer
lists, tax records, personnel histories, and accounting procedures of
the Corporation, without regard to whether any or all of such
information would otherwise be deemed confidential or material.
8 Non-Assignability
(a) Neither party to this Agreement shall have the right to assign
this Agreement or any rights or obligations hereunder provided
that nothing herein shall prevent the Employee from
designating one or more members of his family or a trust or
trusts for the members of his family as a beneficiary or
beneficiaries entitled to receive payments hereunder as
heretofore specified.
(b) Except as provided above, no title to any payments which shall
become due and payable to the Employee, his personal
representative or designated beneficiary under the provisions
hereof, shall be vested in him or any of them until the actual
payment thereof is made to such person by the Corporation in
accordance with the provisions of this Agreement. Neither he
nor any of them shall have the right or power to transfer,
assign, anticipate or encumber any interest in any such
payment, prior to the actual receipt thereof from the
Corporation. Neither this Agreement, the Corporation nor any
person's rights hereunder shall be liable for the debt,
contract or engagement of any of them. None of them shall be
permitted to appoint any agent or attorney-in-fact and except
as provided herein, to collect or receive his share of such
payments or any part thereof unless permission to do so shall
be specifically granted by the Corporation in writing. The
Corporation, in the absence of such written permission, shall
not in any manner recognize such appointment, transfer,
assignment or encumbrance.
(c) If the Employee or any personal representative or any
designated beneficiary attempts to transfer, assign or
encumber his interest in such payments, or any part thereof,
prior to the payment or distribution thereof to him or her;
or, if any transfer or seizure thereof is attempted to be made
or brought through the operation of any bankruptcy or
insolvency law, the right of the person taking such action or
concerned therein or affected thereby, and who would, but for
this provision, be entitled to receive such payments, or any
part
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thereof, shall forthwith and ipso facto terminate, all rights
bestowed on any such person being hereby, on the happening of
any such event, expressly revoked; and the Corporation shall
thereafter, in its absolute discretion, at such time or times
as it deems proper, cause such part of such person's
theretofore existing share of such payments to be paid to such
person or persons, including the Employee, of any parent,
spouse or child of said person, as the Corporation, in its
uncontrolled discretion, shall deem advisable; and the
remainder of such payments, if any, may be distributed by the
Corporation to the person or person who would have been
entitled to receive the same if such person had died
immediately prior to said attempted transfer, assignment or
encumbrance, or attempted transfer or seizure by operation of
law.
9. Binding Effect
This Agreement shall be binding upon and inure to the benefit of any
successor of the Corporation, and any such successor shall be deemed
substituted for the Corporation under the terms of this Agreement. As
used in this Agreement, the term "successor" shall include any person,
firm, corporation, or other business entity which, at any time, whether
by merger, purchase, or otherwise, acquires all or substantially all of
the assets or business of the Corporation.
10. Entire Agreement
This Agreement contains the entire agreement of the parties hereto
concerning the subject matter hereof, and if the date hereof supersedes
and cancels any and all other oral or written agreements or
understandings between the parties with respect to the subject matter
hereof. The Agreement may not be changed orally, but only by agreement
in writing signed by both parties.
11. Authorization for Acts of Corporation
Any act, request, approval, consent or opinion of the Corporation
hereunder shall be authorized, given or expressed by resolution of its
Board of Directors.
12. Arbitration
In the event the parties are unable to resolve any issue,
misunderstanding, disagreement or dispute after making a good faith
effort to do so, the parties hereto agree to arbitrate any such issue,
misunderstanding, disagreement or dispute in connection with the terms
in effect in this Agreement in accordance with the Rules of the
American Arbitration Association, before one arbitrator mutually
agreeable to the parties hereto. If after eight weeks they have been
unable to agree upon one arbitrator, then either party may appoint one
arbitrator and require the other party to appoint a second arbitrator.
Whereupon, the two appointed arbitrators shall appoint a third
arbitrator mutually agreeable to the two arbitrators. The arbitration
shall occur in Medina, Ohio, or such other place as mutually agreed
upon. Each party shall bear their own expenses in connection with such
arbitration.
13. Regulatory Reformation
If any provision of this Agreement shall be deemed unacceptable to the
Ohio Division of Financial Institutions, the Board of Governors of the
Federal Reserve System or the Federal Deposit Insurance Corporation
(hereinafter the "Regulators"), the parties shall use their best
efforts to cause the Regulators to find this Agreement acceptable. In
the event the parties are unable to agree upon such modifications as
are required to make the Agreement acceptable to the Regulators, then
either party may terminate this Agreement and the parties shall have no
further obligations hereunder whatsoever. In the event of termination
pursuant to this subparagraph by the Corporation, the Corporation shall
pay to Employee, immediately upon such termination, a lump sum cash
payment equal to eighteen months of Base Pay, less all amounts of Base
Pay previously paid to Employee.
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14. Governing Law
This Agreement is executed and delivered in the State of Ohio and is
intended to be interpreted, construed and enforced in accordance with
the laws of such State.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by the Chairman of its Board of Directors, and the
Employee has signed this Agreement, all as of the date and year first above
written.
By: /s/ P.M. Xxxxx
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Chairman, Board of Directors
/s/ Xxxxxx X. XxXxxx
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Employee
