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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is made this 28th day of January, 2000, by and between
The Savings Bank, an Ohio chartered commercial bank (hereinafter called the
"Bank"), and Stephen A. Gary hereinafter called the "Employee."
WHEREAS, the Board of Directors of the Bank believes that the future
services of the Employee in a senior executive capacity will be of great value
to the Bank; and
WHEREAS, the Employee is willing to continue in the employ of the Bank
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 Bank hereby employs for itself or its subsidiaries (hereinafter
sometimes collectively referred to as "Bank"), the services of Employee
for a period commencing as of the date first written above and
terminating January 31, 2005 (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
Bank 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 Bank.
2. Base Salary and Fringe Benefits
Except as otherwise provided herein, as compensation for these services
hereunder, the Bank 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 One Thousand Dollars ($121,000) per year, subject to the
right of the parties, by mutual agreement, to adjust such rate upward
in respect of any future calendar year or years after the date hereof,
hereinafter "Base Pay."
In addition the Bank shall:
(a) Provide $135,000 in term life insurance, payable to the
beneficiary of Employee's choice.
(b) Provide to the spouse and/or children of Employee upon the
death of Employee the benefits set forth in an agreement
between the Employee and the Bank dated
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June 1, 1993 which payments currently are funded by a "key
man" life insurance policy on the life of Employee.
(c) Provide four (4) weeks paid vacation annually.
(d) 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 Bank 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 and Employee shall be entitled to receive
100% of his Base Pay during the first ninety (90) days of any
disability of Employee.
(e) Provide for the Employee's participation in other employee
benefit plans or programs of the Bank, if any, to the extent
that his position, tenure, salary and other qualifications
make him eligible to participate, subject to the rules and
regulations applicable thereto including employee bonus plans,
if any, as the same may be in effect from time to time.
(f) Reimbursement of fees and expenses incurred in connection with
business of the Bank including, Rotary Club dues, fees for
attendance at banking related conventions and similar items
approved by the Board of Directors.
3. 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 Bank with Cause
For Cause at any time by action of the Board. For purposes
hereof, the term "Cause" shall mean removal by order of a
regulatory agency having jurisdiction over the Bank, or 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 Bank 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 Bank; or,
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(d) Disability
Upon receipt by the Employee of written notice from the Bank
that, in its opinion, based on reliable medical evidence, the
Employee is unable by reason of permanent 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 Bank 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 Circleville, Ohio, area, one of whom
shall be a physician who regularly has treated Employee, 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 Bank without Cause
At the election of the Bank, at any time during the term of
this Agreement without cause.
(f) Termination in Connection with Change in Control.
In the event that the employment of the Employee is terminated
by the Bank in connection with a Change of Control
(hereinafter defined) for any reason other than for "Cause" as
defined in Section 3(c) above, then the following shall occur:
(i) The Bank shall promptly pay to the Employee or to his
beneficiaries, dependents or estate an amount equal
to the product of 2.99 multiplied by the Employee's
"base amount" as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (hereinafter
collectively referred to as "Section 280G");
(ii) The Employee, his dependents, beneficiaries and
estate shall continue to be covered at the Bank's
expense under all health, life, disability and other
benefit plans of the Bank, as described in Section 2
of this Agreement, in which the Employee was a
participant prior to the effective date of the
termination of his employment as if the Employee were
still employed under this Agreement until the earlier
of the expiration of the term of this
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Agreement or the date on which the Employee is
included in another employer's benefit plans as a
full-time employee; and
(iii) The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement
by seeking other employment or otherwise, nor shall
any amounts received from other employment or
otherwise by the Employee offset in any manner the
obligations of the Bank hereunder, except as
specifically stated in subparagraph (ii) above.
(iv) A "Change in Control" shall mean any one of the
following events:
(A) the acquisition of ownership or power to vote
more than 25% of the voting stock of the Bank;
(B) the acquisition of the ability to control the
election of a majority of the directors of the Bank;
(C) during any period of three or less consecutive
years, individuals who at the beginning of such
period constitute the Board of Directors of the Bank
cease for any reason to constitute at least a
majority thereof; provided, however, that any
individual whose election or nomination for election
as a member of the Board of Directors of the Bank was
approved by a vote of at least two-thirds of the
directors then in office shall be considered to have
continued to be a member of the Board of Directors of
the Bank;
(D) an event that would be required to be reported in
response to Item 1(a) of Form 8-K or Item 6(e) of
Schedule 14A of Regulation 14A pursuant to the
Securities Exchange Act of 1934, as amended
(hereinafter referred to as the "Exchange Act"), or
any successor thereto, whether or not any class of
securities of the Bank is registered under the
Exchange Act.
(v) In the event that the Employee becomes entitled to
the benefits or payments set forth under this Section
3(f) or other benefits due form the Bank to Employee
(together, the "Total Benefits"), and in the event
that any of the Total Benefits will be subject to the
Excise Tax as set forth in Section 280G of the Code
(herein the "Excise Tax"), the Bank shall pay to the
Employee an additional amount (the "Gross-Up
Payment(s)") on a monthly basis in addition to the
amounts set forth in Section 3(f) hereof, such that
the net amount retained by the Employee, after
deduction of any Excise Tax on the Total Benefits and
any federal, state and local income tax, Excise Taxes
and FICA and Medicare withholding taxes upon the
payment provided for by this Section 3(f), shall be
equal to the Total Benefits.
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For purposes of determining whether any of the Total
Benefits will be subject to the Excise Tax and the
amount of such Excise Tax, (i) any other payments or
benefits received or to be received by the Employee
in connection with a Change in Control or the
Employee's termination of employment (whether
pursuant to the terms of this Agreement or any other
agreement, or other plan or arrangement with the
Bank, any Person whose actions result in a Change in
Control or any Person affiliated with the Bank or
such Person) shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code,
and all "excess parachute payments" within the
meaning of Section 280G(b)(1) shall be treated as
subject to the Excise Tax, unless in the opinion of
tax counsel ("Tax Counsel") selected by the Bank's
independent auditors and acceptable to the Employee,
such other payments or benefits (in whole or in part)
do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent
reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of
the Code in excess of the Base Amount (as defined in
Section 280G(b)(3) of the Code), or are otherwise not
subject to the Excise Tax, (ii) the amount of the
Total Benefits which shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A)
the total amount of the Total Benefits reduced by the
amount of such Total Benefits that in the opinion of
Tax Counsel are not parachute payments, or (B) the
amount of excess parachute payments within the
meaning of Section 280G(b)(1) (after applying clause
(i), above), and (iii) the value of any noncash
benefits or any deferred payment or benefit shall be
determined by the Bank's independent auditors in
accordance with the principles of sections 280G(d)(3)
and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payments, the Employee shall
be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the
calendar years in which the Gross-Up Payments are to
be made and state and local income taxes at the
highest marginal rate of taxation in the state and
locality of the Employee's residence on the date of
termination of employment, net of the reduction in
federal income taxes which could be obtained from
deduction of such state and local taxes (calculated
by assuming that any reduction under Section 68 of
the Code in the amount of itemized deductions
allowable to the Employee applies first to reduce the
amount of such state and local income taxes that
would otherwise be deductible by the Employee).
In the event that the Excise Tax is subsequently
determined to be less than the amount taken into
account hereunder at the time of termination of the
Employee's employment, the Employee shall repay to
the Bank, at the time that the amount of such
reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payments attributable to such
reduction (plus that portion of the Gross-Up Payments
attributable to the Excise Tax, federal, state and
local income taxes and FICA and Medicare withholding
taxes imposed on the Gross-Up Payments being repaid
by the Employee to
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the extent that such repayment results in a reduction
in Excise Tax, FICA and Medicare withholding taxes
and/or a federal, state or local income tax
deduction) plus interest on the amount of such
repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken
into account hereunder at the time of the termination
of the Employee's employment (including by reason of
any payment the existence or amount of which cannot
be determined at the time of the Gross-Up Payments),
the Bank shall make an additional Gross-Up Payment to
the Employee in respect of such excess (plus any
interest, penalties or additions payable by the
Employee with respect to such excess) at the time
that the amount of such excess is finally
determined."
(vi) For purposes of this Agreement, an event shall be
deemed to have occurred "in connection with a Change
in Control" if such event occurs within one year
before or after a Change in Control.
Upon termination of employment of the Employee pursuant to paragraph
3(a), (b), (c), (d) or (e) 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. In addition, in the
event of the termination of employment of Employee pursuant to
paragraph 3(e) above, the Bank shall pay to the Employee a lump sum
severance payment in an amount equal to the Base Pay and other benefits
set forth in Section 2 hereof through January 31, 2005, unless such
termination occurs as a result of a "Change of Control" pursuant to
Section 3(f) hereof, in which case the provisions of that Section 3(f)
shall apply.
In the event that this Agreement is terminated pursuant to either
paragraph 3(a) or 3(e), or paragraph 3(f) if such termination occurs
more than six (6) months after a "Change of Control," and the Bank and
the Employee fail to enter into an extension or renewal of this
Agreement on substantially similar terms and conditions for a term of
not less than twelve (12) additional months (i.e. through at least
January 31, 2006), then in such case the Bank shall pay to Employee an
additional amount in cash equal to the annual Base Salary of Employee
for the period ending January 31, 2005. Any such amount due under this
subparagraph shall be paid not later than February 15, 2005.
4. Covenant Not to Compete
(a) Throughout the term of this Agreement and for a period of one
(1) year thereafter, Employee agrees that he will not, except
on behalf of the Bank or with the written consent of the Bank,
(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 Bank),
director, trustee, principal, agent, employee,
consultant or otherwise of any person, firm or Bank,
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which is competitive with any activity in which the
Bank or any parent, subsidiary or affiliate of the
Bank 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 Bank or any parent, subsidiary or affiliate
of the Bank is engaged, or
(iii) offer employment to or employ, for himself or on
behalf of any competitor of the Bank or any parent,
subsidiary or affiliate thereof, any person who at any
time within the prior three years shall have been
employed by the Bank or any parent, subsidiary or
affiliate of the Bank.
(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; and
(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 Bank
pursuant to paragraph 3(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 those areas in Pickaway
County, Ohio or within a two (2) mile radius of any township
contiguous to Pickaway County, Ohio.
5. Inventions, Discoveries and Improvements
The Employee hereby agrees to assign and transfer to the Bank, 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 Bank or any parent, subsidiary or affiliate of the
Bank, 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
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thereto, Employee shall notify the Bank thereof and shall execute and
deliver to the Bank, without further compensation, such documents as
may be necessary to assign and transfer to the Bank 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 Bank.
6. Confidential Information
Employee shall not at any time, in any manner, while employed by the
Bank or thereafter, either directly or indirectly, except in the course
of carrying out the Bank's business or as previously authorized in
writing on behalf of the Bank, disclose or communicate to any person,
firm, or Bank, any information of any kind concerning any matters
affecting or relating to the Bank's business or any of its data,
figures, projections, estimates, customer lists, tax records, personnel
histories, and accounting procedures of the Bank, without regard to
whether any or all of such information would otherwise be deemed
confidential or material. In the event that Employee is required to
disclose such information under the terms of a subpoena issued by a
court of competent jurisdiction, Employee shall give written notice of
such subpoena to the Bank within two (2) days of receipt. The Bank may
undertake to obtain an order dismissing such subpoena prior to
Employee's obligations to supply information thereunder. If the Bank
does not obtain such an order, the Employee shall not be deemed to have
violated the provisions hereof by disclosures made pursuant to such
subpoena.
7. 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 Bank 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 Bank.
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 Bank
in writing. The Bank, 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
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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 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 Bank 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, or any parent, spouse or child of said person,
as the Bank, in its uncontrolled discretion, shall deem
advisable; and the remainder of such payments, if any, may be
distributed by the Bank 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.
8. Binding Effect
This Agreement shall be binding upon and inure to the benefit of any
successor of the Bank, and any such successor shall be deemed
substituted for the Bank under the terms of this Agreement. As used in
this Agreement, the term "successor" shall include any person, firm,
Bank, 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 Bank.
9. 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.
10. Authorization for Acts of Bank
Any act, request, approval, consent or opinion of the Bank hereunder
shall be authorized, given or expressed by resolution of its Board of
Directors.
11. 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
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arbitrators. The arbitration shall occur in Circleville, Ohio, or such
other place as mutually agreed upon. Each party shall bear their own
expenses in connection with such arbitration.
12. Regulatory Reformation
If any provision of this Agreement shall be deemed unacceptable to Ohio
Department of Financial Institutions or the Federal Deposit Insurance
Corporation (hereinafter collectively referred to herein as 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. Such termination shall not affect the ability of
the Employee to continue to work for the Bank on an "at will" basis as
mutually agreed by the Employee and the Bank.
13. 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 parties hereto have executed this Agreement as
of the date and year first above written.
The Savings Bank
By: /s/ Thomas F. Tootle
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Its: Chairman of the Board
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/s/ Stephen A. Gary
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Employee
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