EXHIBIT 10.3
EMPLOYMENT AND CONSULTING AGREEMENT
     THIS AGREEMENT is effective as of January 1, 2006, by and between L. Dwight
Douce, hereinafter referred to as “Douce,” and Ohio Legacy Bank, NA, a national
bank with its principal place of business in Wooster, Ohio, hereinafter referred
to as the “Bank.”
1. REASONS FOR AGREEMENT
     The company is engaged in the business of banking, and Douce possesses
certain expertise in the field of banking. Douce was Chief Executive Officer of
the Bank from inception until December 31, 2005. The Bank and Douce each desire
to enter into this Agreement for the mutual benefit of each and to provide for
the orderly transition in the management of the Bank. Accordingly, the parties
have agreed to execute this Agreement and enter into the enumerated mutual
covenants and agreements contained herein.
2. CONSIDERATION
     Douce’s consideration for this Agreement shall be the payment of Douce’s
compensation and benefits hereunder, and Douce’s continued receipt of
confidential information disclosed by the Bank to him. This Agreement shall
supersede any other employment agreements entered into by and between Douce and
the Bank, which agreements shall be deemed terminated as of the effective date
of this Agreement.
3. TERMS OF EMPLOYMENT PHASE OF CONTRACT AND DUTIES
     A. Employment Term
          The term of employment (“Employment Term”) of this Agreement shall be
for two years commencing on the first day of January, 2006, and continuing
through December 31, 2007, unless sooner terminated in accordance with the
provisions of Article 8. Douce shall be Executive Vice President of the Bank in
2006, and 2007.
     B. Duties as Employee
          Douce shall have such duties as are assigned to him from to time by
President and the Board of Directors. In particular, Douce shall carry out by
way of example, but without limitation, the following duties:

  i. Duties relating to deposit relationships.     ii. Mergers and Acquisition
assignments including financial analysis, market opportunity, contribution
analysis and other assignments relating to evaluation and completing mergers and
acquisitions.     iii. Branch acquisition and de novo branching.     iv. Capital
planning.     v. Customer service programs.     vi. public relations; and    
vii. Human resource planning.

     C. Compensation
          As consideration for the services to be rendered by Douce as an
employee under this Agreement, Douce shall receive the following compensation:

 

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  i. In the year 2006, Douce shall receive a salary of One Hundred Thousand
Dollars ($100,000).     ii. In the year 2007, Douce shall receive a salary of
Seventy-five Thousand Dollars ($75,000).     iii. Douce’s base compensation will
be paid in installments as is customarily the Bank’s practice and shall be
subject to with holding and any deductions as required by law.     iv. During
the Employment Term and to the extent Douce meets the participation requirements
thereof, Douce shall have the right to participate in any retirement plan,
profit sharing plan, group life insurance plan, health or accident insurance
plan, or other employee benefit plan which may now be in effect or may hereafter
be adopted by the Bank for its employees.     v. During the Employment Term,
Douce shall be entitled to the holidays and annual vacation leave in accordance
with the Bank’s policy as it exists from time to time.     vi. During the
Employment Term, Douce shall be entitled to the country club membership as it
currently exists, unless such memberships are terminated for all executives at
the discretion of the Board of Directors.

     D. Reimbursement of Business Expense
          During the Employment Term, and in accordance with Bank policies,
Douce is authorized to incur reasonable business expense for promoting the
business of the Bank. The Bank shall reimburse Douce for all reasonable travel,
entertainment, and other incidental expense incurred by Douce in performance of
his duty.
     E. Time
          Douce shall be expected to devote the time necessary to fulfill his
obligations in support of this Agreement. It is agreed that Douce will commit to
the following terms in furtherance of the employment term of this Agreement:

  i. Full Time in 2006.     ii. Three-fourths Time in 2007.

4. TERMS OF CONSULTING PHASE OF CONTRACT AND DUTIES
     A. Consulting Term
          The Consulting Term (“Consulting Term”) of this Agreement shall be one
(1) year commencing on the first day of January, 2008, and continuing through
December 31, 2008, unless sooner terminated in accordance with the provisions of
Article 8.
     B. Duties as Consultant
          During the Consulting Term and subject to direction of the Board of
Directors and CEO, Douce shall consult with the Bank and provide assistance in
all aspects of Bank operation including, but without limitation, those terms
defined in Article 3(B).
     C. Compensation as a Consultant
          As consideration for the services to be rendered by Douce as a
consultant under this Agreement, Douce shall receive the following compensation:

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  i. In the year 2008, Douce shall receive payment in the amount of Fifty
Thousand Dollars ($50,000.00) payable in equal monthly installments. Douce shall
be expected to be available on a mutually convenient basis as requested up to
one thousand (1,000) hours per year for duties to be performed for the Bank.

  ii. Douce shall be obligated to pay all taxes on the money paid pursuant to
the consulting phase of this Agreement, and the Bank will not withhold any funds
relating thereto.

     D. COBRA Health Insurance Election
          The Bank shall, at Douce’s cost, make available to Douce and his
spouse health care coverage pursuant to the COBRA election permitted by the
Bank’s group health insurance plan to the same extent such coverage is made
available to other retirees of the Bank and their spouses.
     E. Reimbursement of Business Expense
          During the Consulting Term, Douce may be authorized by the CEO to
incur reasonable business expense for promoting the business of the Bank. The
Bank shall reimburse Douce for all authorized travel, entertainment, and other
incidental expense incurred by Douce in performance of his duty.
     F. Benefits
          Douce shall not be entitled to any other benefits (i.e., car
allowance, country club dues, bonus plan, or other so-called perquisites).
5. GOODWILL
     At all times during the term of this Agreement, Douce agrees to promote
goodwill by and between the employees and management of the Bank, and the Bank
and its customers, the Bank and third parties, and the parent of the Bank, Ohio
Legacy Corp (“Legacy Corp”) and its shareholders. Douce will also promote and
encourage harmonious working relationships among the employees of the Bank,
directors of the Bank, and all third parties that have business dealings with
the Bank. Douce will not disparage in any manner the Bank or its parent company.
6. BOARD OF DIRECTORS
     Recognizing that the ultimate decision for election to the Board of
Directors is entrusted to the shareholders, the parties hereto agree to the
following principles:
     A. Board Position
          The parties will cooperate to help Douce secure a continued position
as a member of the Board of Directors of Legacy Corp and the Bank until the
annual meeting in 2006. The Legacy Corp nominating committee will determine
whether to nominate Douce for an additional term on the Board of Directors at
the expiration of his existing term.
     B. Resignation and Removal
          In the event Douce’s health or other duties render it impractical for
him to carry out his duties as a director of Ohio Legacy Corp or in the event he
breaches this Agreement, he agrees to resign as a director of Ohio Legacy Corp
and the Bank.
     C. Fees
          Douce shall not be entitled to receive additional compensation for
serving as a Director of Ohio Legacy Corp or the Bank.

 

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7. DOUCE’S PROMISES
     A. Management Transition
          Douce shall carry out the intent of this Agreement and perform the
duties set forth herein in a forthright and diligent manner. Douce will
cooperate fully with the Board of Directors of the Bank in implementing the
transition of management to his successor and will cooperate with all other Bank
personnel to make this transition as seamless as possible. Douce acknowledges
that his current position as Chief Executive Officer makes his cooperation and
effort critical to a successful transition.
     B. Noncompete
          During both the Employment Term and the Consulting Term of this
Agreement Douce will not directly or indirectly compete with the Bank or Legacy
Corp. In the event the Bank terminates this Agreement for any reason other than
“For Cause”, Douce shall be free to compete.
     C. Prior and Subsequent Agreements
          Douce represents and warrants that he has not entered into any prior
agreements with others which would conflict with the terms of this Agreement.
Further, Douce will not enter into any agreement with others during the term
hereof which would conflict with this Agreement.
8. TERMINATION
     A. Events of Termination
          This Agreement and Douce’s rights to compensation and all other rights
of Douce under this Agreement or otherwise as an employee or consultant of the
Bank will terminate (except as otherwise provided in this Article 8):

  i. Upon the death of Douce.     ii. Upon the disability of Douce as defined in
Article 8(B), immediately upon notice from either party to the other.     iii.
For cause as defined in Article 8(C), immediately upon notice from the Bank to
Douce, or such later time as such notice may specify; or     iv. Without cause
as defined in Article 8(D), immediately upon notice from the Bank to Douce, or
such later time as such notice may specify.

     B. Definition of Disability
          For purposes of Article 8(A)(ii), Douce will be deemed to have a
“disability” if, for physical or mental reasons, Douce is unable to perform his
duties under this Agreement for one hundred twenty (120) consecutive days, or
one hundred eighty (180) days during any twelve-month period, as determined in
accordance with this Article 8(B). The disability of Douce shall be determined
by a medical doctor selected by written agreement of the Bank and Douce upon the
request of either party by notice to the other. If the Bank and Douce cannot or
do not agree on the selection of a medical doctor, each of them, within seven
(7) days after the notice, will submit to the other the name of a medical doctor
authorized to participate jointly with the medical doctor whose name is
submitted by the other party in the selection of a third medical doctor who will
examine Douce and determine whether he has a disability as defined herein. The
determination of the medical doctor selected under this Article 8(B) will be
binding on both parties. Douce must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
this Article 8(B), and Douce hereby authorizes the disclosure and release to the
Bank of such determination and all supporting medical records. If Douce is not
legally competent, Douce’s legal guardian or duly authorized attorney-in-

 

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fact will act in Douce’s stead, under this Article 8(B) for the purpose of
selecting the medical doctor and submitting Douce to the examinations, and
providing the authorization of disclosure, required under Article 8(B).
     C. Definition of “For Cause”
          For purposes of Article 8(A)(iii), the phrase “For Cause” means:

  i. Willful misconduct by the Executive in the performance of his duties.    
ii. Gross negligence by the Executive in the performance of his duties.     iii.
The Executive’s indictment or conviction for committing a crime.     iv. The
Executive’s commission of an act of moral turpitude.     v. The continued
failure of and/or refusal shall not be cured within fifteen (15) days following
receipt by the Executive of written notice from the Board specifying the factors
or events constituting such failure and/or refusal and affording the Executive
an opportunity within such fifteen (15) day period for the Executive to correct
such deficiencies.     vi. Receipt of notice from the Comptroller of the
Currency that the Executive is not properly fulfilling his duties.

     D. Definition of “Without Cause”
          For purposes of Article 8(A)(iv), the phrase “Without Cause” means
that the Bank terminates this Agreement for any reason other than For Cause or
there is a “Change of Control” with the meaning of Article 8(G).
     E. Termination Pay
          If this Agreement is terminated in accordance with this Article 8, the
Bank will be obligated to pay Douce (or, in the event of his death, his
designated beneficiary as defined below) only such compensation as is provided
in this Article 8(E), in lieu of all other amounts and in settlement and
complete release of all claims Douce may have against the Bank. Prior to
receiving such termination pay, Douce agrees to sign a release the terms and
conditions of which are satisfactory to the Bank. For purposes of this
Article 8(E), Douce’s designated beneficiary will be such individual beneficiary
or trust, located at such address as Douce may designate by notice to the Bank
from time to time or, if Douce fails to give notice to the Bank of such
beneficiary, Douce’s estate. Notwithstanding the preceding sentence, the Bank
will have no duty, in any circumstances, to attempt to open an estate on behalf
of Douce, to determine whether any beneficiary designated by Douce is alive or
to ascertain the address of any such beneficiary, to determine the existence of
any trust, to determine whether any person or entity purporting to act as
Douce’s personal representative (or the trustee of a trust established by Douce)
is duly authorized to act in that capacity, or to locate or attempt to locate
any beneficiary, personal representative, or trustee.
          1. Termination by the Bank Without Cause
               If the Bank terminates this Agreement Without Cause, or there is
Change of Control the Bank will pay to Douce his base salary or consulting fee
as scheduled herein, for a period of one year following the termination of this
Agreement; however, in no event will any payment extend beyond the scheduled
payments as called for herein. Any payment as required by this Article 8(E)(1)
shall be made as if Douce continued as an employee or consultant of the Bank.
          2. Termination by the Bank For Cause
               If the Bank terminates this Agreement for cause, Douce shall be
entitled to receive his base salary or consulting fee only through the date such
termination is effective.

 

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          3. Termination Upon Disability
               If this Agreement is terminated by either party as a result of
Douce’s disability as determined under Article 8(B), the Bank will pay Douce’s
base salary or consulting fee through the remainder of the calendar month during
which such termination is effective and for the period until disability
insurance benefits commence under the disability insurance coverage furnished by
the Bank to Douce.
          4. Termination Upon Death
               If this Agreement is terminated because of Douce’s death, Douce
will be entitled to receive his base salary through the end of the calendar
month in which his death occurs.
          5. Benefits
               Douce’s accrual of, or participation in plans providing for
benefits will cease at the effective date of the termination of this Agreement,
and Douce will be entitled to accrued benefits pursuant to such plans only as
provided in such plans. Douce will receive, as part of his termination pay
pursuant to this Article 8, such payment or other compensation for vacation,
holiday, sick leave, or other leave unused on the date the notice of termination
is given under this Agreement in accordance with the Bank’s policies then in
effect..
     F. Non-Termination of Douce’s Obligation
          The termination of this Agreement shall not terminate the obligations
of Douce contained in Article 7.
     G. Change in Control
          1. “Change in Control” means:

  i the direct or indirect acquisition by any person or related group of
persons, other than by the Legacy Corp or the Bank or a person that directly or
indirectly controls, is controlled by, or is under common control with, Legacy
Corp or the Bank immediately prior to such acquisition, of beneficial ownership
(within the meaning of Rule 13d of the Securities and Exchange Act of 1934, as
amended) of securities possessing more than 50 percent of the total combined
voting power of Legacy Corp or the Bank’s outstanding securities, whether
effectuated pursuant to a tender or exchange offer made directly to Legacy Corp
or the Bank’s shareholders or pursuant to another transaction; or     ii a
change in the composition of the board of directors of Legacy Corp or the Bank
over a period of 36 or fewer consecutive months such that a majority of such
respective board members (rounded up to the next whole number) ceases, by reason
of one or more contested elections for such respective board membership, to be
comprised of individuals who either (a) have been board members continuously
since the beginning of such period or (b) have been elected or nominated for
election as board members during such period by at least a majority of the board
members described in clause (c) who were still in office at the time such
election or nomination was approved by the board; or     iii the completion of a
transaction requiring shareholder approval for the acquisition of all or
substantially all of the stock or assets of Legacy Corp or the Bank by an entity
other than Legacy Corp or the Bank or any merger of Legacy Corp or the Bank into
another entity in which neither Legacy Corp nor the Bank is the surviving
entity; or     iv The Bank sells or otherwise transfers all or substantially all
of its assets to another corporation or other legal person, and as a result of
such sale or transfer less than a majority of the combined voting power of the
then-outstanding voting stock of such Company or person immediately after such
sale or transfer is held in the aggregate by the holders of Voting Stock of the
Bank immediately prior to such sale or transfer.

 

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          2. Within twelve (12) months of the occurrence of (1) above, there is
a “Diminution in Duties” of Douce. Except as contemplated by this Agreement, the
term “Diminution in Duties” means the Bank constructively terminates this
Agreement by:

  i. A material diminution of Douce’s duties, responsibilities and benefits as
an officer or consultant of the Bank.     ii. A change in the principal
workplace of Douce to a location other than Wayne County.     iii. A material
demotion.     iv. A material change in the number or seniority of the Bank
personnel reporting to Douce or a material reduction in the frequency with
which, or in the nature of the matters with respect to which, such personnel are
to report to Douce, other than as part of a Bank relocation or reduction in
staff.     v. A material adverse change in Douce’s perquisites, benefits,
contingent benefits or vacation, other than as part of an overall program
applied uniformly and with equitable effect to all members of the senior
management of the Bank; or     vi. A material permanent increase in the required
hours of work or the workload of Douce.

9. APPLICABLE LAW
     The parties agree that this Agreement shall be interpreted under the law of
the State of Ohio. In the event any court of competent jurisdiction shall
determine that any portion of Article 7 is invalid or unenforceable, said
portion may be reformed or stricken by said court without affecting the validity
of any remaining portions of Article 7.
10. SECRECY OF PROCEEDINGS
     Any legal proceedings involving any matters relating to the Bank’s
confidential information will be conducted in the utmost secrecy. In such cases
all documents, testimony and records shall be received, heard and maintained by
the court in secrecy under seal available only for the inspection of the Bank
and its attorneys, Douce’s attorney, or such expert witnesses as shall be
approved by the Bank or the court. The court shall be able to decree any and all
relief of an equitable nature including but not limited to such relief as a
temporary restraining order, a temporary and/or permanent injunction and shall
also be able to award damages and costs. The determination of what constitutes
confidential information shall be made by the reasonable determination of the
Bank.
11. ATTORNEY FEES
     In the event any controversy or claim arises under this Agreement, the
prevailing party shall be entitled to its reasonable costs, disbursements and
attorney fees together with all expenses which it may reasonably incur in taking
such action including, but not limited to, costs incurred in searching records,
expert witnesses and consulting fees, discovery depositions, whether or not
introduced into evidence in the trial, hearing or other proceeding and travel
expenses in any arbitration, trial or other proceeding, including any proceeding
brought to enforce an award or judgment, and any appeal taken therefrom.
12. CONSULTATION WITH COUNSEL
     Douce acknowledges that the Bank has provided sufficient time to have Douce
review this Agreement and to submit it for review to an attorney, if desired,
and that execution of this Agreement by Douce indicates Douce’s decision not to
seek legal counsel with regard to this Agreement or the approval of the same by
such legal counsel.

 

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13. UNDERSTANDING
     Douce acknowledges receipt of a signed copy of this Agreement and further
acknowledges that Douce has carefully read and understands each and every term
contained herein.
14. PERSONS BOUND
     This Agreement shall bind the heirs and assigns of Douce and the successors
and assigns of the Bank.
15. JURISDICTION
     Any action brought to enforce this Agreement shall be subject to the
exclusive jurisdiction of the Court of Common Pleas Wayne County, Ohio.
     IN WITNESS WHEREOF, this Agreement is executed the day first above written.

       
 
  /s/ L. Dwight Douce
 
   
 
  L. Dwight Douce  
 
  /s/ Daniel H. Plumly
 
   
 
  Daniel H. Plumly,
Chairman of the Board