EXHIBIT 10
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EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made and entered into
on the date set forth below by and between Allied First Bancorp, Inc. (the
"Holding Company") and Allied First Bank, sb, Naperville, Illinois ( the
"Bank"), and Xxxxxxx X. Xxxxxxxx (the "Employee").
The Holding Company and the Bank are hereinafter sometimes referred to as "the
Employer."
RECITALS
The Employee is currently serving as President and Chief Executive Officer
of the Employer; and
The Board of Directors of the Holding Company and the Bank (`the Board")
believe it is in the best interests of the Employer to enter into this Agreement
with the Employee in order to assure continuity of management of the Employer
and to reinforce and encourage the continued attention and dedication of the
Employee to the Employee's assigned duties;
Now therefore, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, the parties agree as follows:
1. EMPLOYMENT. The Employee is hereby employed as President and Chief
Executive Officer of the Holding Company and of the Bank. As such, the
Employee shall render administrative and management services as are
customarily performed by persons situated in similar executive
capacities, and shall have such other powers and duties of an officer
of the Holding Company and the Bank as the Board may prescribe from
time to time. The Employee shall diligently consult with the Board
concerning the Employer's policies and shall devote his full business
time and attention and his best efforts to his duties as President and
Chief Executive Officer of the Employer.
2. COMPENSATION. The compensation for the Employee shall be as follows:
A. Base Salary. The Employer shall pay the Employee during the term
of this Agreement a base salary of $140,000 per year, or such
additional amount as may be established by the Board from time to
time. The Employee's base salary shall be reviewed by the Board
on at least an annual basis.
B. Performance Bonus. The Employee shall be eligible for an annual
performance bonus, in the complete discretion of the Board, of up
to fifteen percent (15%) of the Employee's base salary based upon
(i) his performance in meeting the goals and objectives of the
Employer set forth in Exhibit A, attached hereto, as may be
modified or amended by the Board from time to time, and (ii) the
overall performance and profitability of the Employer.
3. BENEFITS. The Employer shall provide the following benefits for the
Employee:
A. Expenses. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Employee in performing services under this Agreement in
accordance with the policies and procedures applicable to the
executive officers of the Employer, provided that the Employee
accounts for such expenses as required under such policies and
procedures and in accordance with law.
B. Retirement and Employee Benefit Plans. The Employee shall be
entitled to participate in all plans relating to stock and stock
options, pension, thrift, profit-sharing, group life insurance,
medical and dental coverage, education, cash bonuses, and other
retirement (including supplemental retirement) or employee
benefits or combinations thereof, in which the Employer's
executive officers participate from time to time during the term
of this Agreement in accordance with the terms of such plans or
programs.
C. Other Fringe Benefits. The Employee shall be eligible to
participate in, and receive benefits under, any other fringe
benefit plans which are or may become applicable to the
Employer's executive officers. The Employee shall also be
entitled to tuition reimbursement for such continuing educational
expenses as may be necessary in order to maintain his CPA.
D. Vacations; The Employee shall be entitled to paid vacation of
twenty (20) days per year in accordance with the policies
established by the Bank for executive officers. Unused vacation
days may not be carried over to a subsequent year. The Employee
shall also be entitled to such paid holidays as are provided to
all other employees.
E. Death Benefits. The Employer shall (i) contribute up to $1,000
per year towards the premiums on a $400,000 life insurance policy
on the life of the Employee with the beneficiary to be as
designated by the Employee; and (ii) provide health insurance
benefits comparable to other executive employees of the Employer
for the dependants of the Employee for (A) one (1) year; or (B)
the balance of the term of this Agreement, whichever is greater.
F. Disability Benefits. The Employer shall contribute up to $3,000
per year towards the premiums on a long term disability insurance
policy on the Employee for the benefit of the Employee in the
amount of at least $72,000 per year with a limitation period of
ninety (90) days.
G. Nonqualified Retirement Plan. The Employer shall establish a
nonqualified retirement plan for the benefit of the Employee that
will (i) be funded by the Employer with a minimum of $8,500 per
year; and (ii) include
provisions for (A) twenty percent (20%) annual vesting on a
rolling basis; (B) one hundred percent (100%) vesting upon the
death, disability or termination of employment of the Employee by
the Employer without cause; and (C) payment of the benefit to the
Employee upon his death, disability, retirement after having
attained age sixty-two (62); or (D) having attained age
sixty-five (65), whichever shall first occur.
4. TERM. This Agreement shall be effective as of January 1, 2002 ("the
Commencement Date"), and subject to the provisions for earlier
termination, shall run through and including December 31, 2004.
5. TERMINATION:
A. Without Cause by Employee: The Employee's employment may be
voluntarily terminated by the Employee at any time upon one
hundred eighty (180) days' written notice to the Employer, or
such shorter period as may be agreed upon between the Employee
and the Board. In such event, the Employer shall continue to pay
the Employee's salary and benefits only through the Date of
Termination at the time such payments are due, and the Employer
shall have no further obligation to the Employee under this
Agreement.
B. Without Cause by Employer: The Board may terminate the Employee's
employment at any time without cause. In such event, the Employer
(i) shall pay to the Employee the Employee's salary at the rate
in effect immediately prior to the date of termination for a
period of one (1) year payable at such times as such salary would
have been payable to the Employee; and (ii) shall provide for the
Employee and his dependants such health insurance benefits as are
maintained by the Bank for the benefit of its executive officers
from time to time for a period of one (1) year.
The Employee's employment shall be considered without cause in
the event that there is (i) a material diminution of the
Employee's duties, responsibilities and benefits as President and
Chief Executive Officer of the Employer; (ii) a change in the
principal workplace of the Employee to a location outside of a
seventy-five (75) mile radius from the Bank's headquarters office
as of the date hereof; (iii) a material demotion of the Employee;
(iv) a material reduction in the number or seniority of other
Bank personnel reporting to the Employee; or (v) 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
the Employee, other than as part of a general reduction in Bank
or Holding Company staff.
C. With Cause by Employer: The Employer may terminate the Employee
because of the Employee's personal dishonesty, incompetence,
willful
misconduct, breach of a fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation
of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or any
material breach of any provision of this Agreement. In the event
of a termination of the Employee for cause, the Employer shall
pay the Employee the Employee's salary and all other benefits
through the date of termination, and the Employer shall have no
further obligation to the Employee under this Agreement.
D. Upon the death of the Employee;. If this Agreement terminates as
a result of the death of the Employee, the Employer shall pay the
Employee's base salary and all other benefits through the date of
the Employee's death, and the Employer shall have no further
obligation to the Employee under this Agreement.
E. Upon the disability of the Employee.. If the Employee (i) becomes
disabled as defined in any disability policy that the Employer is
providing for the Employee, or (ii) is otherwise unable to carry
out his duties in a normal and customary manner as President and
Chief Executive Officer as a result of a mental or physical
condition which continues for at least ninety (90) days, as
determined by the Board in its sole and absolute discretion, then
the Employer may terminate this Agreement upon notice to the
Employee. If this Agreement is terminated pursuant to this
provision, the Employer shall pay the Employee's base salary and
all other benefits through the date of the termination of this
Agreement, and the Employer shall have no further obligation to
the Employee under this Agreement.
6. SUSPENSION OR PROHIBITION.
A. Temporary. If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the Employer's
affairs by a notice served under Section 8(e)(3) or (g)(1) of the
FDIC, 12 X.X.X.xx. 1818(e)(3) and (g)(1), the Employer's
obligations under this Agreement shall be suspended as of the
date of service unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Employer may, in its
discretion, (i) pay the Employee all or part of the compensation
withheld while its obligations under this Agreement were
suspended; and (ii) reinstate in whole or in part any of its
obligations which were suspended.
B. Permanent. If the Employee is removed and/or permanently
prohibited from participating in the conduct of the Employer's
affairs by an order issued under Section 8(e)(4) or (g)(1) of the
FDIC, 12 U.S.C.ss.1818(e)(4) and (g)(1), all obligations of the
Employer under this Agreement shall
terminate as of the effective date of the order, but vested
rights of both the Employer and the Employee shall not be
affected.
7. DEFAULT OF THE EMPLOYER. If the Employer is in default (as defined in
Section 3(x)(1) of the FDIC), all obligations under this Agreement
shall terminate as of the date of default, but this provision shall
not affect any vested rights of both the Employer and the Employee.
8. TERMINATION BY REGULATORS. All obligations under this Agreement shall
be terminated, except to the extent determined that continuation of
this Agreement is necessary for the continued operation of the
Employer (i) at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Employer under the authority
contained in Section 13(c) of the FDIC; or (ii) by the OBRE or the
FDIC, at the time it approves a supervisory merger to resolve problems
related to operation of the Employer or when the Employer is
determined to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by
any such action.
9. CERTAIN REDUCTION OF PAYMENTS BY THE EMPLOYER.
A. Excessive Benefits. Notwithstanding any other provision of this
Agreement, if the value and amounts of benefits under this
Agreement, together with any other amounts and the value of
benefits received or to be received by the Employee in connection
with a Change in Control of the Holding Company would cause any
amount to be nondeductible by the Employer for federal income tax
purposes pursuant to Section 280G of the Code, then such amounts
and benefits under this Agreement shall be reduced (but not less
than to zero) to the extent necessary so as to maximize amounts
and the value of benefits to the Employee without causing any
amount to become nondeductible by the Employer pursuant to or by
reason of such Section 280G. The Employee shall determine the
allocation of such reduction among payments and benefits to the
Employee.
B. Compliance: Any payments made to the Employee pursuant to this
Agreement or otherwise are subject to and conditioned upon their
compliance with 12 U.S.C.ss.1828(k) and any regulations
promulgated thereunder.
10. CERTAIN INCREASE OF PAYMENTS BY THE EMPLOYER.
A. Excessive Parachute Payments. In the event that any payments or
benefits provided or to be provided to the Employee, whether
pursuant to this Agreement or otherwise, constitute "excess
parachute payments" under Section 280G of the Code that are
subject to excise tax under Section 4999 of the Code, the
Employer shall pay to the Employee in cash an additional
amount equal to the amount of the Gross Up Payment. The "Gross Up
Payment" shall be the amount equal to the aggregate of (i) the
excise tax payable by the Employee pursuant to Section 4999 of
the Code (the "Penalty Tax"); and (ii) the amount that, on an
after-tax basis, would fully reimburse the Employee for the
Penalty Tax, utilizing the maximum effective rate of tax of the
Employee including federal, state, local and medicare tax rates.
X. Xxxxx Up Payment. For purposes of determining the amount of the
Gross Up Payment, the value of any non-cash benefits and deferred
payments or benefits subject to the Penalty Tax shall be
determined by the Employer's independent auditors in accordance
with the principles of Section 280G(d)(3) and (4) of the Code. In
the event that, after the Gross Up Payment is made, the amount of
the Penalty Tax is determined to be less than the amount
calculated in the determination of the actual Gross Up Payment
made by the Employer, the Employee shall repay to the Employer,
at the time that such reduction in the amount of Penalty Tax is
finally determined, the portion of the Gross Up Payment
attributable to such reduction, plus interest on the amount of
such repayment at the applicable federal rate under Section 1274
of the Code from the date of the Gross Up Payment to the date of
the repayment. The amount of the reduction of the Gross Up
Payment shall reflect any subsequent reduction in the Penalty Tax
resulting from such repayment.
C. Penalty Tax. In the event that, after the Gross Up Payment is
made, the amount of the Penalty Tax is determined to exceed the
amount anticipated at the time the Gross Up Payment was made, the
Employer shall pay to the Employee, in immediately available
funds, at the time that such additional amount of Penalty Tax is
finally determined, an additional payment (the "Additional Gross
Up Payment") equal to the aggregate of (i) such additional amount
of Penalty Tax (the "Additional Penalty Tax"); (ii) the amount
that, on an after-tax basis, would fully reimburse the Employee
for the Additional Penalty Tax, utilizing the maximum effective
rate of tax of the Employee including federal, state, local and
medicare taxes, over the Additional Penalty Tax; and (iii)
interest and penalties, if any, owed by the Employee with respect
to such Additional Penalty Tax and other tax attributable to the
Additional Gross Up Payment.
D. Employer Challenge Rights. The Employer shall have the right to
challenge, on the Employee's behalf, any Penalty Tax or
Additional Penalty Tax assessment against him as to which the
Employee is entitled to (or would be entitled if such assessment
is finally determined to be proper) an Gross Up Payment or
Additional Gross Up Payment, provided that all costs and expenses
incurred in such a challenge shall be borne by the Employer and
the Employer shall indemnify the Employee and hold him
harmless, on an after-tax basis, from any Penalty Tax, Additional
Penalty Tax or other tax (including interest and penalties with
respect thereto) imposed as a result of such payment costs and
expenses by the Employer.
11. NO MITIGATION. The Employee shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this
Agreement by seeking other comparable employment, nor shall the amount
of any payment or benefit provided for in this Agreement be reduced by
any compensation earned by the Employee as the result of employment by
another employer, by retirement benefits after the Date of Termination
or otherwise.
12. NO ASSIGNMENTS.
A. Nonassignment. This Agreement is personal to each of the parties
hereto, and neither party may assign or delegate any of its
rights or obligations hereunder without first obtaining the
written consent of the other party; provided that the Employer
shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the
Employer, by an assumption agreement in form and substance
satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Employer would be required to perform it if no such
succession or assignment had taken place. Failure of the Employer
to obtain such an assumption agreement prior to the effectiveness
of any such succession or assignment shall be a breach of this
Agreement and shall entitle the Employee to compensation from the
Employer in the same amount and on the same terms as the
compensation pursuant to Section 5(b) hereof. For purposes of
implementing the provisions of this Section 12(A), the date on
which any such succession becomes effective shall be deemed the
Date of Termination.
B. Inurement of Benefits. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the
Employee had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee, legatee or
other designee, or if there is no such designee, to the
Employee's estate.
13. DISCLOSURE OF INFORMATION. The Employee hereby acknowledges that he
will have access to confidential information of the Employer and its
affiliates, including without limitation, subsidiaries, and that such
information constitutes valuable, special and unique property of the
Employer and such affiliates. The Employee shall not,
during or after the term of his employment hereunder, disclose any
such confidential information to any person or entity for any reason
or purpose whatsoever, except as may be required by law. If the
Employee becomes legally compelled to disclose any confidential
information, the Employee shall provide to the Employer prompt notice
thereof so that the Employer may seek a protective order or other
appropriate remedy and the Employee shall cooperate with the Employer
in that effort. If such protective order or other remedy is not
obtained, the Employee (i) shall furnish only that portion of the
confidential information that the Employee is advised by written
opinion of counsel is legally required; and (ii) shall exercise his
best effort to obtain reliable assurance that confidential treatment
will be accorded such confidential information.
In the event of a breach or threatened breach by the Employee of the
provisions of this Section, the Employer shall be entitled to an
injunction restraining the Employee from disclosing, in whole or in
part, any of such information, or from rendering any services to any
person, firm, corporation, association or other entity to whom such
information, in whole or in part, has been disclosed or is threatened
to be disclosed. Nothing herein shall be construed as prohibiting the
Employer from pursuing any other remedies available to the Employer
for such breach or threatened breach, including the recovery of
damages from the Employee.
14. AGREEMENT NOT TO SOLICIT EMPLOYEES, CUSTOMERS OR AGENTS. The Employee
agrees, that for a period of two (2) years following the termination
of his employment with the Employer for any reason, he shall not,
directly or indirectly, either alone or on behalf of any business
engaged in competition with the Employer, solicit or induce, or in any
manner attempt to solicit or induce any person who is employed by, a
customer of, or an agent of, the Employer to terminate his or her
employment, business or agency relationship, as the case may be, with
the Employer.
In the event of a breach or threatened breach by the Employee of the
provisions of this Section, the Employer shall be entitled to an
injunction restraining the Employee from in any manner interfering
with such employment, business or agency relationship, as the case may
be, of the Employer. Nothing herein shall be construed as prohibiting
the Employer from pursuing any other remedies available to the
Employer for such breach or threatened breach, including the recovery
of damages from the Employee.
15. RETURN OF DOCUMENTS. The Employee agrees, that upon termination of his
employment with the Employer, whether voluntary, involuntary or
otherwise, the Employee shall deliver to the Employer all notes,
letters, documents, electronic files, records, equipments(computers,
fax machines, etc.), credit cards, keys, etc. that are Employer
property or may contain proprietary information which are then in his
possession or control and shall destroy any and all copies and
summaries thereof not returned to the Employer.
16. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given (i) when personally delivered;
(ii) upon the earlier of actual receipt or three (3) business days
after posting if sent by certified mail, return receipt requested,
postage prepaid; (iii) the next business day after confirmation of
transmission, if sent by facsimile; and (iv) the next business day
after delivery, if sent by a nationally recognized overnight courier
service. Any such notice for the Employer shall be sent to the
principal office of the Employer, to the attention of the Chairman of
the Board, with a copy to the Secretary of the Employer, and any such
notice for the Employee shall be sent to his home or to such other
address as the Employee has most recently provided in writing to the
Employer.
17. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
18. HEADINGS. The headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
19. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other
provisions hereof.
20. GOVERNING LAW. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of
the State of Illinois without regard to its laws of conflicts.
The parties have executed this Executive Employment Agreement, consisting
of eleven pages, Exhibit A included, this 8th day of August, 2002, to be
effective as of January 1, 2002.
Employer: Employee:
Holding Company:
Allied First Bancorp, Inc.
By: /s/ Xxxx X. Xxxxxxx, Xx. /s/ Xxxxxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxx, Xx., Xxxxxxx X. Xxxxxxxx
Chairman of the Board
Bank:
Allied First Bank, sb
By: /s/ Xxxx X. Xxxxxxx, Xx.
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Xxxx X. Xxxxxxx, Xx.,
Chairman of the Board
EXHIBIT A
GOALS AND OBJECTIVES
The main focus for the Employee and the Employer during 2002 is asset
growth. The goal is budgeted assets growth and profitability for the remainder
of this calendar year. The budget will be readjusted at mid calendar year to
establish a budget for the new fiscal year. These new figures will then become
the goals for this calendar year. ROA, ROE and Efficiency Ratio are extremely
important, however status quo or any improvement in these three (3) areas should
be considered a positive factor in determining the President's bonus for 2002.
The parties understand and agree that the profitability and the Employers
ability to pay will also be a significant factor in the determination the
President's bonus for 2002.
