UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2006 (March 6, 2006)
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RURBAN FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Ohio 0-13507 34-1395608
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(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
401 Clinton Street, Defiance, Ohio 43512
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(Address of principal executive offices) (Zip Code)
(419) 783-8950
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On March 6, 2006, the Company entered into an Employment Agreement with Kenneth
A. Joyce (the "Employment Agreement") effective as of March 1, 2006. The
Employment Agreement supersedes the Change in Control Agreement previously
entered into by the Company and Mr. Joyce.
Under the Employment Agreement, Mr. Joyce is employed as the Chief Executive
Officer of the Company and will perform any duties assigned to him from time to
time by the Company's Board of Directors. Mr. Joyce must devote his full time
and attention to the Company's business, and he may not engage in any activities
which compete with activities of the Company or its subsidiaries. Mr. Joyce is
also prohibited from serving any company which competes with the Company or its
subsidiaries.
Term
The term of the Employment Agreement runs from March 1, 2006 to March 1, 2009,
but the term will be automatically extended to December 31, 2010 unless either
party provides the other party with notice of nonrenewal no later than September
2, 2008.
Compensation
During the term of the Employment Agreement, Mr. Joyce will be paid an annual
base salary of $264,000 or a higher amount set by the Company. Mr. Joyce is also
entitled to:
o receive bonuses from time to time as the Company, in its sole
discretion, deems appropriate;
o receive paid vacation time in accordance with policies established by
the Company's Board of Directors;
o participate any of the Company's employee benefit plans (provided that
the Company may not change any of its employee benefits in any way
that would adversely affect Mr. Joyce, unless the change would apply
to all of the Company's executive officers and would not affect Mr.
Joyce disproportionately); and
o receive prompt reimbursement for all reasonable business expenses he
incurs in accordance with the policies and procedures established by
the Company's Board of Directors.
Termination Resulting from Disability or Death
If Mr. Joyce dies or becomes permanently disabled during his employment, the
Employment Agreement will terminate and the Company will have no further
obligations to Mr. Joyce under the Employment Agreement. However, any
compensation that becomes payable to Mr. Joyce under the Employment Agreement
prior to his death or permanent disability will continue to be paid to Mr. Joyce
or his designated beneficiary or estate, as appropriate.
Termination for "Cause" or Without "Good Reason"
o If Mr. Joyce's employment is terminated by the Board of Directors for
"Cause" or by Mr. Joyce without "Good Reason," the Employment
Agreement (and all of Mr. Joyce's rights under the Employment
Agreement) will terminate automatically. If Mr. Joyce's employment
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is terminated other than for Cause and the Company subsequently learns
that Mr. Joyce actively concealed conduct that would have entitled the
Company to terminate his employment for Cause, the Company may recover
any amounts paid to Mr. Joyce (or his beneficiaries) under the
Employment Agreement in connection with the termination of his
employment.
Termination by the Company Without "Cause" or by Mr. Joyce for "Good Reason"
If Mr. Joyce's employment is terminated by the Company without "Cause" or by Mr.
Joyce with "Good Reason" (and such termination does not occur in connection with
a change in control), the Company will:
o pay Mr. Joyce an amount equal to twice his "Agreed Compensation"
(i.e., the sum of (a) the average of Mr. Joyce's annual base salary
for the five calendar years immediately preceding his termination and
(b) the average of Mr. Joyce's annual bonuses for the five calendar
years immediately preceding his termination) in 24 equal monthly
installments;
o provide Mr. Joyce and his family (if he elected family coverage prior
to the termination of his employment) with continued health care, life
insurance and disability insurance coverage without cost to the
executive for a period of one year, at the same level and subject to
the same terms that were in effect at any time during the two years
prior of his termination; and
o pay Mr. Joyce any other payments or benefits to which he is entitled
under the terms of any other agreement, arrangement, plan or program
in which he participates.
Termination in Connection With a Change in Control
If, at any time during the period beginning on the date the Board of Directors
first learns of a possible "change in control" and ending one year after the
change in control, Mr. Joyce's employment is terminated (1) by the Company
without Cause or (2) by Mr. Joyce for Good Reason, the Company or its successor
will:
o pay Mr. Joyce a lump sum cash payment 2.99 times his "Agreed
Compensation";
o provide Mr. Joyce and his family (if he elected family coverage prior
to the termination of his employment) with continued health care, life
insurance and disability insurance coverage without cost to the
executive for a period of three years, at the same level and subject
to the same terms that were in effect at any time during the two years
prior of his termination; and
o pay Mr. Joyce any other payments or benefits to which he is entitled
under the terms of any other agreement, arrangement, plan or program
in which he participates.
Mr. Joyce will not be entitled to the payments and benefits described above if
he acted in concert with any person or group to effect a change in control
(other than at the direction of the Board of Directors and in his capacity as an
employee of the Company). Also, the Company may not terminate Mr. Joyce's
employment during the period beginning on the date the Company's Board of
Directors first learns of a possible change in control and ending on the date
the change in control occurs.
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No Mitigation
The Employment Agreement does not require Mr. Joyce to mitigate the amount of
any compensation payable to him by seeking other employment or otherwise. The
compensation payable to Mr. Joyce under the Employment Agreement will not be
reduced by any other compensation or benefits he earns or becomes entitled to
receive after the termination of his employment with the Company or its
successor and their subsidiaries.
Employee Benefits
If the Company or its successor is unable to provide the health care, life
insurance and disability insurance coverage described above through an insured
arrangement for active employees and with the same tax consequences available to
active employees, the Company or its successor will pay Mr. Joyce an additional
amount of cash equal to the executive officer's cost of procuring equivalent
coverage. The amount of this cash payment will be "grossed up" to ensure that
Mr. Joyce receives enough cash to pay the cost of procuring equivalent coverage
after payment of all applicable federal, state and local taxes.
Parachute Payments
If the compensation provided to an executive officer under his Change in Control
Agreement would constitute a "parachute payment" within the meaning of Section
280G of the Internal Revenue Code, then the amount of compensation payable under
the executive officer's Change in Control Agreement will be reduced to the
extent necessary to avoid excise taxes under Section 4999 of the Internal
Revenue Code.
Non-Compete
If Mr. Joyce receives compensation under his Employment Agreement in connection
with the termination of his employment after a Change in Control, he will be
prohibited from engaging in the following activities for two years following the
termination of his employment:
o providing financial or executive assistance to any person or entity
located within 50 miles of the Company's main office in Defiance, Ohio
and engaged in the banking or financial services industry or any other
activity engaged in by the Company or its subsidiaries;
o directly or indirectly contacting, soliciting or inducing any of the
customers or referral sources of the Company and its subsidiaries (who
were customers or referral sources during the executive officer's
employment) to become a customer or referral source of another
company; and
o directly or indirectly soliciting, inducing or encouraging any of the
employees of the Company or its successor and their subsidiaries (who
were employees during the executive officer's employment) to terminate
their employment with the Company or its successor and their
subsidiaries or to seek, obtain or accept employment with another
company.
The Employment Agreement also prohibits Mr. Joyce from using or disclosing any
material confidential information of the Company or its successor and their
subsidiaries to any person other than an employee of the Company or its
successor and their subsidiaries or a person to whom the disclosure is
reasonably necessary or appropriate in connection with his duties to the Company
or its successor and their subsidiaries.
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Disputes
In the event of a dispute between the Company and Mr. Joyce regarding the
Employment Agreement, the parties will submit the dispute to binding
arbitration. The Company and its subsidiaries will bear all costs associated
with any disputes arising under the Employment Agreement, including reasonable
accounting and legal fees incurred by Mr. Joyce.
ITEM 1.02. TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
As reported under Item 1.01 above, the Change in Control Agreement, dated March
14, 2001, by and between the Company and Kenneth A. Joyce was superseded by the
Employment Agreement effective as of March 1, 2006.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired - Not Applicable
(b) Pro forma financial information - Not Applicable
(c) Exhibits - None
[Remainder of page intentionally left blank; signature on following page.]
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SIGNATURE
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 hereunto duly authorized.
RURBAN FINANCIAL CORP.
Dated: March 10, 2006 By: /s/ Duane L. Sinn
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Duane L. Sinn
Executive Vice President and
Chief Financial Officer
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