EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this "AGREEMENT") is
entered into as of the ___ day of ___________, 1996, by and between Foundation
Bancorp, Inc., a savings and loan holding company incorporated under Ohio law
(hereinafter referred to as the "EMPLOYER"), and Laird L. Lazelle, an individual
(hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the President and Chief
Executive Officer of Foundation Savings Bank (the "BANK"), which will become a
wholly owned subsidiary of the EMPLOYER upon the effectiveness of the BANK's
conversion to stock form;
WHEREAS, the EMPLOYEE desires to serve as the President and Chief Executive
Officer of the EMPLOYER and as the President and Chief Executive Officer of the
BANK; and
WHEREAS, the EMPLOYEE and the EMPLOYER desire to enter into this AGREEMENT
to set forth the terms and conditions of the employment relationship between the
EMPLOYER and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYER and the EMPLOYEE hereby agree as follows:
1. EMPLOYMENT AND TERM.
(a) TERM. Upon the terms and subject to the conditions of this AGREEMENT,
the EMPLOYER hereby employs the EMPLOYEE, and the EMPLOYEE hereby accepts
employment, as the President and Chief Executive Officer of the EMPLOYER. The
term of this AGREEMENT shall commence on the effective date of the BANK's
conversion from mutual to stock form and shall end thirty-six (36) months
thereafter, subject to extension pursuant to subsection (b) of this Section 1
(hereinafter, including any such extension, referred to as the "TERM"), and to
earlier termination as provided herein.
(b) EXTENSION. Prior to each anniversary of the date of this AGREEMENT,
the Board of Directors of the EMPLOYER shall review this AGREEMENT and
document its justification and approval of this AGREEMENT in the board
minutes. In connection with such annual review, the EMPLOYEE's term of
employment shall be extended for a one-year period beyond the then effective
expiration date, provided the Board of Directors of the EMPLOYER determines
in a duly adopted resolution that the performance of the EMPLOYEE has met the
Board's requirements and standards and that this AGREEMENT should be
extended. Any such extension shall be subject to the written consent of the
EMPLOYEE.
2. DUTIES OF EMPLOYEE.
(a) GENERAL DUTIES AND RESPONSIBILITIES. The EMPLOYEE shall serve as the
President and Chief Executive Officer of the EMPLOYER. Subject to the direction
of the Boards of Directors of the EMPLOYER, the EMPLOYEE shall have
responsibility for the general management and control of the business and
affairs of the EMPLOYER and the BANK, and shall perform all duties and shall
have all powers which are commonly incident to the offices of President and
Chief Executive Officer or which, consistent therewith, are delegated to him by
the Board of Directors. Such duties include, but are not limited to, (1)
managing the day-to-day operations of the EMPLOYER, (2) managing the efforts of
the EMPLOYER to comply with applicable laws and regulations, (3) promotion of
the EMPLOYER and its services, (4) supervising other employees of the EMPLOYER,
(5) providing prompt and accurate reports to the Board of Directors of the
EMPLOYER regarding the affairs and condition of the EMPLOYER, and (6) making
recommendations to the Board of Directors of the EMPLOYER concerning the
strategies, capital structure, tactics, and general operations of the EMPLOYER
and the BANK. The EMPLOYER shall employ the EMPLOYEE during the TERM as
President and Chief Executive Officer without material diminishment of the
importance or prestige of his position.
(b) DEVOTION OF ENTIRE TIME TO THE BUSINESS OF THE EMPLOYER. 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 and the employment agreement between the
Bank and the EMPOLYEE of even date herewith (the "BANK 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 EMPLOYER and its subsidiaries and affiliates without the prior written
consent of the Board of Directors of the EMPLOYER; provided, however, that
the EMPLOYEE shall not be precluded from (i) vacations and other leave time
in accordance with Section 3(e) hereof; (ii) reasonable participation in
community, civic, charitable or similar organizations; or (iii) the pursuit
of personal investments which do not interfere or conflict with the
performance of the EMPLOYEE's duties to the EMPLOYER. Nothing in this
section shall limit the EMPLOYEE's right to invest in securities of any
business that does not provide services or products of the type or competing
with those provided by the EMPLOYER or its subsidiaries or affiliates or,
solely as a passive investor, in any business.
3. COMPENSATION, BENEFITS AND REIMBURSEMENTS.
(a) LIABILITY FOR BANK OBLIGATIONS. The EMPLOYER hereby agrees that it
shall be jointly and severally liable for the payment of all amounts due
under the BANK AGREEMENT and shall guarantee the performance of the BANK's
obligations thereunder, including but not limited to the BANK'S obligations
under Section 3 and Section 4 of the BANK AGREEMENT.
(b) BASE SALARY AND BONUSES. The EMPLOYER shall not be required by this
AGREEMENT to pay to the EMPLOYEE a base salary or any bonuses, except as a
result of its obligations with respect to the BANK AGREEMENT. The EMPLOYER may,
however, pay
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such base salary and bonuses as deemed appropriate by the Board of Directors in
the exercise of its discretion.
(c) EXPENSES. In addition to any compensation received under Section 3(a)
or (b) of this AGREEMENT, the EMPLOYER 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. Such
reimbursement shall be made in accordance with the existing policies and
procedures of the EMPLOYER pertaining to reimbursement of expenses to senior
management officials.
(d) EMPLOYEE BENEFIT PROGRAMS.
(i) 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 EMPLOYER from time to
time, including programs in respect of group health, disability or life
insurance, and all employee benefit plans or programs hereafter adopted in
writing by the Board of Directors of the EMPLOYER, for which senior management
personnel are eligible, including any employee stock ownership plan, stock
option plan or other stock benefit plan (hereinafter collectively referred to as
the "BENEFIT PLANS"). Notwithstanding the foregoing sentence, the EMPLOYER may
discontinue or terminate at any time any such BENEFIT PLANS, now existing or
hereafter adopted, to the extent permitted by the terms of such plans and
applicable law and shall not be required to compensate the EMPLOYEE for such
discontinuance or termination; and
(ii) After the termination of the employment of the EMPLOYEE in
accordance with Section 4(a) of this AGREEMENT, for any reason other than JUST
CAUSE (as defined hereinafter), the EMPLOYER shall provide a group health
insurance program in which the EMPLOYEE and his spouse will be eligible to
participate and which shall provide substantially the same benefits as are
available to retired employees of the EMPLOYER on the date of this AGREEMENT
until both the EMPLOYEE and his spouse become sixty-five (65) years of age;
provided, however that all premiums for such program shall be paid by the
EMPLOYEE and/or his spouse after the EMPLOYEE's termination; provided further,
however, that if the EMPLOYER no longer makes available an employee group health
insurance program which permits the EMPLOYER to make coverage available for
retirees the EMPLOYEE shall be paid cash in an amount equal to the cost to the
EMPLOYEE of maintaining coverage substantially equivalent to the coverage
provided on the date of such termination to the EMPLOYEE and his spouse until
the EMPLOYEE and his SPOUSE become sixty-five (65) years of age.
(e) 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, subject to the following conditions:
(i) The EMPLOYEE shall be entitled to an annual vacation in
accordance with the provisions of the BANK AGREEMENT;
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(ii) The EMPLOYEE shall be entitled to annual sick leave as
established by the Board of Directors of the EMPLOYER for senior management
officials of the EMPLOYER;
(iii) In addition to paid vacations and sick leave, the EMPLOYEE
shall be entitled, without loss of pay, to absent himself voluntarily from
the performance of his employment with the EMPLOYER for such additional
period of time and for such valid and legitimate reasons as the Board may,
in its discretion, determine, and the Board may grant to the EMPLOYEE a
leave or leaves of absence, with or without pay, at such time or times and
upon such terms and conditions as such Board, in its discretion, may
determine.
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 EMPLOYER upon the delivery by the
EMPLOYER of written notice of employment termination to the EMPLOYEE, or (ii) at
the option of the EMPLOYEE upon the delivery by the EMPLOYEE of written notice
of termination to the EMPLOYER if, unless consented to in writing by the
EMPLOYEE, (A) the present capacity or circumstances in which the EMPLOYEE is
employed are materially changed (including, without limitation, a material
reduction in responsibilities or authority, or the assignment of duties or
responsibilities substantially inconsistent with those normally associated with
EMPLOYEE's position described in Section 2(a) of this AGREEMENT), (B) the
EMPLOYEE is not elected a member of the Boards of Directors of the EMPLOYER or
the BANK or the EMPLOYEE is no longer the President and Chief Executive Officer
of the EMPLOYER and the BANK, (C) the EMPLOYEE is required to move his personal
residence, or 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 (D) the EMPLOYER otherwise breaches this AGREEMENT in
any material respect.
(b) TERMINATION FOR JUST CAUSE. In the event that the EMPLOYER
terminates the employment of the EMPLOYEE before the expiration of 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 or the BANK AGREEMENT, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses ) or final
cease-and-desist order, conviction of a felony or for fraud or embezzlement,
or material breach of any provision of this AGREEMENT or the BANK 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.
(c) TERMINATION IN CONNECTION WITH A CHANGE OF CONTROL. In the event
that, in connection with a CHANGE OF CONTROL (including, without limitation, a
termination other than for JUST CAUSE within the six months prior to a CHANGE OF
CONTROL) or after a CHANGE OF CONTROL, the employment of the EMPLOYEE is
terminated by the EMPLOYER for any reasons other than JUST CAUSE before the
expiration of the TERM or is
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terminated by the EMPLOYEE in accordance with Section 4(a) (ii) of this
AGREEMENT before the expiration of the TERM, then the following shall occur:
(i) The EMPLOYER shall promptly pay to the EMPLOYEE or to his
beneficiaries, dependents or estate an amount equal to the product of three
multiplied by the salary, if any, paid to the EMPLOYEE pursuant to
Section 3 (b) of this AGREEMENT;
(ii) The EMPLOYEE, his dependents, beneficiaries and estate shall
continue to be covered under all BENEFIT PLANS in which the EMPLOYEE is a
participant immediately prior to the CHANGE OF CONTROL of the EMPLOYER at
the EMPLOYER's expense as if the EMPLOYEE were still employed under this
AGREEMENT until the earliest 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 shall be entitled thereafter to the benefits
described in section 3(d)(ii) of this AGREEMENT; 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
EMPLOYER hereunder, except as specifically stated in subparagraph (ii).
In the event that payments pursuant to this subsection (c) would result in
the imposition of a penalty tax pursuant to 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"), such payments shall be
reduced to the maximum amount which may be paid under SECTION 280G without
exceeding such limits. Payments pursuant to this subsection (c) also may not
exceed applicable limits established by the Office of Thrift Supervision
(hereinafter referred to as the "OTS"). In the event a reduction in payments is
necessary in order to comply with the requirements of this AGREEMENT relating to
the limitations of SECTION 280G or applicable OTS limits, the EMPLOYEE may
determine, in his sole discretion, which categories of payments are to be
reduced or eliminated.
(d) TERMINATION WITHOUT CHANGE OF CONTROL. In the event that the
employment of the EMPLOYEE is terminated by the EMPLOYER or is terminated by
the EMPLOYEE in accordance with Section 4(a) (ii) of this AGREEMENT before
the expiration of the TERM other than (A) for JUST CAUSE or (B) in connection
with or after a CHANGE OF CONTROL, the EMPLOYER shall be obligated (1) to
pay to the EMPLOYEE, his designated beneficiaries or his estate, for the
remainder of the TERM, the salary, if any, paid to the EMPLOYEE pursuant to
Section 3(b) of this AGREEMENT or the salary payable to the EMPLOYEE as a
result of any annual salary review in accordance with Section 3(b) of this
AGREEMENT; (2) to provide to the EMPLOYEE, at the EMPLOYER's expense, health,
life, disability, and other benefits as provided in Section 3(d)(i) of this
Agreement, until the expiration of the TERM or until the earlier date the
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EMPLOYEE obtains substantially equivalent coverage from another full-time
employer; and (3) to provide to the EMPLOYEE the benefits under Section
3(d)(ii) of this AGREEMENT, if any. In the event that payments pursuant to
this subsection (d) 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 those limits. In the event
a reduction in payment is necessary in order to comply with the requirements
of this AGREEMENT relating to the limitations of SECTION 280G or applicable
OTS limits, the EMPLOYEE may determine, in his sole discretion, which
categories of payments are to be reduced or eliminated.
(e) DEATH OF THE EMPLOYEE. The TERM automatically terminates upon the
death of the EMPLOYEE. In the event of such death, 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.
(f) "GOLDEN PARACHUTE" PROVISION. Any payments made to the EMPLOYEE
pursuant to this AGREEMENT or otherwise are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated
thereunder.
(g) DEFINITION OF "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events: (i) the acquisition of ownership, holding or
power to vote more than 25% of the voting stock of the EMPLOYER or the BANK,
(ii) the acquisition of the ability to control the election of a majority of the
directors of the EMPLOYER or the BANK, (iii) the acquisition of a controlling
influence over the management or policies of the EMPLOYER or the BANK (as
determined in accordance with 12 C.F.R. 574.4(a)(3)) by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the Securities
Exchange Act of 1934); (iv) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the EMPLOYER or the BANK cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Board of Directors 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; or (v) the
acquisition by any person or entity of "conclusive control" of the EMPLOYER
within the meaning of 12 C.F.R. Section 574.4(a), or any person or entity
obtains "rebuttable control" within the meaning of 12 C.F.R. Section 574.4(b)
that and has not been rebutted in accordance with 12 C.F.R. Section 574.4(c).
For purposes of this paragraph, the term "person" refers to an individual or a
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.
.
(h) LEGAL FEES. EMPLOYER shall promptly pay all legal fees and expenses
which EMPLOYEE may incur as a result of EMPLOYEE or EMPLOYER contesting the
validity or enforceability of this AGREEMENT if a court of competent
jurisdiction renders a final decision in favor of EMPLOYEE with respect to any
such contest, or to the extent agreed to by EMPLOYER and EMPLOYEE in an
agreement of settlement with respect to any such contest.
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5. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this AGREEMENT shall
preclude the EMPLOYER from consolidating with, merging into, or transferring
all, or substantially all, of its assets to another corporation that assumes all
of the EMPLOYER's obligations and undertakings hereunder. Upon such a
consolidation, merger or transfer of assets, the term "EMPLOYER" as used herein,
shall mean such other corporation or entity, and this AGREEMENT shall continue
in full force and effect.
6. CONFIDENTIAL INFORMATION. The EMPLOYEE acknowledges that during his
employment he will learn and have access to confidential information regarding
the EMPLOYER 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
EMPLOYER consents to such disclosure or use or such information becomes common
knowledge in the industry or 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 EMPLOYER, 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
EMPLOYER. The EMPLOYEE shall not otherwise knowingly act or conduct himself (a)
to the material detriment of the EMPLOYER, its subsidiaries, or affiliates, or
(b) in a manner which is inimical or contrary to the interests of the EMPLOYER.
7. NONASSIGNABILITY. Neither this AGREEMENT nor any right or interest
hereunder shall be assignable by the EMPLOYEE, his beneficiaries, or legal
representatives without the EMPLOYER's prior written consent; provided, however,
that nothing in this Section 7 shall preclude (a) the EMPLOYEE from designating
a beneficiary to receive any benefits payable hereunder upon his death, or (b)
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.
8. 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.
9. INDEMNIFICATION INSURANCE.
(a) INDEMNIFICATION. The EMPLOYER agrees to indemnify the EMPLOYEE and his
heirs, executors, and administrators to the fullest extent permitted under
applicable law and regulations, including, without limitation 12 U.S.C. Section
1828(k), against any and all expenses and liabilities reasonably incurred by the
EMPLOYEE in connection with or arising out of any action, suit or proceeding in
which the EMPLOYEE may be involved by reason of his having been a director or
officer of the EMPLOYER or any of its subsidiaries, whether or not the EMPLOYEE
is a director or officer at the time of incurring any such expenses or
liabilities. Such expenses and liabilities shall include, but shall not be
limited to, judgments, court costs and attorney's fees and the cost of
reasonable settlements. The EMPLOYEE shall be entitled to
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indemnification in respect of a settlement only if the Board of Directors of the
EMPLOYER has approved such settlement. Notwithstanding anything herein to the
contrary, (i) indemnification for expenses shall not extend to matters for which
the EMPLOYEE has been terminated for JUST CAUSE, and (ii) the obligations of
this Section 10 shall survive the TERM of this AGREEMENT. Nothing contained
herein shall be deemed to provide indemnification prohibited by applicable law
or regulation.
b. INSURANCE. During the TERM, the EMPLOYER shall provide the EMPLOYEE
(and his heirs, executors, and administrators) with coverage under a directors'
and officers' liability policy at the EMPLOYER's expense, at lease equivalent to
such coverage provided to directors and senior officers of the EMPLOYER.
10. BINDING AGREEMENT. This AGREEMENT shall be binding upon, and inure to the
benefit of, the EMPLOYEE and the EMPLOYER 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.
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 EMPLOYER (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; REGULATORY AUTHORITY. 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. References to the
OTS included herein shall include any successor primary federal regulatory
authority of the EMPLOYER.
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16. EFFECT OF PRIOR AGREEMENTS. This AGREEMENT contains the entire
understanding between the parties hereto and supersedes any prior employment
agreement between the EMPLOYER or any predecessor of the EMPLOYER 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 EMPLOYER:
Foundation Bancorp, Inc.
25 Garfield Place
Cincinnati, Ohio 45202
If to the EMPLOYEE:
Mr. Laird L. Lazelle
7 Spring Knoll Drive
Mariemont, Ohio 45227
IN WITNESS WHEREOF, the EMPLOYER 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: FOUNDATION BANCORP, INC.
By
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Michael S. Schwartz
its Chairman of the Board
Attest:
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Laird L. Lazelle
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