EXHIBIT 10.2
IROQUOIS FEDERAL SAVINGS AND LOAN
ASSOCIATION
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is made
effective as of 7 th
day of July, 2011 (the
“Effective Date”), by and between Iroquois Federal
Savings and Loan Association (the “Bank”), a federally
chartered financial institution, with its principal offices located
at 201 East Cherry Street, Watseka, Illinois 60970-0190, and Alan
Martin (the “Executive”).
WHEREAS , the Executive is currently employed as Chief
Executive Officer and President of the Bank; and
WHEREAS , the Bank desires to ensure that the Bank is
assured of the continued availability of the Executive’s
services as provided in this Agreement; and
WHEREAS , the Executive is willing to serve the Bank on
the terms and conditions hereinafter set forth and has agreed to
such changes.
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:
1. Position
and Responsibilities.
(a) During
the period of Executive’s employment under this Agreement,
Executive agrees to serve as Chief Executive Officer and President
of the Bank. Executive shall perform all duties and
shall have all powers which are commonly incident to the office of
Chief Executive Officer and President or which, consistent with
that office, are delegated to him by the Board of Directors of the
Bank (the “Board of Directors”).
(b) During
the period of Executive’s employment under this Agreement,
except for periods of absence occasioned by illness, vacation, and
reasonable leaves of absence, Executive shall devote substantially
all of his business time, attention, skill and efforts to the
faithful performance of his duties under this Agreement, including
activities and services related to the organization, operation and
management of the Bank and its affiliates, as well as participation
in community, professional and civic organizations; provided,
however, that, with the approval of the Board of Directors, as
evidenced by a resolution of the Board of Directors, 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 the judgment of the Board of Directors,
will not present any conflict of interest with the Bank or its
affiliates, or materially affect the performance of
Executive’s duties pursuant to this Agreement.
(c) The
Bank will furnish Executive with the working facilities and staff
customary for executive officers with the title and duties set
forth in this Agreement and as are necessary for him to perform his
duties. The location of such facilities and staff shall
be at the principal administrative offices of the Bank.
(a) The
term of this Agreement shall be (i) the initial term, consisting on
the Effective Date and ending on the third anniversary of the
Effective Date, plus (ii) any and all extensions of the initial
term made pursuant to this Section 2.
(b) Commencing
on the first anniversary of the Effective Date and as of each
anniversary thereafter (each, an “Anniversary Date”),
the disinterested members of the Board of Directors may renew the
term of this Agreement for an additional one (1) year period beyond
the then effective expiration date, provided that Executive shall
not have given at least sixty (60) days’ written notice of
his desire that the term not be renewed. Notwithstanding
the foregoing, prior to each Anniversary Date, the disinterested
members of the Board will conduct a comprehensive performance
evaluation and review of Executive for purposes of determining
whether to extend this Agreement, and the results thereof will be
included in the minutes of the Board’s meeting. If
notice of nonrenewal is provided to the Executive, then in such
case the term of this Agreement shall become fixed and shall cease
at the end of thirty-six (36) full calendar months following the
Anniversary Date.
(c) Notwithstanding
anything contained in this Agreement to the contrary, either
Executive or the Bank may terminate Executive’s employment
with the Bank at any time during the term of this Agreement,
subject to the terms and conditions of this Agreement.
3. Compensation
and Benefits.
(a)
Base Salary. The Bank agrees to pay Executive
during the term of this Agreement a base salary (“Base
Salary”) at the rate of $286,000 per annum, payable in
accordance with the Bank’s customary payroll
practices. The Board of Directors of the Bank shall
review annually the rate of Executive’s Base Salary based
upon factors they deem relevant, and may maintain or increase his
Base Salary, provided that no such action shall reduce the rate of
Base Salary below the rate in effect on the Effective
Date. In the absence of action by the Board of
Directors, Executive shall continue to receive his Base Salary at
the per annum rate specified on the Effective Date or, if another
rate has been established under the provisions of this Section 3,
the rate last properly established by action of the Board of
Directors.
(b)
Incentive Compensation. Executive shall be
entitled to participate in discretionary bonuses or other incentive
compensation programs that the Board of Directors may award from
time to time to senior management employees pursuant to bonus plans
or otherwise.
(c)
Vacation and Holidays. Executive shall take
vacation at a time mutually agreed upon by the Bank and
Executive. Executive shall receive his Base Salary and
other benefits during periods of vacation. Executive
shall also be entitled to paid legal holidays in accordance with
the policies of the Bank.
(d)
Other Employee Benefits. In addition to any
other compensation or benefits provided for under this Agreement,
Executive shall be entitled to continue to participate in any
employee benefit plans, arrangements and perquisites of the Bank in
which he participated or was eligible
to participate
as of the Effective Date. Executive shall also be
entitled to participate in any employee benefits or perquisites the
Bank offers to full-time employees or executive management in the
future. 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 without separately providing for an
arrangement that ensures Executive receives or will receive the
economic value that Executive would otherwise lose as a result of
any adverse changes. Without limiting the generality of
the foregoing provisions of this paragraph, Executive shall be
entitled to participate in or receive benefits under all plans
relating to stock options, restricted stock awards, stock
purchases, pension, profit sharing, employee stock ownership,
supplemental retirement, directors’ retirement, group life
insurance, medical and other health and welfare coverage that are
made available by the Bank currently or at any time in the future
during the term of this Agreement, subject to and on a basis
consistent with, the terms, conditions and overall administration
of such plans and arrangements.
4. Payments
to Executive Upon an Event of Termination.
(a) Upon
the occurrence of an Event of Termination (as herein defined)
during Executive’s term of employment under this Agreement,
the provisions of this Section 4 shall apply. Unless
Executive agrees otherwise, as used in this Agreement, an
“Event of Termination” shall mean and include any one
or more of the following: (i) the termination by the Bank of
Executive’s full-time employment for any reason other than a
termination governed by Section 7 of this Agreement; or (ii)
Executive’s resignation from the Bank for “Good
Reason.” Good Reason shall include any of the
following:
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failure to
reappoint Executive as Chief Executive Officer and
President;
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a material
change in Executive’s functions, duties or responsibilities
with the Bank or its affiliates, 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 of this Agreement;
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the relocation
of Executive’s principal place of employment by more than
thirty-five (35) miles from its location at the Effective Date of
this Agreement;
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a material
reduction in the benefits and perquisites provided to Executive
from those being provided as of the Effective Date of this
Agreement (except for any reduction that is part of an
employee-wide reduction in pay or benefits);
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the failure of
the Company to re-appoint Executive to the Board of Directors of
the Bank other than for Just Cause; or
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a material
breach of this Agreement by the Bank.
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Upon the occurrence of any event described in
clauses (A) through (F), above, Executive shall have the right to
elect to terminate his employment under this Agreement by
resignation upon 30 days prior written notice after the event
giving rise to the right to elect, which
termination by
Executive shall be an Event of Termination. The Bank
shall have 30 days to cure the condition giving rise to the Event
of Termination, provided that the Bank may elect to waive said
30-day period.
(b) Upon
Executive’s termination of employment in accordance with
paragraph (a) of this Section 4, as of the Date of Termination, as
defined in Section 8 of this Agreement, the Bank shall be obligated
to pay Executive, or, in the event of his death following the Date
of Termination, his beneficiary(ies), or his estate, as the case
may be, an amount equal to the sum of three times: (i) the
Executive’s Base Salary and (ii) highest annual bonus,
whether paid to or accrued on behalf of Executive during the prior
three years. In addition, the Executive will be entitled
to the value of all employee benefits that would have been provided
to Executive over the thirty-six (36) month period immediately
following the Event of Termination, based on the most recent level
of contribution, accrual or other participation by or on behalf of
Executive. Such amounts shall be paid to Executive in a
single cash lump sum distribution within thirty (30) days following
Executive’s Event of Termination; provided however, if the
Executive is a “Specified Employee,” as defined in
Treasury Regulation 1.409-1(i), then, solely to the extent required
to avoid penalties under Section 409A of the Code, such payment
shall be delayed until the first day of the seventh full month
following the Executive’s Date of Termination. Such payments
shall not be reduced in the event Executive obtains other
employment following termination of employment with the
Bank.
(c) In
addition to the payments provided for in paragraph (b) of this
Section 4, upon Executive’s termination of employment in
accordance with the provisions of paragraph (a) of this Section 4,
to the extent that the Bank continues to offer any life insurance,
non-taxable medical, health, or dental insurance plan or
arrangement in which Executive or his dependents participate as of
the date of the Event of Termination (each being a “Welfare
Plan”), Executive and his covered dependents shall continue
participating in such Welfare Plans, subject to the same premium
contributions on the part of Executive as were required immediately
prior to the Event of Termination until the earlier of (i) his
death; (ii) his employment by another employer other than one of
which he is the majority owner; or (iii) for a period of thirty-six
(36) months following the Event of Termination. If the
Bank does not offer the Welfare Plans at any time after the Event
of Termination or if Executive’s participation in such plans
would subject the Bank to excise taxes or penalties under
applicable tax laws, then the Bank shall provide Executive with a
payment equal to the premiums for such benefits for the period
which runs until the earlier of (i) his death; (ii) his employment
by another employer other than one of which he is the majority
owner; or (iii) for a period of thirty-six months
following the Event of Termination, with such amounts payable to
Executive in a single cash lump sum distribution within thirty (30)
days following Executive’s Event of Termination or the date
that the Bank is no longer able to provide such coverage, whichever
is later.
(b) For
purposes of this Agreement, a “Change in Control” shall
mean one of the following events:
(i) There
occurs a “Change in Control” of the Bank or Company, as
defined or determined by either the Bank’s or Company’s
primary federal regulator or under regulations promulgated by such
regulator;
(ii) As
a result of, or in connection with, any merger or other business
combination, sale of assets or contested election, wherein the
persons who were non-employee directors of the Bank before such
transaction or event cease to constitute a majority of the Board of
Directors of the Bank or Company or any successor to the Bank or
Bank;
(iii) The
Bank or Company transfers all or substantially all of its assets to
another corporation or entity which is not an affiliate of the Bank
or Company;
(iv) The
Bank or Company is merged or consolidated with another corporation
or entity and, as a result of such merger or consolidation, less
than sixty percent (60%) of the equity interest in the surviving or
resulting corporation is owned by the former shareholders or
depositors of the Bank or Company; or
(v) The
Bank or Company sells or transfers more than a fifty percent (50%)
equity interest in the Bank to another person or entity which is
not an affiliate of the Bank or Company, excluding a sale or
transfer to a person or persons who are employed by the Bank or
Company.
(b) If
any of the events described in paragraph (a) of this Section 5,
constituting a Change in Control, have occurred, Executive shall be
entitled to the benefits provided for in paragraphs (c), (d), and
(e) of this Section 5 upon his termination of
employment within twelve (12) months after the date the
Change in Control occurs due to (i) Executive’s dismissal,
(ii) Executive’s resignation following any demotion, loss of
title, office or significant authority or responsibility, reduction
in annual compensation or benefits or relocation of his principal
place of employment by more than thirty-five (35) miles from its
location immediately prior to the Change in Control, or (iii)
Executive’s resignation for any reason within thirty (30)
days of the effective date of a Change in Control, unless
Executive’s termination is for Just Cause as defined in
Section 7 of this Agreement; provided, however, that such benefits
shall be reduced by any payments made under Section 4 of this
Agreement.
(c) Upon
the occurrence of a Change in Control followed by Executive’s
termination of employment, as provided for in paragraph (b) of this
Section 5, 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 damages, or
both, the greater of the payments and benefits due pursuant to the
provisions of Section 4 of this agreement, or three (3) times
Executive’s average Annual Compensation over the five (5)
most recently completed calendar years ending with the year
immediately preceding the effective date of the Change in
Control. In determining Executive’s average Annual
Compensation, “Annual Compensation” shall include Base
Salary and any other taxable income, including, but not limited to,
amounts related to the granting, vesting or exercise of restricted
stock or stock option award
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