Exhibit 10.2
HARVARD SAVINGS
BANK
EMPLOYMENT
AGREEMENT
This Agreement is made effective as
of the day of
,
2009, by and between Harvard Savings Bank (the “Bank”),
an Illinois chartered savings institution, with its principal
administrative office at 58 North Ayer Street, Harvard, Illinois
60033 and Duffield J. Seyller III (“Executive”). Any
reference to “Company” shall refer to Harvard Illinois
Bancorp, Inc., the holding company of the Bank.
WHEREAS , the Bank wishes to retain the services of
Executive as an President and Chief Executive Officer of the Bank
for the period provided in this Agreement; and
WHEREAS , Executive is willing to serve in the employ of
the Bank on a full-time basis for said period; and
WHEREAS , in order to induce Executive to remain in the
employ of the Bank and to provide further incentive to achieve the
financial and performance objectives of the Bank, the parties
desire to specify the severance benefits which shall be due to
Executive in the event that his employment with the Bank is
terminated under specified circumstances.
NOW, THEREFORE
, in consideration of the mutual
covenants herein contained, and upon the other terms and conditions
hereinafter provided, the parties hereby agree as
follows:
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1.
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POSITION AND
RESPONSIBILITIES
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During the period of his employment
hereunder, Executive agrees to serve as President and Chief
Executive Officer of the Bank. In such capacity, Executive shall be
responsible for establishing the business objectives, policies and
strategic plans of the Bank and the Company, in conjunction with
the Board of Directors (the “Board”). Executive also
shall be responsible for providing leadership and direction to all
departments or divisions of the Bank, and shall be the primary
contact between the Board and officers and employees of the Bank.
Failure to reelect Executive as President and Chief Executive
Officer without the consent of Executive during the term of this
Agreement shall constitute a breach of this Agreement.
Executive also agrees to serve, if
appointed or elected, as a director of the Bank or the Company, and
as an officer and/or director of any subsidiary or affiliate of the
Bank or the Company.
(a) The period of Executive’s
employment under this Agreement shall begin as of the date first
above written and shall continue for a period of thirty-six
(36) full calendar months thereafter. Commencing on the first
anniversary date of this Agreement, and continuing at each
anniversary date thereafter, the Agreement shall renew for an
additional year such that the remaining term shall be three
(3) years unless written notice is provided to Executive at
least thirty (30) days and not more than sixty (60) days
prior to any such anniversary date, that his employment shall cease
at the end of twenty-four (24) months following such
anniversary date. Prior to each notice period for non-renewal, the
disinterested members of the Board of Directors of the Bank
(“Board”) will
conduct a comprehensive performance evaluation
and review of Executive for purposes of determining whether to
extend the Agreement, and the results thereof shall be included in
the minutes of the Board’s meeting.
(b) During the period of his
employment hereunder, except for periods of absence occasioned by
illness, reasonable vacation periods, and reasonable leaves of
absence, Executive shall devote substantially all his business
time, attention, skill, and efforts to the faithful performance of
his duties hereunder; provided, however, that, with the approval of
the Board, as evidenced by a resolution of such Board, from time to
time, Executive may serve, or continue to serve, on the boards of
directors of, and hold any other offices or positions in, companies
or organizations, which, in such Board’s judgment, will not
present any conflict of interest with the Bank, or materially
affect the performance of Executive’s duties pursuant to this
Agreement. Nothing in this Section shall be construed as preventing
Executive from serving from time to time on boards, committees, or
holding positions of non-profit or governmental organizations,
including religious and civic groups, without the need for Board
approval.
(c) Nothing in this Agreement shall
mandate or prohibit a continuation of Executive’s employment
following the expiration of the term of this Agreement, upon such
terms and conditions as the Bank and Executive may mutually
agree.
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3.
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COMPENSATION
AND REIMBURSEMENT
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(a) The compensation specified under
this Agreement shall constitute the salary and benefits paid for
the duties described in Section 2(b). The Bank shall pay
Executive as compensation a salary of not less than $145,128.00 per
year (“Base Salary”). Such Base Salary shall be payable
twice monthly, or in accordance with the Bank’s normal
payroll practices. During the period of this Agreement,
Executive’s Base Salary shall be reviewed at least annually;
such review will be made no later than December 31 of each
year during the term of this Agreement and shall be effective from
the first day of said the following month through the end of the
calendar year. Such review shall be conducted by the Board or a
Committee designated by the Board, and the Board may increase, but
not decrease, Executive’s Base Salary, other than a decrease
that occurs pursuant to an employer-wide reduction of compensation
of all officers of the Bank and provided that the reduction of
Executive’s Base Salary is not in excess of the average
percentage of the employer-wide reduction. Any increase in
Executive’s Base Salary shall become the “Base
Salary” for purposes of this Agreement. In addition to the
Base Salary provided in this Section 3(a), the Bank shall
provide Executive at no cost to Executive with all such other
benefits as are provided uniformly to permanent full-time employees
of the Bank. In the event Executive is elected to the Board, in
addition to the foregoing, Executive shall be entitled to receive
fees for serving as a director of the Bank in the same amount and
on the same terms as fees are paid to other employee directors of
the Bank.
(b) The Bank will provide Executive
with employee benefit plans, arrangements and perquisites
substantially equivalent to those generally provided to the
Bank’s senior officers immediately prior to the beginning of
the term of this Agreement, and the Bank will not, without
Executive’s prior written consent, make any changes in such
plans, arrangements or perquisites which would adversely affect
Executive’s rights or benefits thereunder, other than a
change that occurs pursuant to a reduction in benefits under such
plans, arrangements or perquisites that similarly
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affects all senior officers of the Bank.
Executive will be entitled to participate in all bonus and similar
programs available to the Bank’s senior officers, with
participation for any partial year being appropriately pro-rated.
The Bank shall provide Executive with term life insurance with a
death benefit at least equal to $250,000 and shall pay the same
percentage of Executive’s family health insurance premiums as
paid for other similarly situated senior officers of the Bank.
Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive will be entitled to participate in or
receive benefits under any employee benefit plan, including but not
limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plans,
medical coverage or any other employee benefit plan or arrangement
made available by the Bank in the future to its senior executives
and key management employees, including stock benefit plans,
subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements.
(c) Executive shall be entitled to a
minimum of four (4) weeks of paid vacation time each year
during the term of this Agreement, as well as sick leave, holidays,
other paid absences and additional paid vacation in accordance with
the Bank’s policies and procedures for senior officers. Any
unused paid time off during an annual period shall be treated in
accordance with the Bank’s personnel policies as in effect
from time to time.
(d) The Bank shall pay or reimburse
Executive for all reasonable travel and other reasonable expenses
incurred by Executive performing his obligations under this
Agreement and may provide such additional compensation in such form
and such amounts as the Board may from time to time determine.
Notwithstanding anything to the contrary herein, all reimbursements
under this Agreement shall occur no later than March 15 of the
calendar year following the calendar year in which the expense is
incurred.
(e) The Bank shall provide Executive
with a non-qualified deferred compensation arrangement which shall
be referred to as a Salary Continuation Agreement. Such deferred
compensation shall provide a benefit at retirement in the amount of
at least $40,800 per year for a term of 15 years with a vesting
schedule of not more than 8 years. Notwithstanding any other
provision herein to the contrary, in the event that
Executive’s employment is terminated in accordance with
either Section 4(a) or Section 5(b) below, Executive
shall be entitled to receive, regardless of whether or not vested,
such portion of his deferred compensation which has already been
accrued on the date of termination plus such additional amounts of
deferred compensation as would have been accrued had Executive been
employed for an additional three years following the date of
termination.
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4.
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PAYMENTS TO
EXECUTIVE UPON AN EVENT OF TERMINATION
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The provisions of this Section shall
in all respects be subject to the terms and conditions stated in
Sections 8 and 15.
(a) The provisions of this Section
shall apply upon the occurrence of an Event of Termination (as
herein defined) during Executive’s term of employment under
this Agreement. As used in this Agreement, an “Event of
Termination” shall mean and include any one or more of the
following:
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(i)
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the termination
by the Bank of Executive’s full-time employment hereunder for
any reason other than, (A) disability or retirement as defined
in Section 6 below, (B) a Change in Control, as defined
in Section 5(a), or (C) Termination for Cause as defined
in Section 7 hereof; or
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(ii)
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Executive’s resignation from the
Bank’s employ for “Good Reason.” Good Reason
shall include any:
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(A)
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failure to
elect or reelect or to appoint or reappoint Executive as President
and Chief Executive Officer,
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(B)
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failure to
renominate and reelect Executive to the Bank’s or the
Company’s board following his appointment thereto provided,
however, that any failure to elect Executive to such board which
results from the actions of non-affiliated stockholders, shall not
be deemed an Event of Termination,
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(C)
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material change
in Executive’s function, duties, or responsibilities, which
change would cause Executive’s position to become one of
lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above,
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(D)
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a relocation of
Executive’s principal place of employment by more than 15
miles from its location at the effective date of this Agreement, or
a material reduction in the benefits and perquisites to Executive
from those being provided as of the effective date of this
Agreement,
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(E)
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liquidation or
dissolution of the Bank other than liquidations or dissolutions
that are caused by reorganizations that do not affect the status of
Executive, or
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(F)
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any other
breach of this Agreement by the Bank.
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Upon the occurrence of any event
constituting Good Reason, Executive shall have the right to elect
to terminate his employment under this Agreement by resignation
upon not less than 30 days prior written notice given within a
reasonable period of time (not to exceed 90 days) after the event
giving rise to the right to elect, which termination by Executive
shall be an Event Termination. The Bank shall have at least 30 days
to remedy the event constituting Good Reason, provided, however,
the Bank shall be entitled to waive such period and make an
immediate payment hereunder. In the event of Executive’s
resignation for any reason other than as specifically set forth in
this Section 4(a), Executive shall not be entitled to any
benefits under this Agreement.
(b) Upon the occurrence of an Event
of Termination, on the Date of Termination, as defined in
Section 8, the Bank shall pay Executive, or, in the event of
his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, as severance pay or
liquidated
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damages, or both, a sum equal to the Base Salary
due to Executive for the remaining unexpired term of the Agreement;
provided , however , that if the Bank is not in
compliance with its minimum capital requirements or if such
payments would cause the Bank’s capital to be reduced below
its minimum capital requirements, such payments shall be deferred
until such time as the Bank is in capital compliance. All amounts
payable hereunder shall be made in a lump sum without reduction in
the event Executive obtains employment following an Event of
Termination, and shall commence within thirty (30) days
following Executive’s Date of Termination, or if Executive is
a Specified Employee (within the meaning of Treasury Regulation
§1.409A-1(i))), shall commence on the first business day of
the seventh month following Executive’s Date of
Termination.
(c) Upon the occurrence of an Event
of Termination, the Bank will cause to be continued life insurance
and non-taxable medical and dental coverage substantially identical
to the coverage maintained by the Bank for Executive prior to his
termination, provided that such benefits shall not be provided in
the event they should constitute an unsafe or unsound banking
practice relating to executive compensation and employment
contracts pursuant to applicable regulations, as is now or
hereafter in effect. Such coverage shall cease upon the expiration
of the remaining term of this Agreement.
(d) Executive’s
“involuntary termination by the Bank” and
“resignation from the Bank’s employ” in
accordance with Section 4(a) shall be construed to require a
“Separation from Service” as defined in Code
Section 409A and the Treasury Regulations promulgated
thereunder, provided, however, that the Bank and Executive
reasonably anticip
