EXHIBIT 10(i)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this ___ day of ______ 1996, between
Fidelity Financial of Ohio, Inc., an Ohio corporation (the "Corporation"),
Fidelity Bank, a federally chartered savings bank and a wholly owned subsidiary
of the Corporation (the "Bank"), and Joseph D. Hughes (the "Executive").
Hereinafter, the Corporation and the Bank are referred to collectively as the
"Employers."
WITNESSETH
WHEREAS, pursuant to an Agreement of Merger dated April __, 1996 (the
"Plan") between the Corporation and Circle Financial Corporation ("Circle
Financial"), Circle Financial and its wholly owned subsidiary, People's Savings
Association (the "Association"), Circle Financial merged with and into the
Corporation and the Association merged with and into the Bank;
WHEREAS, pursuant to the terms of the Plan, upon the consummation of
the transactions contemplated thereby on _____ ___, 1996 the Executive became
the Executive Vice President of the Corporation and the Executive Vice President
and Chief Lending Officer of the Bank;
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances.
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) Average Annual Compensation. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof (or Circle Financial or any subsidiary thereof) during the most recent
five taxable years preceding the Date of Termination (or such shorter period as
the Executive was employed thereby), including Base Salary and bonuses under any
employee benefit plans of the Employers.
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(b) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(c) Cause. Termination of the Executive"s employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform his duties as described in Section 2(b) hereof, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material breach of any
provision of this Agreement. For purposes of this paragraph, no act or failure
to act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that the Executive's action or omission was in the best interest of the
Employers.
(d) Change in Control of the Corporation. "Change in Control of the
Corporation" shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor thereto, whether or not the Corporation is registered
under Exchange Act; provided that, without limitation, such a change in control
shall be deemed to have occurred if (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 25% or more of the
combined voting power of the Corporation's then outstanding securities; or (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof unless the election, or the
nomination for election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(g) Disability. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following
a Change in Control of the Corporation based on:
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(i) Without the Executive's express written consent, a
material adverse change made by the Employers in the Executive's functions,
duties or responsibilities as Executive Vice President of the Corporation and
Executive Vice President and Chief Lending Officer of the Bank;
(ii) Without the Executive's express written consent, a
material reduction by the Employers in the Executive's Base Salary as the same
may be increased from time to time or, except to the extent permitted by Section
3(b) hereof, a material reduction in the package of fringe benefits provided to
the Executive, taken as a whole;
(iii) Without the Executive's express written consent, the
Employers require the Executive to work in an office which is more than 30 miles
from the location of the Employers' current principal executive office, except
for required travel on business of the Employers to an extent substantially
consistent with the Executive's present business travel obligations;
(iv) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not effected pursuant to a Notice
of Termination satisfying the requirements of paragraph (j) below; or
(v) The failure by the Employers to obtain the assumption
of and agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) Notice of Termination. Any purported termination of the Executive's
employment by the Employers for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other parties hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Employers' termination of Executive's employment for Cause; and
(iv) is given in the manner specified in Section 10 hereof.
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(k) Retirement. "Retirement" shall mean voluntary termination by
the Executive in accordance with the Employers' retirement policies, including
early retirement, generally applicable to the Employers' salaried employees.
2. Term of Employment.
(a) The Employers hereby employ the Executive as Executive Vice
President of the Corporation and Executive Vice President and Chief Lending
Officer of the Bank and Executive hereby accepts said employment and agrees to
render such services to the Employers on the terms and conditions set forth in
this Agreement. Unless extended as provided in this Section 2, this Agreement
shall terminate three (3) years after the date first above written. Prior to the
first annual anniversary of the date first above written and each annual
anniversary thereafter, the Boards of Directors of the Employers shall consider,
review (with appropriate corporate documentation thereof, and after taking into
account all relevant factors, including the Executive's performance) and, if
appropriate, explicitly approve a one-year extension of the remaining term of
this Agreement. The term of this Agreement shall continue to extend each year if
the Boards of Directors so approve such extension unless the Executive gives
written notice to the Employers of the Executive's election not to extend the
term, with such notice to be given not less than thirty (30) days prior to any
such anniversary date. If the Boards of Directors elect not to extend the term,
they shall give written notice of such decision to the Executive not less than
thirty (30) days prior to any such anniversary date. If any party gives timely
notice that the term will not be extended as of any annual anniversary date,
then this Agreement shall terminate at the conclusion of its remaining term.
References herein to the term of this Agreement shall refer both to the initial
term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employers as is consistent with his title of
Executive Vice President and Chief Lending Officer. The Executive shall be
responsible for establishing and coordinating the lending activities of the
Bank, including oversight of the Bank's loan portfolio.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $124,000 per year
("Base Salary"), which may be increased from time to time in such amounts as may
be determined by the Boards of Directors of the Employers. In addition to his
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Boards of Directors of
the Employers.
(b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties
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and responsibilities, as fixed by the Boards of Directors of the Employers. The
Employers shall not make any changes in such plans, benefits or privileges which
would adversely affect Executive's rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executive officers of the
Employers and does not result in a proportionately greater adverse change in the
rights of or benefits to Executive as compared with any other executive officer
of the Employers. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Boards of Directors of the Employers, which shall in no event be
less than four weeks per annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take a vacation, nor
shall Executive be able to accumulate unused vacation time from one year to the
next, except to the extent authorized by the Boards of Directors of the
Employers.
4. Expenses. The Employers shall reimburse Executive or
otherwise provide for or pay for all reasonable expenses incurred by Executive
in furtherance of, or in connection with the business of the Employers,
including, but not by way of limitation, automobile and traveling expenses,
and all reasonable entertainment expenses (whether incurred at the
Executive's residence, while traveling or otherwise), subject to such
reasonable documentation and other limitations as may be established by the
Boards of Directors of the Employers. If such expenses are paid in the first
instance by Executive, the Employers shall reimburse the Executive therefor.
5. Termination.
(a) The Employers shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) Executive's employment is terminated by the
Employers for Cause, Disability or Retirement or in the event of the Executive's
death, or (ii) Executive terminates his employment hereunder other than for Good
Reason, Executive shall have no right pursuant to this Agreement to compensation
or other benefits for any period after the applicable Date of Termination.
(c)(i) In the event that Executive's employment is terminated by the
Employers for other than Cause, Disability, Retirement or the Executive's death
or such employment is terminated by the Executive due to a material breach of
this Agreement by the Employers, which breach has not been cured within fifteen
(15) days after a written notice of
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non-compliance has been given by the Executive to the Employers, and as of
Executive's Date of Termination no Change in Control of the Corporation has
occurred, no written agreement which contemplates a Change in Control of the
Corporation and which still is in effect has been entered into by either or both
of the Employers and no discussions and/or negotiations are being conducted
which relate to the same, then the Employers shall, subject to the provisions of
Section 6 hereof, if applicable:
(A) Pay to the Executive, in equal monthly installments beginning with
the first business day of the month following the Date of Termination, a cash
severance amount equal to the Base Salary which the Executive would have earned
over the remaining term of this Agreement as of his Date of Termination, and
(B) Maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time employment
by another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and accident,
disability and other employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination (other than stock option and restricted stock plans of the
Employers), provided that in the event that the Executive's participation in any
plan, program or arrangement as provided in this subparagraph (B) is barred or
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Employers shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination.
(ii) In the event that Executive's employment is terminated by the
Employers for other than Cause, Disability, Retirement or the Executive's death,
or such employment is terminated by the Executive due to a material breach of
this Agreement by the Employers which has not been cured within fifteen (15)
days after a written notice of non-compliance has been given by the Executive to
the Employers or for Good Reason, and on or prior to the Executive's Date of
Termination there has been a Change in Control of the Corporation, or a written
agreement which contemplates a Change in Control of the Corporation is in
effect, then the Employers shall subject to the provisions of Section 6 hereof,
if applicable:
(A) Pay to the Executive, in thirty-six (36) equal monthly installments
beginning with the first business day of the month following the Date of
Termination, a cash severance amount equal to three (3) times the Executive's
Average Annual Compensation over the most recent five taxable years, and
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(B) Maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time employment
by another employer (provided that the Executive is entitled under the terms of
such employment to benefits substantially similar to those described in this
subparagraph (B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and accident,
disability and other employee benefit plans, programs and arrangements in which
the Executive was entitled to participate immediately prior to the Date of
Termination (other than stock option and restricted stock plans of the
Employers), provided that in the event that the Executive's participation in any
plan, program or arrangement as provided in this subparagraph (B) is barred or
during such period any such plan, program or arrangement is discontinued or the
benefits thereunder are materially reduced, the Employers shall arrange to
provide the Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and arrangements
immediately prior to the Date of Termination.
6. Limitation of Benefits under Certain Circumstances. If the
payments and benefits pursuant to Section 5 hereof, either alone or together
with other payments and benefits which Executive has the right to receive
from the Employers, would constitute a "parachute payment" under Section 280G
of the Code, the payments and benefits pursuant to Section 5 hereof shall be
reduced, in the manner determined by the Executive, by the amount, if any, which
is the minimum necessary to result in no portion of the payments and benefits
under Section 5 being non-deductible to either of the Employers pursuant to
Section 280G of the Code and subject to the excise tax imposed under Section
4999 of the Code. The determination of any reduction in the payments and
benefits to be made pursuant to Section 5 shall be based upon the opinion of
independent tax counsel selected by the Employers' independent public
accountants and paid by the Employers. Such counsel shall be reasonably
acceptable to the Employers and the Executive; shall promptly prepare the
foregoing opinion, but in no event later than thirty (30) days from the Date
of Termination; and may use such actuaries as such counsel deems necessary
or advisable for the purpose. In the event that the Employers and/or the
Executive do not agree with the opinion of such counsel, (i) the Employers
shall pay to the Executive the maximum amount of payments and benefits
pursuant to Section 5, as selected by the Executive, which such opinion
indicates that there is a high probability do not result in any of such
payments and benefits being non-deductible to the Employers and subject to
the imposition of the excise tax imposed under Section 4999 of the Code and (ii)
the Employers may request, and Executive shall have the right to demand that the
Employers request, a ruling from the IRS as to whether the disputed payments and
benefits pursuant to Section 5 hereof have such consequences. Any such request
for a ruling from the IRS shall be promptly prepared and filed by the Employers,
but in no event later than thirty (30) days from the date of the opinion of
counsel referred to above, and shall be subject to Executive's approval prior to
filing, which shall not be unreasonably withheld. The Employers and Executive
agree to be bound by any ruling received from the IRS and to make appropriate
payments to each other to reflect any such rulings, together with interest at
the applicable federal rate provided for
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in Section 7872(f)(2) of the Code. Nothing contained herein shall result in a
reduction of any payments or benefits to which the Executive may be entitled
upon termination of employment under any circumstances other than as specified
in this Section 6, or a reduction in the payments and benefits specified in
Section 5 below zero.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
8. Withholding. All payments required to be made by the
Employers hereunder to the Executive shall be subject to the withholding
of such amounts, if any, relating to tax and other payroll deductions as
the Employers may reasonably determine should be withheld pursuant to any
applicable law or regulation.
9. Assignability. The Employers may assign this Agreement
and its rights and obligations hereunder in whole, but not in part, to any
corporation, bank or other entity with or into which the Employers may
hereafter merge or consolidate or to which the Employers may transfer all or
substantially all of its assets, if in any such case said corporation, bank
or other entity shall by operation of law or expressly in writing assume all
obligations of the Employers hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.
10. Notice. For the purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below:
To the Employers: Board of Directors
Fidelity Financial of Ohio, Inc.
4555 Montgomery Road
Cincinnati, Ohio 45212
To the Executive: Joseph D. Hughes
43 Huntersknoll Lane
Cincinnati, Ohio 45230
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11. Amendment; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer or officers
as may be specifically designated by the Boards of Directors of the Employers
to sign on its behalf. No waiver by any party hereto at any time of any breach
by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
12. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the United
States where applicable and otherwise by the substantive laws of the State of
Ohio.
13. Nature of Obligations. Nothing contained herein shall
create or require the Employers to create a trust of any kind to fund any
benefits which may be payable hereunder, and to the extent that the Executive
acquires a right to receive benefits from the Employers hereunder, such right
shall be no greater than the right of any unsecured general creditor of the
Employers.
14. Interpretation and Headings. This agreement shall be
interpreted in order to achieve the purposes for which it was entered into. The
section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Actions. The following provisions shall be
applicable to the parties to the extent that they are required to be included
in employment agreements between a savings association and its employees
pursuant to Section 563.39(b) of the Regulations Applicable to all Savings
Associations, 12 C.F.R. ss.563.39(b), or any successor thereto, and shall be
controlling in the event of a conflict with any other provision of this
Agreement, including without limitation Section 5 hereof.
(a) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Employers' affairs pursuant to notice
served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance
Act ("FDIA")(12 U.S.C. ss.ss.1818(e)(3) and 1818(g)(1)), the Employers'
obligations under this Agreement shall be suspended as of the date of service of
such notice, unless stayed by appropriate proceedings.
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If the charges in the notice are dismissed, the Employers may, in their
discretion: (i) pay Executive all or part of the compensation withheld while its
obligations under this Agreement were suspended, and (ii) reinstate (in whole or
in part) any of its obligations which were suspended.
(b) If Executive is removed from office and/or permanently prohibited
from participating in the conduct of the Employers' affairs by an order issued
under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C. ss.ss.1818(e)(4)
and (g)(1)), all obligations of the Employers under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
Executive and the Employers as of the date of termination shall not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. ss.1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Employers as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated pursuant
to 12 C.F.R. ss.563.39(b)(5) (except to the extent that it is determined that
continuation of the Agreement for the continued operation of the Employers is
necessary): (i) by the Director of the Office of Thrift Supervision ("OTS"), or
his/her designee, at the time the Federal Deposit Insurance Corporation ("FDIC")
or Resolution Trust Corporation enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in Section 13(c) of
the FDIA (12 U.S.C. ss.1823(c)); or (ii) by the Director of the OTS, or his/her
designee, at the time the Director or his/her designee approves a supervisory
merger to resolve problems related to operation of the Bank or when the Bank is
determined by the Director of the OTS to be in an unsafe or unsound condition,
but vested rights of the Executive and the Employers as of the date of
termination shall not be affected.
18. Regulatory Prohibition. Notwithstanding any other provision
of this Agreement to the contrary, any payments made to the Executive pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 U.S.C. ss.1828(k)) and any
regulations promulgated thereunder.
19. Entire Agreement. This Agreement incorporates the
entire understanding among the parties hereto relating to the subject matter
hereof, recites the sole consideration of the premises and mutual agreements
exchanged and supersedes any prior agreements between the Employers,
including predecessors thereof or entities acquired thereby, and Executive with
respect to the subject matter hereof, including specifically and without
limitation, that certain employment agreement dated as of August 6,
1991 (the "Association Agreement") between the Association and Executive.
In addition, the Executive by execution hereof specifically waives any and
all claims for benefits, payments, compensation or amounts otherwise
payable thereto by the provisions of the Association Agreement as a
result of the consummation of the transactions contemplated by the Plan
and agrees that this Agreement shall serve as the complete and final
settlement of all obligations of the Association and the Employers, as
the successors thereto, under the Association Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: FIDELITY FINANCIAL OF OHIO, INC.
_________________________________ By: _____________________________
Paul D. Staubach John R. Reusing
Senior Vice President, Chief President and Chief Executive Officer
Financial Officer and Secretary
Attest: FIDELITY BANK
_________________________________ By: ________________________________
Paul D. Staubach John R. Reusing
Senior Vice President, Chief President and Chief Executive Officer
Financial Officer and Secretary
EXECUTIVE
By: ________________________________
Joseph D. Hughes
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