IROQUOIS FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYMENT AGREEMENT
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IROQUOIS FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYMENT AGREEMENT
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IROQUOIS FEDERAL SAVINGS AND LOAN ASSOCIATION
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.
2. Term of Employment.
(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:
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.
5. Change in Control.
(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