FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
---------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File No. 0-18993
WINTON FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-1303854
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5511 Cheviot Road
Cincinnati, Ohio 45247
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (513) 385-3880
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
As of February 4, 2000, the latest practicable date, 4,405,414 shares of the
registrant's common stock, no par value, were issued and outstanding.
Page 1 of 16 pages
<PAGE>
Winton Financial Corporation
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial
Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Other Comprehensive
Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 12
PART II - OTHER INFORMATION 15
SIGNATURES 16
<PAGE>
<TABLE>
Winton Financial Corporation
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
December 31, September 30,
ASSETS 1999 1999
<S> <C> <C>
Cash and due from banks $ 2,245 $ 1,647
Interest-bearing deposits in other financial institutions - 434
------- -------
Cash and cash equivalents 2,245 2,081
Investment securities available for sale - at market 4,932 5,503
Investment securities held to maturity - at cost, approximate
market value of $17,919 at December 31, 1999 and
$16,774 at September 30, 1999 18,130 16,882
Mortgage-backed securities available for sale - at market 388 410
Mortgage-backed securities held to maturity - at cost, approximate
market value of $12,803 at December 31, 1999 and $13,058
at September 30, 1999 13,166 13,533
Loans receivable - net 418,805 411,058
Loans held for sale - at lower of cost or market 1,475 2,492
Office premises and equipment - net 3,681 3,708
Real estate acquired through foreclosure 502 492
Federal Home Loan Bank stock - at cost 6,576 5,925
Accrued interest receivable 3,040 3,227
Prepaid expenses and other assets 401 433
Intangible assets - net 325 341
Prepaid federal income taxes - 193
------- -------
Total assets $473,666 $466,278
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $307,137 $312,072
Advances from the Federal Home Loan Bank and other borrowings 127,030 116,532
Accounts payable on mortgage loans serviced for others 858 838
Advance payments by borrowers for taxes and insurance 1,861 1,023
Other liabilities 1,863 1,990
Accrued federal income taxes 242 -
Deferred federal income taxes 1,690 1,683
------- -------
Total liabilities 441,021 434,138
Shareholders' equity
Preferred stock - 2,000,000 shares without par value
authorized; no shares issued and outstanding - -
Common stock - 18,000,000 shares of no par value
authorized; 4,405,214 and 4,403,714 shares outstanding - -
Additional paid-in capital 9,927 9,917
Retained earnings - substantially restricted 22,163 21,619
Accumulated other comprehensive income, unrealized gains
on securities designated as available for sale, net of
related tax effects 555 604
------- -------
Total shareholders' equity 32,645 32,140
------- -------
Total liabilities and shareholders' equity $473,666 $466,278
======= =======
</TABLE>
3
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Winton Financial Corporation
<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
For the three months ended December 31,
(In thousands, except share data)
1999 1998
(Restated)
<S> <C> <C>
Interest income
Loans $8,228 $7,167
Mortgage-backed securities 196 242
Investment securities 305 299
Interest-bearing deposits and other 98 169
----- -----
Total interest income 8,827 7,877
Interest expense
Deposits 3,823 3,834
Borrowings 1,784 1,054
----- -----
Total interest expense 5,607 4,888
----- -----
Net interest income 3,220 2,989
Provision for losses on loans 23 23
----- -----
Net interest income after provision
for losses on loans 3,197 2,966
Other income
Gain on sale of mortgage loans 50 676
Mortgage servicing fees 77 (10)
Other operating 156 171
----- -----
Total other income 283 837
General, administrative and other expense
Employee compensation and benefits 1,104 985
Occupancy and equipment 441 439
Federal deposit insurance premiums 47 42
Franchise taxes 91 90
Amortization of intangible assets 15 15
Advertising 78 68
Other operating 341 440
----- -----
Total general, administrative and other expense 2,117 2,079
----- -----
Earnings before income taxes 1,363 1,724
Federal income taxes
Current 435 685
Deferred 32 (94)
------ -----
Total federal income taxes 467 591
------ -----
NET EARNINGS $ 896 $1,133
====== =====
EARNINGS PER SHARE
Basic $.20 $.26
=== ===
Diluted $.19 $.25
=== ===
DIVIDENDS PAID PER COMMON SHARE $.080 $.075
==== ====
</TABLE>
4
<PAGE>
Winton Financial Corporation
<TABLE>
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
<CAPTION>
For the three months ended December 31,
(In thousands)
1999 1998
(Restated)
<S> <C> <C>
Net earnings $ 896 $1,133
Other comprehensive losses, net of tax:
Unrealized holding losses on securities
during the period, net of tax of $25 and $26
for 1999 and 1998, respectively (49) (50)
------ -----
Comprehensive income $ 847 $1,050
====== =====
Accumulated comprehensive income $ 555 $ 540
====== =====
</TABLE>
5
<PAGE>
Winton Financial Corporation
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the three months ended December 31,
(In thousands)
1999 1998
(Restated)
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 896 $ 1,133
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities:
Amortization of premiums and discounts on investment and
mortgage-backed securities 12 15
Amortization of deferred loan origination fees (19) (20)
Depreciation and amortization 134 131
Amortization of intangible assets 15 15
Provision for losses on loans 23 23
(Gain) loss on sale of mortgage loans 3 (537)
Loans disbursed for sale in the secondary market (14,250) (38,465)
Proceeds from sale of loans in the secondary market 15,264 40,911
Federal Home Loan Bank stock dividends (108) (93)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans 214 104
Accrued interest receivable on mortgage-backed securities 2 7
Accrued interest receivable on investments and interest
bearing deposits (29) 28
Prepaid expenses and other assets 33 71
Accounts payable on mortgage loans serviced for others 20 261
Other liabilities (127) (120)
Federal income taxes
Current 435 601
Deferred 32 (94)
------ ------
Net cash provided by operating activities 2,550 3,971
Cash flows from investing activities:
Principal repayments on mortgage-backed securities 381 767
Proceeds from the maturity of investment securities 500 2,100
Purchase of investment securities designated as held to maturity (1,255) (2,781)
Purchase Federal Home Loan Bank Stock (543) -
Loan principal repayments 19,802 34,065
Loan disbursements (27,553) (56,977)
Proceeds from sale of real estate acquired through foreclosure - 100
Purchase of office premises and equipment (102) (101)
Additions to real estate acquired through foreclosure (15) -
------ -------
Net cash used in investing activities (8,785) (22,827)
------ -------
Net cash used in operating and investing
activities (balance carried forward) (6,235) (18,856)
------ -------
</TABLE>
6
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Winton Financial Corporation
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<CAPTION>
For the three months ended December 31,
(In thousands)
1999 1998
(Restated)
<S> <C> <C>
Net cash used in operating and investing
activities (balance brought forward) $ (6,235) $(18,856)
Cash flows from financing activities:
Net decrease in deposit accounts (4,935) (2,438)
Repayments of Federal Home Loan Bank advances (11,162) (402)
Proceeds from Federal Home Loan Bank advances
and other borrowings 22,000 19,000
Advances by borrowers for taxes and insurance 838 804
Proceeds from issuance of shares under stock
option and compensation plans 10 7
Dividends paid on common stock (352) (318)
------- ------
Net cash provided by financing activities 4,399 16,653
------- ------
Net increase (decrease) in cash and cash equivalents 164 (2,203)
Cash and cash equivalents at beginning of period 2,081 7,076
------- ------
Cash and cash equivalents at end of period $ 2,245 $ 4,873
======= ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ - $ 85
======= =======
Interest on deposits and borrowings $ 5,552 $ 4,774
======= =======
Supplemental disclosure of noncash investing activities:
Unrealized losses on securities designated as available
for sale, net of related tax effects $ (49) $ (50)
======= =======
Recognition of mortgage servicing rights in accordance with
SFAS No. 125 $ 53 $ 139
======= =======
</TABLE>
7
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Winton Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three month periods ended December 31, 1999 and 1998
1. Basis of Presentation
On December 14, 1998, Winton Financial Corporation ("Winton Financial"
or the "Corporation") entered into an Agreement and Plan of
Reorganization with BenchMark Federal Savings Bank ("BenchMark")
pursuant to which BenchMark would merge with and into Winton Savings
and Loan Co. ("Winton Savings" or the "Company") a wholly-owned
subsidiary of the Corporation. The merger was consummated on June 11,
1999 and was accounted for using the pooling of interests method of
accounting. Accordingly, the consolidated statements of earnings, other
comprehensive income, and cash flows, for the three-month period ended
December 31, 1998 have been restated to give effect to the combination.
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-Q and, therefore,
do not include information or footnotes necessary for a complete
presentation of financial position, results of operations, and cash
flows in conformity with generally accepted accounting principles.
Accordingly, these financial statements should be read in conjunction
with the consolidated financial statements and notes thereto of Winton
Financial included in the Annual Report on Form 10-K for the year ended
September 30, 1999. However, all adjustments (consisting of only normal
recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements have
been included. The results of operations for the three-month period
ended December 31, 1999, are not necessarily indicative of the results
which may be expected for the entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Winton Financial and Winton Savings. All significant intercompany
items have been eliminated.
3. Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which
requires entities to recognize all derivatives in their financial
statements as either assets or liabilities measured at fair value. SFAS
No. 133 also specifies new methods of accounting for hedging
transactions, prescribes the items and transactions that may be hedged,
and specifies detailed criteria to be met to qualify for hedge
accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an
interest rate or foreign exchange rate, that is applied to a notional
amount, such as an amount of currency, to determine the settlement
amount(s). It generally requires no significant initial investment and
can be settled net or by delivery of an asset that is readily
convertible to cash. SFAS No. 133 applies to derivatives embedded in
other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.
8
<PAGE>
Winton Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three month periods ended December 31, 1999 and 1998
3. Effects of Recent Accounting Pronouncements (continued)
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to
transfer held-to-maturity debt securities to the available-for-sale or
trading category without calling into question their intent to hold
other debt securities to maturity in the future. SFAS No. 133 is not
expected to have a material impact on Winton Financial's financial
position or results of operations.
The foregoing discussion of the effects of recent accounting
pronouncements contains forward-looking statements that involve risks
and uncertainties. Changes in economic circumstances could cause the
effects of the accounting pronouncements to differ from management's
foregoing assessment.
4. Year 2000 Compliance Issues
As with all providers of financial services, the Company's operations
are heavily dependent on information technology systems. During the
periods leading up to January 1, 2000, the Company addressed the
potential problems associated with the possibility that the computers
that control or operate the Company's information technology system and
infrastructure may not have been programmed to read four-digit date
codes and, upon arrival of the year 2000, may have recognized the
two-digit code "00" as the year 1900, causing systems to fail to
function or to generate erroneous data.
As part of the awareness and assessment phases of its action plan
related to the Year 2000 problem, management identified the operating
systems that it considered critical to the on-going operations of the
Company. Of the systems that the Company identified as
mission-critical, the most significant is the on-line core account
processing system performed by a third party service provider,
Intrieve, Inc. ("Intrieve"). Intrieve converted its hardware to a new
Year 2000 compliant system during the fourth calendar quarter of 1998.
Intrieve successfully performed Year 2000 proxy testing with several of
its larger users during early October 1998. Winton Savings performed
final testing of its unique equipment configuration and communications
link to Intrieve during November 1998.
The Company expended approximately $67,000 through the periods ended
December 31, 1999, in connection with its Year 2000 compliance program.
Winton Savings experienced no significant problems related to its
information technology systems upon arrival of the Year 2000, nor was
there any interruption in service to its customers of any kind.
The Company could incur losses if year 2000 issues adversely affect its
depositors or borrowers. Such problems could include delayed loan
payments due to year 2000 problems affecting any significant borrowers
or impairing the payroll systems of large employers in the Company's
primary market area. Because the Company's loan portfolio is highly
diversified with regard to individual borrowers and types of
businesses, the Company does not expect, and to date has not realized,
any significant or prolonged difficulties that may affect net earnings
or cash flow.
9
<PAGE>
Winton Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three month periods ended December 31, 1999 and 1998
5. Earnings Per Share
Basic earnings per share for the three-month period ended December 31,
1999 is computed based on 4,404,752 weighted-average shares
outstanding.
Basic earnings per share for the three-month period ended December 31,
1998 is computed based on 4,391,057 weighted-average shares
outstanding.
Diluted earnings per share is computed taking into consideration common
shares outstanding and dilutive potential common shares to be issued
under the Corporation's stock option plan. Weighted-average common
shares deemed outstanding for purposes of computing diluted earnings
per share totaled 4,604,650 for the three-month period ended December
31, 1999, and 4,572,249 for the three-month period ended December 31,
1998, respectively.
Incremental shares related to the assumed exercise of stock options
included in the calculation of diluted earnings per share totaled
199,898 for the three-month period ended December 31, 1999, and 181,192
for the three-month period ended December 31, 1998, respectively.
10
<PAGE>
Winton Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
In the following pages, management presents an analysis of the Corporation's
financial condition as of December 31, 1999, and the results of operations for
the three-month period ended December 31, 1999, compared to the same period in
1998. In addition to this historical information, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, Winton Financial's operations and Winton Financial's
actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and in Winton Financial's general market area.
Without limiting the foregoing, some of the statements in the following
referenced sections of this Form 10-Q are forward looking and are, therefore,
subject to such risks and uncertainties.
1. Management's determination of the amount and adequacy of the allowance for
loan losses as set forth under "Discussion of Changes in Financial
Condition from September 30, 1999 to December 31, 1999" and "Comparison of
Results of Operations for the Three Months Ended December 31, 1999 and
1998."
2. Management's estimate as to the effects of recent accounting pronouncements
as set forth under "Effects of Recent Accounting Pronouncements."
Discussion of Financial Condition Changes from September 30, 1999 to
December 31, 1999
At December 31, 1999, the Corporation had total assets of $473.7 million, an
increase of approximately $7.4 million, or 1.6%, over the level at September 30,
1999. The growth in assets was funded primarily by an increase in Federal Home
Loan Bank ("FHLB") advances and other borrowings of $10.5 million and
undistributed net earnings of $544,000, partially offset by a decrease of $4.9
million in deposits.
Cash and cash equivalents increased by $164,000, or 7.9%, during the three
months ended December 31, 1999.
Investment securities totaled approximately $23.1 million at December 31, 1999,
an increase of approximately $677,000, or 3.0%, over September 30, 1999 levels,
as purchases of $1.3 million exceeded maturities of securities totaling $500,000
during the period.
Mortgage-backed securities totaled approximately $13.6 million at December 31,
1999, a decrease of approximately $389,000, or 2.8%, since September 30, 1999,
primarily attributable to regular principal repayments during the period.
11
<PAGE>
Winton Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from September 30, 1999 to December
31, 1999 (continued)
Loans receivable and loans held for sale totaled $420.3 million at December 31,
1999, an increase of approximately $6.7 million, or 1.6%, over the level at
September 30, 1999. The increase resulted primarily from loan originations of
$41.8 million, which were partially offset by loan sales of $15.3 million during
the current period and principal repayments amounting to $19.8 million.
At December 31, 1999, the allowance for loan losses of Winton Savings totaled
$988,000, an increase of $56,000 from the level maintained at September 30,
1999. At December 31, 1999, the allowance represented approximately .24% of the
total loan portfolio and 229% of total nonperforming loans. At December 31,
1999, the ratio of total nonperforming loans to total loans amounted to .10%
compared to .06% at September 30, 1999. Although management believes that its
allowance for loan losses at December 31, 1999 is adequate based on the
available facts and circumstances, there can be no assurance that additions to
such allowance will not be necessary in future periods, which could adversely
affect Winton Financial's results of operations.
Deposits totaled $307.1 million at December 31, 1999, a decrease of $4.9
million, or 1.6%, from September 30, 1999 levels. The decrease in deposits was
primarily the result of management's decision not to renew some brokered
certificates. Brokered deposits totaled $26.5 million and $27.3 at December 31,
1999 and September 30, 1999, respectively.
Advances from the FHLB and other borrowings totaled $127.0 million at December
31, 1999, an increase of $10.5 million, or 9.0%, over September 30, 1999 levels.
Proceeds from borrowings have generally been utilized to fund the growth in the
loan portfolio.
The Company is required to meet minimum capital standards promulgated by the
Office of Thrift Supervision (the "OTS"). At December 31, 1999, the Company's
regulatory capital was in excess of such minimum capital requirements.
Comparison of Operating Results for the Three-Month Periods ended
December 31, 1999 and 1998
General
The Corporation recorded net earnings for the three months ended December 31,
1999, totaling $896,000, compared to $1.1 million in net earnings for the same
period in 1998, a decrease of $237,000, or 20.9%. The decreased earnings
resulted primarily from a $38,000 increase in general, administrative and other
expense and a $554,000 decrease in other income, which were partially offset by
a $231,000 increase in net interest income and a $124,000 decrease in the
provision for federal income taxes.
12
<PAGE>
Winton Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three-Month Periods ended
December 31, 1999 and 1998 (continued)
Net Interest Income
Interest income on loans and mortgage-backed securities increased by $1.0
million, or 13.7%, for the three months ended December 31, 1999, compared to the
same period in 1998. The increase resulted primarily from a $56.6 million
increase in the average portfolio outstanding year to year, partially offset by
a 10 basis point decrease in yield, to 7.82% for the three months ended December
31, 1999.
Interest income on investment securities and interest-bearing deposits and other
decreased by $65,000, or 13.9%, for the three months ended December 31, 1999,
compared to the same quarter in 1998. The decrease resulted from a $654,000
decrease in the average balance outstanding, and by a decrease in yield, to
5.48% for the three months ended December 31, 1999.
Interest expense on deposits decreased by $11,000 or .3%, for the three months
ended December 31, 1999 compared to the same period in 1998. The decrease was
primarily attributable to a $5.9 million decrease in weighted-average deposits
outstanding year to year. The weighted-average cost of deposits decreased during
the periods, amounting to 4.93% and 5.04% for the three months ended December
31, 1999 and 1998, respectively.
Interest expense on borrowings increased by $730,000, or 69.3%, during the three
months ended December 31, 1999, compared to the same period in 1998, primarily
due to an increase of $47.9 million in the average balance outstanding, while
the weighted-average cost of borrowings increased to 5.90% from 5.77% during the
three-month period ended December 31, 1998.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $231,000, or 7.7%, to $3.2 million for the
three months ended December 31, 1999, compared to $3.0 million for the same
period in 1998. The interest rate spread decreased by 15 basis points, to 2.47%
for the three months ended December 31, 1999, while the net interest margin
decreased by 16 basis points, to 2.80% for the three months ended December 31,
1999, compared to 2.96% for the three months ended December 31, 1998.
Provision for Losses on Loans
As a result of an analysis of historical experience, the volume and type of
lending conducted by the Company, the status of past due principal and interest
payments, and general economic conditions, particularly as such conditions
relate to the Company's loan portfolio, management elected to record a $23,000
provision for loan losses during the three-month period ended December 31, 1999,
the same dollar amount recorded in the 1998 period. The current period provision
reflects the growth in the loan portfolio year to year. There can be no
assurance that the allowance for loan losses of the Company will be adequate to
cover losses on nonperforming assets in the future.
13
<PAGE>
Winton Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three-Month Periods ended
December 31, 1999 and 1998 (continued)
Other Income
Other income decreased by $554,000, or 66.2%, for the three months ended
December 31, 1999, compared to the 1998 period, primarily due to a $626,000, or
92.6%, decrease in gain on sale of mortgage loans and a $15,000, or 8.8%,
decrease in other operating income, which was partially offset by an increase of
$87,000 in mortgage servicing fees. The decrease in the gain on sale of loans is
due to the changed rate environment causing borrowers to prefer adjustable rate
loans, which the Company has not traditionally sold.
General, Administrative and Other Expense
General, administrative and other expense increased by $38,000, or 1.8%, for the
three months ended December 31, 1999, compared to the same period in 1998. The
increase consisted primarily of a $119,000, or 12.1% increase in employee
compensation and benefits and a $2,000, or .5%, increase in occupancy and
equipment, a $5,000, or 11.9%, increase in federal deposit insurance premiums, a
$10,000, or 14.7%, increase in advertising expense, which were partially offset
by a $99,000, or 22.5%, decrease in other operating expense. The increase in
employee compensation and benefits resulted primarily from a decrease in
deferred loan origination costs, due to a decline in lending volume year to
year, partially offset by a decline in staffing levels. The decrease in other
operating expense was due to the effects of economies attained in the BenchMark
merger, which was consummated in June 1999.
Federal Income Taxes
The provision for federal income taxes amounted to $467,000 for the three months
ended December 31, 1999, a decrease of $124,000, or 21.0%, from the same period
in 1998. The decrease resulted primarily from a $361,000, or 20.9%, decrease in
pretax earnings. The effective tax rates were 34.3% and 34.3% for the
three-month periods ended December 31, 1999 and 1998, respectively.
14
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Winton Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
On January 28, 2000, the Annual Meeting of Shareholders of
Winton Financial Corporation was held. Two directors were
nominated for re-election and were re-elected for terms
expiring in 2003, pursuant to the following respective votes:
Robert L. Bollin For: 3,534,025 Withheld: 53,524
William J. Parchman For: 3,538,397 Withheld: 54,152
One other matter was voted upon by the shareholders, as follows:
1) To consider and vote upon the ratification of the
selection of Grant Thornton LLP as the auditors of Winton
Financial for the current fiscal year.
For: 3,344,285 Against: 120,964 Abstain: 122,300
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits
10.1 Employment Agreement for Robert L. Bollin
10.2 Employment Agreement for Gregory J. Bollin
10.3 Employment Agreement for Jill M. Burke
27.1 Financial Data Schedule for the Three Months Ended
December 31, 1999
27.2 Restated Financial Data Schedule for the Three Months Ended
December 31, 1998
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 9, 2000 By: /s/Robert L. Bollin
Robert L. Bollin
President
Date: February 9, 2000 By: /s/Jill M. Burke
Jill M. Burke
Chief Financial Officer
16
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), entered into this 6th day of January, 2000, by and among Winton
Financial Corporation, a savings and loan holding company incorporated under
Ohio law (hereinafter referred to as "WFC"), The Winton Savings and Loan Co., a
savings and loan association incorporated under Ohio law and a wholly-owned
subsidiary of WFC (hereinafter referred to as "WINTON"), and Robert L. Bollin,
an individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as President of WFC and
WINTON (hereinafter collectively referred to as the "EMPLOYERS");
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Boards of Directors of the EMPLOYERS desire to retain the services
of the EMPLOYEE as the President of WINTON and of WFC;
WHEREAS, the EMPLOYEE desires to continue to serve as the President of
WINTON and of WFC; and
WHEREAS, the EMPLOYEE and the EMPLOYERS desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the EMPLOYERS and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYERS and the EMPLOYEE hereby agree as follows:
Section l. Employment and Term. Upon the terms and subject to the
conditions of this AGREEMENT, the EMPLOYERS hereby employ the EMPLOYEE, and the
EMPLOYEE hereby accepts employment, as the President of WINTON and of WFC. The
term of this AGREEMENT shall commence on January 6, 2000 and shall end on
January 1, 2003 (hereinafter referred to as the "TERM").
Section 2. Duties of EMPLOYEE.
(a) General Duties and Responsibilities. As an officer of each of the
EMPLOYERS, the EMPLOYEE shall perform the duties and responsibilities customary
for such office to the best of his ability and in accordance with the policies
established by the Boards of Directors of the EMPLOYERS and all applicable laws
and regulations. The EMPLOYEE shall perform such other duties not inconsistent
with his position as may be assigned to him from time to time by the Boards of
Directors of the EMPLOYERS; provided, however, that the EMPLOYERS shall employ
the EMPLOYEE during the TERM in a senior executive capacity without diminishment
of the importance or prestige of his position.
(b) Devotion of Entire Time to the Business of the EMPLOYERS. 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. The EMPLOYEE shall not directly or indirectly
render any services of a business, commercial or professional nature to any
person or organization without the prior written consent of the Boards of
Directors of the EMPLOYERS; 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
EMPLOYERS.
Section 3. Compensation, Benefits and Reimbursements.
(a) Salary. The EMPLOYEE shall receive during the TERM an annual salary
payable in equal installments not less often than monthly. The amount of such
annual salary shall be $200,000 until changed by the Boards of Directors of the
EMPLOYERS in accordance with Section 3(b) of this AGREEMENT.
(b) Annual Salary Review. In December of each year throughout the TERM,
the annual salary of the EMPLOYEE shall be reviewed by the Boards of Directors
of the EMPLOYERS and shall be set, effective January l of the following year, at
an amount not less than $200,000, based upon the EMPLOYEE'S individual
performance and the overall profitability and financial condition of the
EMPLOYERS (hereinafter referred to as the "ANNUAL REVIEW"). The results of the
ANNUAL REVIEW shall be reflected in the minutes of the Boards of Directors of
the EMPLOYERS.
(c) Expenses. In addition to any compensation received under Section
3(a) or (b) of this AGREEMENT, the EMPLOYERS 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 EMPLOYERS pertaining to reimbursement of expenses to senior
management officials.
(d) Employee Benefit Program. (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
EMPLOYERS from time to time, including programs in respect of group health,
disability or life insurance, reimbursement of membership fees in civic, social
and professional organizations and all employee benefit plans or programs
hereafter adopted in writing by the Boards of Directors of the EMPLOYERS, 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 EMPLOYERS 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 shall not be required to compensate the EMPLOYEE for
such discontinuance or termination.
(i) After the expiration of the TERM or the termination of the
employment of the EMPLOYEE for any reason other than JUST CAUSE (as
defined hereinafter), the EMPLOYERS 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 EMPLOYERS on the date of
this AGREEMENT until both the EMPLOYEE and his spouse become 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 retirement;
provided further, however, that the EMPLOYEE may only participate in
such program for as long as the EMPLOYERS make available an employee
group health insurance program which permits the EMPLOYERS to make
coverage available for retirees.
(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 policies periodically established by the Boards of
Directors of the EMPLOYERS for senior management officials of the
EMPLOYERS, the duration of which shall not be less than four weeks each
calendar year;
(ii) Vacation time shall be scheduled by the EMPLOYEE in a
reasonable manner and shall be subject to approval by the Boards of
Directors of the EMPLOYERS. The EMPLOYEE shall not be entitled to
receive any additional compensation from the EMPLOYERS in the event of
his failure to take the full allotment of vacation time in any calendar
year; provided, however, that a maximum of one week of unused vacation
time in any calendar year may be carried over into any succeeding
calendar year; and
(iii) The EMPLOYEE shall be entitled to annual sick leave as
established by the Boards of Directors of the EMPLOYERS for senior
management officials of the EMPLOYERS. In the event that any sick leave
time shall not have been used during any calendar year, such leave
shall accrue to subsequent calendar years, only to the extent
authorized by the Boards of Directors of the EMPLOYERS. Upon
termination of employment, the EMPLOYEE shall not be entitled to
receive any additional compensation from the EMPLOYERS for unused sick
leave.
Section 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 EMPLOYERS, upon the delivery by the
EMPLOYERS of written notice of termination to the EMPLOYEE, or (ii) at the
option of the EMPLOYEE, upon delivery by the EMPLOYEE of written notice of
termination to the EMPLOYERS if the present capacity or circumstances in which
the EMPLOYEE is employed are materially adversely changed, including, but not
limited to, a material reduction in responsibilities or authority, the
assignment of duties or responsibilities substantially inconsistent with those
normally associated with the EMPLOYEE'S position described in Section 2(a) of
this AGREEMENT, a change of title, the requirement that the EMPLOYEE regularly
perform his principal executive functions more than thirty-five (35) miles from
his primary office as of the date of this AGREEMENT or the reduction of the
EMPLOYEE'S benefits provided under this AGREEMENT, unless the benefit reductions
are part of a company-wide reduction. The following subsections (i), (ii) and
(iii) of this Section 4(a) shall govern the obligations of the EMPLOYERS to the
EMPLOYEE upon the occurrence of the events described in such subparagraphs:
(i) Termination for JUST CAUSE. In the event that the
EMPLOYERS terminate the employment of the EMPLOYEE during 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, willful violation of any
law, rule, regulation or final cease-and-desist order (other than
traffic violations or similar offenses), conviction of a felony or for
fraud or embezzlement, or material breach of any provision of this
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.
(ii) Termination after CHANGE OF CONTROL. In the event that,
before the expiration of the TERM and in connection with or within one
year of a CHANGE OF CONTROL (as defined hereinafter) of either one of
the EMPLOYERS, (A) the employment of the EMPLOYEE is terminated for any
reason other than JUST CAUSE or is terminated by the EMPLOYEE as
provided in Section 4(a)(ii) above, then the following shall occur:
(I) The EMPLOYERS shall promptly pay to the EMPLOYEE
or to his beneficiaries, dependents or estate an amount equal
to the sum of (l) the amount of compensation to which the
EMPLOYEE would be entitled for the remainder of the TERM under
this AGREEMENT, plus (2) the difference between (x) the
product of three, multiplied by the greater of the annual
salary set forth in Section 3(a) of this AGREEMENT or the
annual salary payable to the EMPLOYEE as a result of any
ANNUAL REVIEW, less (xx) the amount paid to the EMPLOYEE
pursuant to clause (l) of this subparagraph (I);
(II) The EMPLOYEE, his dependents, beneficiaries and
estate shall continue to be covered under all BENEFIT PLANS of
the EMPLOYERS at the EMPLOYERS' 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
(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 EMPLOYERS
hereunder, except as specifically stated in subparagraph (II)
above.
In the event that payments pursuant to this subsection (ii) 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.
(iii) Termination Without CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated before the expiration of
the TERM for any reason other than death, JUST CAUSE or in connection
with or within one year of a CHANGE OF CONTROL, the EMPLOYERS shall be
obligated to continue (A) to pay on a monthly basis to the EMPLOYEE,
his designated beneficiaries or his estate, his annual salary provided
pursuant to Section 3(a) or (b) of this AGREEMENT until the expiration
of the TERM and (B) to provide to the EMPLOYEE at the EMPLOYERS'
expense, health, life, disability, and other benefits substantially
equal to those being provided to the EMPLOYEE at the date of
termination of his employment until the earliest to occur of the
expiration of the TERM or the date the EMPLOYEE becomes employed
full-time by another employer. In the event that payments pursuant to
this subsection (iii) 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. 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
EMPLOYERS hereunder, except as specifically stated in subparagraph
(iii)(B) above.
(b) 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.
(c) "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.
(d) Definition of "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events: (i) the acquisition of ownership or power to
vote more than 25% of the voting stock of either of the EMPLOYERS; (ii) the
acquisition of the ability to control the election of a majority of the
directors of either of the EMPLOYERS; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of WFC or WINTON 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 WFC or
WINTON 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 WFC or WINTON; or (iv) the acquisition by any person or entity of
"conclusive control" of WINTON within the meaning of 12 C.F.R. ss.574.4(a), or
the acquisition by any person or entity of "rebuttable control" within the
meaning of 12 C.F.R. ss.574.4(b) that has not been rebutted in accordance with
12 C.F.R. ss.574.4(c). For purposes of this paragraph, the term "person" refers
to an individual or 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.
Section 5. Special Regulatory Events. Notwithstanding Section 4 of
this AGREEMENT, the obligations of the EMPLOYERS to the EMPLOYEE shall be as
follows in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the EMPLOYERS' affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), the EMPLOYERS' obligations under this AGREEMENT
shall be suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
EMPLOYERS may, in their discretion, pay the EMPLOYEE all or part of the
compensation withheld while the obligations in this AGREEMENT were suspended and
reinstate, in whole or in part, any of the obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYERS' affairs by an order issued under
Section 8(e)(4) or (g)(l) of the FDIA, all obligations of the EMPLOYERS under
this AGREEMENT shall terminate as of the effective date of such order; provided,
however, that vested rights of the EMPLOYEE shall not be affected by such
termination.
(c) If the EMPLOYERS are in default, as defined in section 3(x)(1) of
the FDIA, all obligations under this AGREEMENT shall terminate as of the date of
default; provided, however, that vested rights of the EMPLOYEE shall not be
affected.
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the EMPLOYERS, (i) by the Director of
the Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his
or her designee at the time that the Federal Deposit Insurance Corporation
enters into an agreement to provide assistance to or on behalf of the EMPLOYERS
under the authority contained in Section 13(c) of the FDIA or (ii) by the
Director of the OTS, or his or her designee, at any time the Director of the
OTS, or his or her designee, approves a supervisory merger to resolve problems
related to the operation of the EMPLOYERS or when the EMPLOYERS are determined
by the Director of the OTS to be in an unsafe or unsound condition. No vested
rights of the EMPLOYEE shall be affected by any such action.
Section 6. Consolidation, Merger or Sale of Assets. Nothing in this
AGREEMENT shall preclude the EMPLOYERS from consolidating with, merging into, or
transferring all, or substantially all, of their assets to another corporation
that assumes all of the EMPLOYERS' obligations and undertakings hereunder. Upon
such a consolidation, merger or transfer of assets, the term "EMPLOYERS" as used
herein, shall mean such other corporation or entity, and this AGREEMENT shall
continue in full force and effect.
Section 7. Confidential Information. The EMPLOYEE acknowledges that
during his employment he will learn and have access to confidential information
regarding the EMPLOYERS and their 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
EMPLOYERS consent 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 EMPLOYERS, their 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
EMPLOYERS. The EMPLOYEE shall not otherwise knowingly act or conduct himself (a)
to the material detriment of the EMPLOYERS, their subsidiaries, or affiliates,
or (b) in a manner which is inimical or contrary to the interests of the
EMPLOYERS.
Section 8. Nonassignability. Neither this AGREEMENT nor any right or
interest hereunder shall be assignable by the EMPLOYEE, his beneficiaries, or
legal representatives without the EMPLOYERS' prior written consent; provided,
however, that nothing in this Section 8 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.
Section 9. 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.
Section l0. Binding Agreement. This AGREEMENT shall be binding upon,
and inure to the benefit of, the EMPLOYEE and the EMPLOYERS and their
respective permitted successors and assigns.
Section 11. Amendment of AGREEMENT. This AGREEMENT may not be modified
or amended, except by an instrument in writing signed by the parties hereto.
Section 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.
Section 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 EMPLOYERS (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.
Section 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.
Section 15. Governing Law. 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 this State of Ohio, except to
the extent that federal law is governing.
Section 16. Effect of Prior Agreements. This AGREEMENT contains the
entire understanding between the parties hereto and supersedes any prior
employment agreement between the EMPLOYERS and the EMPLOYEE, each of which is
hereby terminated and is of no further force or effect.
Section 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 Winton Financial Corporation and/or The Winton Savings & Loan
Company:
Winton Financial Corporation
5511 Cheviot Road
Cincinnati, Ohio 45247-7095
With copies to:
John C. Vorys, Esq.
Vorys, Sater, Seymour and Pease LLP
Suite 2100, Atrium Two
221 East Fourth Street
Cincinnati, Ohio 45202
If to the EMPLOYEE to:
Robert L. Bollin
3358 Kuliga Park Drive
Cincinnati, Ohio 45248
<PAGE>
IN WITNESS WHEREOF, the EMPLOYERS have caused this AGREEMENT to be
executed by their duly authorized officers, and the EMPLOYEE has signed this
AGREEMENT, each as of the day and year first above written.
Attest: WINTON FINANCIAL CORPORATION
By
its
Attest: THE WINTON SAVINGS AND LOAN CO.
By
its
Attest:
Robert L. Bollin
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), entered into this 6th day of January, 2000, by and among Winton
Financial Corporation, a savings and loan holding company incorporated under
Ohio law (hereinafter referred to as "WFC"), The Winton Savings and Loan Co., a
savings and loan association incorporated under Ohio law and a wholly-owned
subsidiary of WFC (hereinafter referred to as "WINTON"), and Gregory J. Bollin,
an individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is an employee of WFC and WINTON (hereinafter
collectively referred to as the "EMPLOYERS");
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Boards of Directors of the EMPLOYERS desire to retain the services
of the EMPLOYEE as the Executive Vice President of WINTON and the Vice President
of WFC;
WHEREAS, the EMPLOYEE desires to continue to serve as the Executive
Vice President of WINTON and the Vice President of WFC; and
WHEREAS, the EMPLOYEE and the EMPLOYERS desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the EMPLOYERS and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYERS and the EMPLOYEE hereby agree as follows:
Section l. Employment and Term. Upon the terms and subject to the
conditions of this AGREEMENT, the EMPLOYERS hereby employ the EMPLOYEE, and the
EMPLOYEE hereby accepts employment, as the Executive Vice President of WINTON
and the Vice President of WFC. The term of this AGREEMENT shall commence on
January 6, 2000 and shall end on January 1, 2003 (hereinafter referred to as the
"TERM").
Section 2. Duties of EMPLOYEE.
(a) General Duties and Responsibilities. As an officer of each of the
EMPLOYERS, the EMPLOYEE shall perform the duties and responsibilities customary
for such office to the best of his ability and in accordance with the policies
established by the Boards of Directors of the EMPLOYERS and all applicable laws
and regulations. The EMPLOYEE shall perform such other duties not inconsistent
with his position as may be assigned to him from time to time by the Boards of
Directors of the EMPLOYERS; provided, however, that the EMPLOYERS shall employ
the EMPLOYEE during the TERM in a senior executive capacity without diminishment
of the importance or prestige of his position.
(b) Devotion of Entire Time to the Business of the EMPLOYERS. 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. The EMPLOYEE shall not directly or indirectly
render any services of a business, commercial or professional nature to any
person or organization without the prior written consent of the Boards of
Directors of the EMPLOYERS; 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
EMPLOYERS.
Section 3. Compensation, Benefits and Reimbursements.
(a) Salary. The EMPLOYEE shall receive during the TERM an annual salary
payable in equal installments not less often than monthly. The amount of such
annual salary shall be $145,600 until changed by the Boards of Directors of the
EMPLOYERS in accordance with Section 3(b) of this AGREEMENT.
(b) Annual Salary Review. In December of each year throughout the TERM,
the annual salary of the EMPLOYEE shall be reviewed by the Boards of Directors
of the EMPLOYERS and shall be set, effective January l of the following year, at
an amount not less than $145,600, based upon the EMPLOYEE'S individual
performance and the overall profitability and financial condition of the
EMPLOYERS (hereinafter referred to as the "ANNUAL REVIEW"). The results of the
ANNUAL REVIEW shall be reflected in the minutes of the Boards of Directors of
the EMPLOYERS.
(c) Expenses. In addition to any compensation received under Section
3(a) or (b) of this AGREEMENT, the EMPLOYERS 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 EMPLOYERS pertaining to reimbursement of expenses to senior
management officials.
(d) Employee Benefit Program. (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
EMPLOYERS from time to time, including programs in respect of group health,
disability or life insurance, reimbursement of membership fees in civic, social
and professional organizations and all employee benefit plans or programs
hereafter adopted in writing by the Boards of Directors of the EMPLOYERS, 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 EMPLOYERS 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 shall not be required to compensate the EMPLOYEE for
such discontinuance or termination.
(ii) After the expiration of the TERM or the termination of the
employment of the EMPLOYEE for any reason other than JUST CAUSE (as defined
hereinafter), the EMPLOYERS 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 EMPLOYERS on the date of this AGREEMENT until both the EMPLOYEE
and his spouse become 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 retirement; provided further, however, that the EMPLOYEE may only
participate in such program for as long as the EMPLOYERS make available an
employee group health insurance program which permits the EMPLOYERS to make
coverage available for retirees.
(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 policies periodically established by the Boards of
Directors of the EMPLOYERS for senior management officials of the
EMPLOYERS, the duration of which shall not be less than four weeks each
calendar year;
(ii) Vacation time shall be scheduled by the EMPLOYEE in a
reasonable manner and shall be subject to approval by the Boards of
Directors of the EMPLOYERS. The EMPLOYEE shall not be entitled to
receive any additional compensation from the EMPLOYERS in the event of
his failure to take the full allotment of vacation time in any calendar
year; provided, however, that a maximum of one week of unused vacation
time in any calendar year may be carried over into any succeeding
calendar year; and
(iii) The EMPLOYEE shall be entitled to annual sick leave as
established by the Boards of Directors of the EMPLOYERS for senior
management officials of the EMPLOYERS. In the event that any sick leave
time shall not have been used during any calendar year, such leave
shall accrue to subsequent calendar years, only to the extent
authorized by the Boards of Directors of the EMPLOYERS. Upon
termination of employment, the EMPLOYEE shall not be entitled to
receive any additional compensation from the EMPLOYERS for unused sick
leave.
Section 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 EMPLOYERS, upon the delivery by the
EMPLOYERS of written notice of termination to the EMPLOYEE, or (ii) at the
option of the EMPLOYEE, upon delivery by the EMPLOYEE of written notice of
termination to the EMPLOYERS if the present capacity or circumstances in which
the EMPLOYEE is employed are materially adversely changed, including, but not
limited to, a material reduction in responsibilities or authority, the
assignment of duties or responsibilities substantially inconsistent with those
normally associated with the EMPLOYEE'S position described in Section 2(a) of
this AGREEMENT, a change of title, the requirement that the EMPLOYEE regularly
perform his principal executive functions more than thirty-five (35) miles from
his primary office as of the date of this AGREEMENT or the reduction of the
EMPLOYEE'S benefits provided under this AGREEMENT, unless the benefit reductions
are part of a company-wide reduction. The following subsections (i), (ii) and
(iii) of this Section 4(a) shall govern the obligations of the EMPLOYERS to the
EMPLOYEE upon the occurrence of the events described in such subparagraphs:
(i) Termination for JUST CAUSE. In the event that the
EMPLOYERS terminate the employment of the EMPLOYEE during 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, willful violation of any
law, rule, regulation or final cease-and-desist order (other than
traffic violations or similar offenses), conviction of a felony or for
fraud or embezzlement, or material breach of any provision of this
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.
(ii) Termination after CHANGE OF CONTROL. In the event that,
before the expiration of the TERM and in connection with or within one
year of a CHANGE OF CONTROL (as defined hereinafter) of either one of
the EMPLOYERS, (A) the employment of the EMPLOYEE is terminated for any
reason other than JUST CAUSE or is terminated by the EMPLOYEE as
provided in Section 4(a)(ii) above, then the following shall occur:
(I) The EMPLOYERS shall promptly pay to the EMPLOYEE
or to his beneficiaries, dependents or estate an amount equal
to the sum of (l) the amount of compensation to which the
EMPLOYEE would be entitled for the remainder of the TERM under
this AGREEMENT, plus (2) the difference between (x) the
product of three, multiplied by the greater of the annual
salary set forth in Section 3(a) of this AGREEMENT or the
annual salary payable to the EMPLOYEE as a result of any
ANNUAL REVIEW, less (xx) the amount paid to the EMPLOYEE
pursuant to clause (l) of this subparagraph (I);
(II) The EMPLOYEE, his dependents, beneficiaries and
estate shall continue to be covered under all BENEFIT PLANS of
the EMPLOYERS at the EMPLOYERS' 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
(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 EMPLOYERS
hereunder, except as specifically stated in subparagraph (II)
above.
In the event that payments pursuant to this subsection (ii) 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.
(iii) Termination Without CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated before the expiration of
the TERM for any reason other than death, JUST CAUSE or in connection
with or within one year of a CHANGE OF CONTROL, the EMPLOYERS shall be
obligated to continue (A) to pay on a monthly basis to the EMPLOYEE,
his designated beneficiaries or his estate, his annual salary provided
pursuant to Section 3(a) or (b) of this AGREEMENT until the expiration
of the TERM and (B) to provide to the EMPLOYEE at the EMPLOYERS'
expense, health, life, disability, and other benefits substantially
equal to those being provided to the EMPLOYEE at the date of
termination of his employment until the earliest to occur of the
expiration of the TERM or the date the EMPLOYEE becomes employed
full-time by another employer. In the event that payments pursuant to
this subsection (iii) 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. 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
EMPLOYERS hereunder, except as specifically stated in subparagraph
(iii)(B) above.
(b) 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.
(c) "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.
(d) Definition of "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events: (i) the acquisition of ownership or power to
vote more than 25% of the voting stock of either of the EMPLOYERS; (ii) the
acquisition of the ability to control the election of a majority of the
directors of either of the EMPLOYERS; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of WFC or WINTON 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 WFC or
WINTON 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 WFC or WINTON; or (iv) the acquisition by any person or entity of
"conclusive control" of WINTON within the meaning of 12 C.F.R. ss.574.4(a), or
the acquisition by any person or entity of "rebuttable control" within the
meaning of 12 C.F.R. ss.574.4(b) that has not been rebutted in accordance with
12 C.F.R. ss.574.4(c). For purposes of this paragraph, the term "person" refers
to an individual or 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.
Section 5. Special Regulatory Events. Notwithstanding Section 4 of
this AGREEMENT, the obligations of the EMPLOYERS to the EMPLOYEE shall be as
follows in the event of the following circumstances
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the EMPLOYERS' affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), the EMPLOYERS' obligations under this AGREEMENT
shall be suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
EMPLOYERS may, in their discretion, pay the EMPLOYEE all or part of the
compensation withheld while the obligations in this AGREEMENT were suspended and
reinstate, in whole or in part, any of the obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYERS' affairs by an order issued under
Section 8(e)(4) or (g)(l) of the FDIA, all obligations of the EMPLOYERS under
this AGREEMENT shall terminate as of the effective date of such order; provided,
however, that vested rights of the EMPLOYEE shall not be affected by such
termination.
(c) If the EMPLOYERS are in default, as defined in section 3(x)(1) of
the FDIA, all obligations under this AGREEMENT shall terminate as of the date of
default; provided, however, that vested rights of the EMPLOYEE shall not be
affected.
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the EMPLOYERS, (i) by the Director of
the Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his
or her designee at the time that the Federal Deposit Insurance Corporation
enters into an agreement to provide assistance to or on behalf of the EMPLOYERS
under the authority contained in Section 13(c) of the FDIA or (ii) by the
Director of the OTS, or his or her designee, at any time the Director of the
OTS, or his or her designee, approves a supervisory merger to resolve problems
related to the operation of the EMPLOYERS or when the EMPLOYERS are determined
by the Director of the OTS to be in an unsafe or unsound condition. No vested
rights of the EMPLOYEE shall be affected by any such action.
Section 6. Consolidation, Merger or Sale of Assets. Nothing in this
AGREEMENT shall preclude the EMPLOYERS from consolidating with, merging into, or
transferring all, or substantially all, of their assets to another corporation
that assumes all of the EMPLOYERS' obligations and undertakings hereunder. Upon
such a consolidation, merger or transfer of assets, the term "EMPLOYERS" as used
herein, shall mean such other corporation or entity, and this AGREEMENT shall
continue in full force and effect.
Section 7. Confidential Information. The EMPLOYEE acknowledges that
during his employment he will learn and have access to confidential information
regarding the EMPLOYERS and their 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
EMPLOYERS consent 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 EMPLOYERS, their 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
EMPLOYERS. The EMPLOYEE shall not otherwise knowingly act or conduct himself (a)
to the material detriment of the EMPLOYERS, their subsidiaries, or affiliates,
or (b) in a manner which is inimical or contrary to the interests of the
EMPLOYERS.
Section 8. Nonassignability. Neither this AGREEMENT nor any right or
interest hereunder shall be assignable by the EMPLOYEE, his beneficiaries, or
legal representatives without the EMPLOYERS' prior written consent; provided,
however, that nothing in this Section 8 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.
Section 9. 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.
Section l0. Binding Agreement. This AGREEMENT shall be binding upon,
and inure to the benefit of, the EMPLOYEE and the EMPLOYERS and their respective
permitted successors and assigns.
Section 11. Amendment of AGREEMENT. This AGREEMENT may not be modified
or amended, except by an instrument in writing signed by the parties hereto.
Section 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.
Section 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 EMPLOYERS (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.
Section 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.
Section 15. Governing Law. 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 this State of Ohio, except to
the extent that federal law is governing.
Section 16. Effect of Prior Agreements. This AGREEMENT contains the
entire understanding between the parties hereto and supersedes any prior
employment agreement between the EMPLOYERS and the EMPLOYEE, each of which is
hereby terminated and is of no further force or effect.
Section 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 Winton Financial Corporation and/or The Winton Savings & Loan
Company:
Winton Financial Corporation
5511 Cheviot Road
Cincinnati, Ohio 45247-7095
With copies to:
John C. Vorys, Esq.
Vorys, Sater, Seymour and Pease LLP
Suite 2100, Atrium Two
221 East Fourth Street
Cincinnati, Ohio 45202
If to the EMPLOYEE to:
Gregory J. Bollin
4440 Hubble Road
Cincinnati, Ohio 45247
<PAGE>
IN WITNESS WHEREOF, the EMPLOYERS have caused this AGREEMENT to be
executed by their duly authorized officers, and the EMPLOYEE has signed this
AGREEMENT, each as of the day and year first above written.
Attest: WINTON FINANCIAL CORPORATION
By
its
Attest: THE WINTON SAVINGS AND LOAN CO.
By
its
Attest:
Gregory J. Bollin
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as this
"AGREEMENT"), entered into this 6th day of January, 2000, by and among Winton
Financial Corporation, a savings and loan holding company incorporated under
Ohio law (hereinafter referred to as "WFC"), The Winton Savings and Loan Co., a
savings and loan association incorporated under Ohio law and a wholly-owned
subsidiary of WFC (hereinafter referred to as "WINTON"), and Jill M. Burke, an
individual (hereinafter referred to as the "EMPLOYEE");
WITNESSETH:
WHEREAS, the EMPLOYEE is currently employed as the Treasurer and Chief
Financial Officer of WFC and WINTON (hereinafter collectively referred to as the
"EMPLOYERS");
WHEREAS, as a result of the skill, knowledge and experience of the
EMPLOYEE, the Boards of Directors of the EMPLOYERS desire to retain the services
of the EMPLOYEE as the Treasurer and Chief Financial Officer of WINTON and WFC;
WHEREAS, the EMPLOYEE desires to continue to serve as the Treasurer
and Chief Financial Officer of WINTON and WFC; and
WHEREAS, the EMPLOYEE and the EMPLOYERS desire to enter into this
Agreement to set forth the terms and conditions of the employment relationship
between the EMPLOYERS and the EMPLOYEE;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the EMPLOYERS and the EMPLOYEE hereby agree as follows:
Section l. Employment and Term. Upon the terms and subject to the
conditions of this AGREEMENT, the EMPLOYERS hereby employ the EMPLOYEE, and the
EMPLOYEE hereby accepts employment, as the Treasurer and Chief Financial Officer
of WINTON and WFC. The term of this AGREEMENT shall commence on January 6, 2000,
and shall end on January 1, 2003 (hereinafter referred to as the "TERM").
Section 2. Duties of EMPLOYEE.
(a) General Duties and Responsibilities. The EMPLOYEE shall serve as
the Treasurer and Chief Financial Officer of the EMPLOYERS. Subject to the
direction of the Boards of Directors of the EMPLOYERS, the EMPLOYEE shall
perform all duties and shall have all powers which are commonly incident to the
office of Treasurer and Chief Financial Officer or which, consistent therewith,
are delegated to her by the Board of Directors. Such duties may include, but
shall not be limited to, assisting in the development of policies and strategic
objectives pertaining to fiscal control and operating results, directing and
coordinating the investment, accounting and controlling activities of the
EMPLOYERS, and preparation of financial reports.
(b) Devotion of Entire Time to the Business of the EMPLOYERS. The
EMPLOYEE shall devote her entire productive time, ability and attention during
normal business hours throughout the TERM to the faithful performance of her
duties under this AGREEMENT. The EMPLOYEE shall not directly or indirectly
render any services of a business, commercial or professional nature to any
person or organization without the prior written consent of the Boards of
Directors of the EMPLOYERS; 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
EMPLOYERS.
Section 3. Compensation, Benefits and Reimbursements.
(a) Salary. The EMPLOYEE shall receive during the TERM an annual salary
payable in equal installments not less often than monthly. The amount of such
annual salary shall be $96,000 until changed by the Boards of Directors of the
EMPLOYERS in accordance with Section 3(b) of this AGREEMENT.
(b) Annual Salary Review. In December of each year throughout the TERM,
the annual salary of the EMPLOYEE shall be reviewed by the Boards of Directors
of the EMPLOYERS and shall be set, effective January l of the following year, at
an amount not less than $96,000, based upon the EMPLOYEE'S individual
performance and the overall profitability and financial condition of the
EMPLOYERS (hereinafter referred to as the "ANNUAL REVIEW"). The results of the
ANNUAL REVIEW shall be reflected in the minutes of the Boards of Directors of
the EMPLOYERS.
(c) Expenses. In addition to any compensation received under Section
3(a) or (b) of this AGREEMENT, the EMPLOYERS shall pay or reimburse the EMPLOYEE
for all reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of her duties under this AGREEMENT. Such
reimbursement shall be made in accordance with the existing policies and
procedures of the EMPLOYERS pertaining to reimbursement of expenses to senior
management officials.
(d) Employee Benefit Program. (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
EMPLOYERS from time to time, including programs in respect of group health,
disability or life insurance, reimbursement of membership fees in civic, social
and professional organizations and all employee benefit plans or programs
hereafter adopted in writing by the Boards of Directors of the EMPLOYERS, 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 EMPLOYERS 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 shall not be required to compensate the EMPLOYEE for
such discontinuance or termination.
(i) After the expiration of the TERM or the termination of the
employment of the EMPLOYEE for any reason other than JUST CAUSE (as defined
hereinafter), the EMPLOYERS shall provide a group health insurance program in
which the EMPLOYEE and her spouse will be eligible to participate and which
shall provide substantially the same benefits as are available to retired
employees of the EMPLOYERS on the date of this AGREEMENT until both the EMPLOYEE
and her spouse become 65 years of age; provided, however that all premiums for
such program shall be paid by the EMPLOYEE and/or her spouse after the
EMPLOYEE'S retirement; provided further, however, that the EMPLOYEE may only
participate in such program for as long as the EMPLOYERS make available an
employee group health insurance program which permits the EMPLOYERS to make
coverage available for retirees.
(e) Vacation and Sick Leave. The EMPLOYEE shall be entitled, without
loss of pay, to be absent voluntarily from the performance of her duties under
this AGREEMENT, subject to the following conditions:
(i) The EMPLOYEE shall be entitled to an annual vacation in
accordance with the policies periodically established by the Boards of
Directors of the EMPLOYERS for senior management officials of the
EMPLOYERS, the duration of which shall not be less than four weeks each
calendar year;
(ii) Vacation time shall be scheduled by the EMPLOYEE in a
reasonable manner and shall be subject to approval by the Boards of
Directors of the EMPLOYERS. The EMPLOYEE shall not be entitled to
receive any additional compensation from the EMPLOYERS in the event of
her failure to take the full allotment of vacation time in any calendar
year; provided, however, that a maximum of one week of unused vacation
time in any calendar year may be carried over into any succeeding
calendar year; and
(iii) The EMPLOYEE shall be entitled to annual sick leave as
established by the Boards of Directors of the EMPLOYERS for senior
management officials of the EMPLOYERS. In the event that any sick leave
time shall not have been used during any calendar year, such leave
shall accrue to subsequent calendar years, only to the extent
authorized by the Boards of Directors of the EMPLOYERS. Upon
termination of employment, the EMPLOYEE shall not be entitled to
receive any additional compensation from the EMPLOYERS for unused sick
leave.
Section 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 EMPLOYERS, upon the delivery by the
EMPLOYERS of written notice of termination to the EMPLOYEE, or (ii) at the
option of the EMPLOYEE, upon delivery by the EMPLOYEE of written notice of
termination to the EMPLOYERS if the present capacity or circumstances in which
the EMPLOYEE is employed are materially adversely changed, including, but not
limited to, a material reduction in responsibilities or authority, the
assignment of duties or responsibilities substantially inconsistent with those
normally associated with the EMPLOYEE'S position described in Section 2(a) of
this AGREEMENT, a change of title, the requirement that the EMPLOYEE regularly
perform her principal executive functions more than thirty-five (35) miles from
her primary office as of the date of this AGREEMENT or the reduction of the
EMPLOYEE'S benefits provided under this AGREEMENT, unless the benefit reductions
are part of a company-wide reduction. The following subsections (i), (ii) and
(iii) of this Section 4(a) shall govern the obligations of the EMPLOYERS to the
EMPLOYEE upon the occurrence of the events described in such subparagraphs:
(i) Termination for JUST CAUSE. In the event that the
EMPLOYERS terminate the employment of the EMPLOYEE during 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, willful violation of any
law, rule, regulation or final cease-and-desist order (other than
traffic violations or similar offenses), conviction of a felony or for
fraud or embezzlement, or material breach of any provision of this
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.
(ii) Termination after CHANGE OF CONTROL. In the event that,
before the expiration of the TERM and in connection with or within one
year of a CHANGE OF CONTROL (as defined hereinafter) of either one of
the EMPLOYERS, (A) the employment of the EMPLOYEE is terminated for any
reason other than JUST CAUSE or is terminated by the EMPLOYEE as
provided in Section 4(a)(ii) above, then the following shall occur:
(I) The EMPLOYERS shall promptly pay to the EMPLOYEE
or to her beneficiaries, dependents or estate an amount equal
to the sum of (l) the amount of compensation to which the
EMPLOYEE would be entitled for the remainder of the TERM under
this AGREEMENT, plus (2) the difference between (x) the
product of three, multiplied by the greater of the annual
salary set forth in Section 3(a) of this AGREEMENT or the
annual salary payable to the EMPLOYEE as a result of any
ANNUAL REVIEW, less (xx) the amount paid to the EMPLOYEE
pursuant to clause (l) of this subparagraph (I);
(II) The EMPLOYEE, her dependents, beneficiaries and
estate shall continue to be covered under all BENEFIT PLANS of
the EMPLOYERS at the EMPLOYERS' 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
(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 EMPLOYERS
hereunder, except as specifically stated in subparagraph (II)
above.
In the event that payments pursuant to this subsection (ii) 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.
(iii) Termination Without CHANGE OF CONTROL. In the event that
the employment of the EMPLOYEE is terminated before the expiration of
the TERM for any reason other than death, JUST CAUSE or in connection
with or within one year of a CHANGE OF CONTROL, the EMPLOYERS shall be
obligated to continue (A) to pay on a monthly basis to the EMPLOYEE,
her designated beneficiaries or her estate, her annual salary provided
pursuant to Section 3(a) or (b) of this AGREEMENT until the expiration
of the TERM and (B) to provide to the EMPLOYEE at the EMPLOYERS'
expense, health, life, disability, and other benefits substantially
equal to those being provided to the EMPLOYEE at the date of
termination of her employment until the earliest to occur of the
expiration of the TERM or the date the EMPLOYEE becomes employed
full-time by another employer. In the event that payments pursuant to
this subsection (iii) 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. 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
EMPLOYERS hereunder, except as specifically stated in subparagraph
(iii)(B) above.
(b) 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.
(c) "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.
(d) Definition of "CHANGE OF CONTROL". A "CHANGE OF CONTROL" shall mean
any one of the following events: (i) the acquisition of ownership or power to
vote more than 25% of the voting stock of either of the EMPLOYERS; (ii) the
acquisition of the ability to control the election of a majority of the
directors of either of the EMPLOYERS; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of WFC or WINTON 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 WFC or
WINTON 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 WFC or WINTON; or (iv) the acquisition by any person or entity of
"conclusive control" of WINTON within the meaning of 12 C.F.R. ss.574.4(a), or
the acquisition by any person or entity of "rebuttable control" within the
meaning of 12 C.F.R. ss.574.4(b) that has not been rebutted in accordance with
12 C.F.R. ss.574.4(c). For purposes of this paragraph, the term "person" refers
to an individual or 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.
(e) Termination by EMPLOYEE. If the EMPLOYEE terminates this AGREEMENT
without the written consent of the EMPLOYERS, other than pursuant to Section
4(a)(ii) of this AGREEMENT, the EMPLOYEE shall not engage in the financial
institutions business as a director, officer, employee or consultant for any
business or enterprise which competes with the principal business of the
EMPLOYERS or any of their subsidiaries within Hamilton County or any other
geographic area in which WINTON or WFC is doing business for the unexpired TERM
of this AGREEMENT. This provision shall not apply in the event of the
termination of the employment of the EMPLOYEE by the EMPLOYERS prior to the
expiration of the TERM or the termination of the employment of the EMPLOYEE by
the EMPLOYEE pursuant to Section 4(a)(ii) of this AGREEMENT.
Section 5. Special Regulatory Events. Notwithstanding Section 4 of
this AGREEMENT, the obligations of the EMPLOYERS to the EMPLOYEE shall be as
follows in the event of the following circumstances:
(a) If the EMPLOYEE is suspended and/or temporarily prohibited from
participating in the conduct of the EMPLOYERS' affairs by a notice served under
section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (hereinafter
referred to as the "FDIA"), the EMPLOYERS' obligations under this AGREEMENT
shall be suspended as of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
EMPLOYERS may, in their discretion, pay the EMPLOYEE all or part of the
compensation withheld while the obligations in this AGREEMENT were suspended and
reinstate, in whole or in part, any of the obligations that were suspended.
(b) If the EMPLOYEE is removed and/or permanently prohibited from
participating in the conduct of the EMPLOYERS' affairs by an order issued under
Section 8(e)(4) or (g)(l) of the FDIA, all obligations of the EMPLOYERS under
this AGREEMENT shall terminate as of the effective date of such order; provided,
however, that vested rights of the EMPLOYEE shall not be affected by such
termination.
(c) If the EMPLOYERS are in default, as defined in section 3(x)(1) of
the FDIA, all obligations under this AGREEMENT shall terminate as of the date of
default; provided, however, that vested rights of the EMPLOYEE shall not be
affected.
(d) All obligations under this AGREEMENT shall be terminated, except to
the extent of a determination that the continuation of this AGREEMENT is
necessary for the continued operation of the EMPLOYERS, (i) by the Director of
the Office of Thrift Supervision (hereinafter referred to as the "OTS"), or his
or her designee at the time that the Federal Deposit Insurance Corporation
enters into an agreement to provide assistance to or on behalf of the EMPLOYERS
under the authority contained in Section 13(c) of the FDIA or (ii) by the
Director of the OTS, or his or her designee, at any time the Director of the
OTS, or his or her designee, approves a supervisory merger to resolve problems
related to the operation of the EMPLOYERS or when the EMPLOYERS are determined
by the Director of the OTS to be in an unsafe or unsound condition. No vested
rights of the EMPLOYEE shall be affected by any such action.
Section 6. Consolidation, Merger or Sale of Assets. Nothing in this
AGREEMENT shall preclude the EMPLOYERS from consolidating with, merging into, or
transferring all, or substantially all, of their assets to another corporation
that assumes all of the EMPLOYERS' obligations and undertakings hereunder. Upon
such a consolidation, merger or transfer of assets, the term "EMPLOYERS" as used
herein, shall mean such other corporation or entity, and this AGREEMENT shall
continue in full force and effect.
Section 7. Confidential Information. The EMPLOYEE acknowledges that
during her employment she will learn and have access to confidential information
regarding the EMPLOYERS and their customers and businesses. The EMPLOYEE agrees
and covenants not to disclose or use for her own benefit, or the benefit of any
other person or entity, any confidential information, unless or until the
EMPLOYERS consent 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 EMPLOYERS, their 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
EMPLOYERS. The EMPLOYEE shall not otherwise knowingly act or conduct himself (a)
to the material detriment of the EMPLOYERS, their subsidiaries, or affiliates,
or (b) in a manner which is inimical or contrary to the interests of the
EMPLOYERS.
Section 8. Nonassignability. Neither this AGREEMENT nor any right or
interest hereunder shall be assignable by the EMPLOYEE, her beneficiaries, or
legal representatives without the EMPLOYERS' prior written consent; provided,
however, that nothing in this Section 8 shall preclude (a) the EMPLOYEE from
designating a beneficiary to receive any benefits payable hereunder upon her
death, or (b) the executors, administrators, or other legal representatives of
the EMPLOYEE or her estate from assigning any rights hereunder to the person or
persons entitled thereto.
<PAGE>
Section 9. 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.
Section l0. Binding Agreement. This AGREEMENT shall be binding upon,
and inure to the benefit of, the EMPLOYEE and the EMPLOYERS and their respective
permitted successors and assigns.
Section 11. Amendment of AGREEMENT. This AGREEMENT may not be modified
or amended, except by an instrument in writing signed by the parties hereto.
Section 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.
Section 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 EMPLOYERS (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.
Section 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.
Section 15. Governing Law. 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 this State of Ohio, except to
the extent that federal law is governing.
Section 16. Effect of Prior Agreements. This AGREEMENT contains the
entire understanding between the parties hereto and supersedes any prior
employment agreement between the EMPLOYERS and the EMPLOYEE, each of which is
hereby terminated and is of no further force or effect.
Section 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 Winton Financial Corporation and/or The Winton Savings & Loan
Company:
Winton Financial Corporation
5511 Cheviot Road
Cincinnati, Ohio 45247-7095
With copies to:
John C. Vorys, Esq.
Vorys, Sater, Seymour and Pease LLP
Suite 2100, Atrium Two
221 East Fourth Street
Cincinnati, Ohio 45202
If to the EMPLOYEE to:
Jill M. Burke
5168 Deeridge Lane
Cincinnati, Ohio 45247
<PAGE>
IN WITNESS WHEREOF, the EMPLOYERS have caused this AGREEMENT to be
executed by their duly authorized officers, and the EMPLOYEE has signed this
AGREEMENT, each as of the day and year first above written.
Attest: WINTON FINANCIAL CORPORATION
By
its
Attest: THE WINTON SAVINGS AND LOAN CO.
By
its
Attest:
Jill M. Burke
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