EXHIBIT 10.a. MATERIAL CONTRACTS.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is made and entered into
as of the 21st day of January 1997, by and between PINNACLE BANC GROUP, INC.,
an Illinois bank holding company with its main office located in Oakbrook,
Illinois ("Pinnacle"), and Xxxx X. Xxxxxxx, Xx. (the "Executive").
RECITALS
A. The Executive is currently serving as the Chief Executive Officer
of Pinnacle. For a number of years he has borne significant management
responsibilities for Pinnacle.
B. Pinnacle desires to continue to employ the Executive as an
Officer of Pinnacle and the Executive is willing to continue such employment
upon the terms and conditions set forth in this Agreement.
C. Pinnacle recognizes that circumstances may arise in which a
change of control in Pinnacle or all of its subsidiaries through acquisition
or otherwise may occur thereby causing uncertainty of employment without
regard to the competence or past contributions of the Executive which
uncertainty may result in the loss of valuable services of the Executive for
the benefit of Pinnacle. Pinnacle and the Executive wish to provide
reasonable security to the Executive against changes in the employment
relationship if there is any such change in control.
AGREEMENTS
In consideration of the premises and of the covenants and agreements
hereinafter contained, it is covenanted and agreed by and between the parties
hereto as follows:
1. POSITION AND DUTIES. Pinnacle hereby employs the Executive as the
Chief Executive Officer of Pinnacle or in such other senior executive
capacity as shall be mutually agreed between Pinnacle and the Executive.
During the period of the Executive's employment hereunder, the Executive
shall devote his best efforts and full business time, energy, skills and
attention to the business and affairs of Pinnacle. The Executive shall have
the powers necessary to perform his duties and shall be provided such
supporting services, staff, secretarial and other assistance as shall be
reasonably necessary and appropriate in the light of such duties.
2. COMPENSATION. As compensation for the services to be provided by the
Executive hereunder, the Executive shall receive the following compensation and
be eligible for other benefits:
a. BASE COMPENSATION. The Executive shall receive an annual salary
as determined from time to time by the Board of
Directors of Pinnacle. Said salary shall be subject to review annually
commencing in 1998.
b. INCENTIVE COMPENSATION. In addition to the salary provided
for in Section 2(a) hereof, Pinnacle may pay incentive compensation to the
Executive in recognition for services rendered by the Executive which
Pinnacle deems, in its discretion, to be extraordinary (such payments,
collectively "Incentive Compensation.")
c. OTHER BENEFITS. The Executive shall be entitled, to the
extent he is eligible therefore, to participate in all plans and benefits
generally accorded to employees of Pinnacle.
d. WITHHOLDING. Pinnacle shall be entitled to withhold from
amounts payable to the Executive hereunder, any federal, state or local
withholding or other taxes or charges which from time to time it is required
to withhold. Pinnacle shall be entitled to rely upon the opinion of its legal
counsel with regard to any question concerning the amount or requirement of
any such withholding.
e. VACATIONS. The Executive shall be entitled to such vacation
time annually as is regularly made available to other officers of Pinnacle
pursuant to the regular vacation policy of Pinnacle, which vacation shall be
taken at such time or times as are mutually agreed to by Pinnacle and the
Executive.
3. REIMBURSEMENT OF EXPENSES. The Executive shall be reimbursed, upon
submission of appropriate vouchers and support documentation, for all travel,
entertainment and other out-of-pocket expenses reasonably and necessarily
incurred by the Executive in the performance of his duties hereunder which
are consistent with Pinnacle's policies and practices.
4. CONFIDENTIALITY AND LOYALTY. The Executive acknowledges that
heretofore or hereafter during the course of his employment he has produced
and may hereafter produce and have access to material, records, data, trade
secrets and information not generally available to the public (collectively,
"Confidential Information") regarding Pinnacle and its subsidiaries and
affiliates. Accordingly, during and subsequent to the termination of this
Agreement, the Executive shall hold in confidence and not directly or
indirectly disclose, use, copy, or make lists of any such Confidential
Information, except to the extent that such information is or thereafter
becomes lawfully available from public sources, or such disclosure is
authorized in writing by Pinnacle, required by law or any regulatory agency
or judicial authority, or otherwise as reasonably necessary or appropriate in
connection with the performance by the Executive of his duties hereunder.
All records, files, documents and other materials or copies thereof relating
to Pinnacle, shall not be removed from Pinnacle's premises
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without its written consent, and shall be promptly returned to Pinnacle upon
termination of the Executive's employment hereunder. The Executive agrees to
abide by Pinnacle's policies, as in effect from time to time, respecting
avoidance of interests conflicting with those of Pinnacle.
5. TERMS AND CONDITIONS.
a. BASIC TERM. This Agreement shall take effect on the date
hereof (the "Effective Date"), and the Executive's employment hereunder shall
continue until terminated upon thirty (30) days prior written notice by
either Pinnacle or the Executive for any reason deemed appropriate by
Pinnacle or the Executive provided however the Executive's employment cannot
be terminated by Pinnacle pursuant to the provisions of this subparagraph
upon or after there occurs a Change of Control as defined by subparagraph e
below. Upon termination of employment pursuant to the provisions of this
Agreement, the Executive shall receive all compensation described in
paragraph 2 hereof vested through the effective date of termination of
employment and the compensation described in subparagraph e below if
applicable.
b. TERMINATION FOR CAUSE. This Agreement may be terminated by
Pinnacle for cause as defined below. "Cause" shall mean: (i) the Executive's
death or his Disability (as defined below); (ii) a material violation by the
Executive of any applicable law or regulation respecting the business of
Pinnacle; (iii) the Executive being found guilty of a felony, an act of
dishonesty in connection with the performance of his duties as an officer of
Pinnacle or an act which disqualifies the Executive from serving as an
officer of Pinnacle; or (iv) the willful or negligent failure of the
Executive to perform his duties hereunder in any material respect. The
Executive shall be entitled to at least thirty (30) days' prior written
notice of Pinnacle's intention to terminate his employment for cause (except
the Executive's death) specifying the grounds for such termination, the
action necessary to cure any conduct or act of Executive, if curable in the
sole judgment of Pinnacle, and the availability of the opportunity to present
to the Board of Directors of Pinnacle (the "Board") his position regarding
any dispute relating to the existence of such cause.
c. TERMINATION UPON DEATH. If payments are due and owing under
this Agreement at the death of the Executive, payment shall be made to such
beneficiary as the Executive may designate in writing, or failing such
designation, to the executor of his estate, in full settlement and
satisfaction of all claims and demands on behalf of the Executive under this
Agreement. Such payments shall be in addition to any other death benefits
provided by Pinnacle for the benefit of the Executive.
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d. TERMINATION UPON DISABILITY. Pinnacle may terminate the
Executive's employment after having been advised by a physician selected by
Pinnacle of the Executive's Disability. For purposes of this Agreement,
"Disability" means a physical or mental infirmity which impairs the
Executive's ability to substantially perform his duties under this Agreement
and which continues for a period of at least 90 consecutive days. The
Executive shall be entitled to the compensation and benefits provided for
under this Agreement for the period in which the Executive is unable to work
due to a physical or mental infirmity and until Pinnacle terminates the
Executive's employment after having established his Disability.
e. TERMINATION UPON CHANGE OF CONTROL.
i) If the Executive's employment hereunder is terminated by the
Executive or by Pinnacle within one year of a Change in Control (as
defined below), the Executive shall be entitled to immediate receipt from
Pinnacle of a lump sum payment equal to one dollar ($1.00) less than the
sum of: (A) three (3) times the base compensation then payable to the
Executive pursuant to Section 2(a) hereof, plus (B) three (3) times the
average incentive compensation paid to the Executive during the three (3)
previous fiscal years of Pinnacle pursuant to Section 2(b) hereof, plus
(C) three (3) times the value of the contributions that have been made or
credited by Pinnacle for the benefit of the Executive under all employee
retirement plans maintained by Pinnacle for the completed fiscal year of
Pinnacle immediately preceding the termination. In addition, Pinnacle
shall continue to provide coverage for the Executive under the health
program maintained by Pinnacle for a period of twelve (12) months
following termination of the Executive's Employment.
ii) For purposes of this paragraph, the term "Change in Control"
shall mean the following:
(A) The consummation of the acquisition or acquisitions by
any person or affiliated group (as such term is defined
in Section 13 of the Securities Exchange Act of 1934, as
amended (the "1934 Act") other than Xxxx X. Xxxxxxx, his
spouse, his descendants, or their spouses directly or
indirectly, so that the person or group holds beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the 0000 Xxx) of fifty-one (51%) percent or more
of the combined voting power of the then outstanding
voting securities of Pinnacle or Pinnacle Bank, an
Illinois state bank and wholly owned subsidiary of
Pinnacle (Pinnacle Bank); or
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(B) Approval by Pinnacle's stockholders of: (1) a merger,
consolidation or other transaction involving Pinnacle or
Pinnacle Bank if the persons who are stockholders on the
date the merger or consolidation is approved do not, on
the first date following such merger or consolidation
and as a result thereof, own, directly or indirectly,
more than sixty-seven percent (67%) of the combined
voting power of the then outstanding voting securities
of the entity resulting from such merger, consolidation
or other transaction and in substantially the same
proportion as their ownership of the combined voting
power of Pinnacle's voting securities outstanding on the
date such merger, consolidation or other transaction is
approved; or (2) a complete liquidation or dissolution
or an agreement for the sale or other disposition of all
or substantially all of the assets of Pinnacle or
Pinnacle Bank; or
(C) A sale by Pinnacle of all of the stock of all banking
subsidiaries of Pinnacle and their affiliates.
iii) Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur solely because fifty-one percent (51%) or more of
the combined voting power of the then outstanding securities of Pinnacle
is acquired by: (A) a trustee or other fiduciary holding securities under
one or more employee benefit plans maintained for employees of Pinnacle;
or (B) any Affiliate of Pinnacle (as defined below).
f. NOT AN EXCESS PARACHUTE PAYMENT. It is the intention of Pinnacle
and the Executive that no portion of any payment under this Agreement, or
payments to or for the benefit of the Executive under any other agreement or
plan, be deemed to be an "Excess Parachute Payment" as defined in Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), or its
successors. It is agreed that the present value of and payments to or for the
benefit of the Executive in the nature of compensation, receipt of which is
contingent on a Change of Control of Pinnacle (as "Change of Control" is defined
in this Agreement), and to which Section 280G of the Code applies (in the
aggregate "Total Payments") shall not exceed an amount equal to one dollar less
than the maximum amount which Pinnacle may pay without loss of deduction under
Section 280G(a) of the Code. Present value for purposes of this Agreement shall
be calculated in accordance with Section
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280G(d)(4) of the Code. Within sixty (60) days following the earlier of (A)
the delivery by the Executive of notice of termination or (B) the delivery of
notice to the Executive from Pinnacle of its belief that there is a payment
or benefit due the Executive which will result in an excess parachute payment
as defined in Section 280G of the Code, the Executive and Pinnacle, at
Pinnacle's expense, shall obtain the opinion of such legal counsel and
certified public accountants as are selected by Pinnacle (notwithstanding the
fact that such persons have acted or may also be acting as the legal counsel
or certified public accountants for Pinnacle), which opinions need not be
unqualified, which sets forth (A) the amount of the Base Period Income (as
defined in Section 280G of the Code) of the Executive, (B) the present value
of Total Payments and (C) the amount and present value of any Excess
Parachute Payments. If such opinions conclude that there would be an Excess
Parachute Payment, the payment hereunder or any other payment determined to
be includable in Total Payments shall be modified, reduced or eliminated as
specified by the Executive in writing delivered to Pinnacle within thirty
(30) days of his receipt of such opinions or, if the Executive fails to so
notify Pinnacle, then as Pinnacle shall reasonably determine, so that under
the basis of calculation set forth in such opinions there will be no Excess
Parachute Payment. The provisions of this subparagraph, including the
calculations, notices and opinions provided for herein shall be based upon
the conclusive presumption that (A) the compensation and benefits provided
for in Section 2 hereof and (B) any other compensation earned by the
Executive pursuant to Pinnacle's compensation programs which would have been
paid in any event, are reasonable compensation for services rendered, even
though the timing of such payment is triggered by the Change of Control;
provided, however, that if any such counsel or accountants so request in
connection with the opinions required by this subparagraph, the Executive and
Pinnacle shall obtain, at Pinnacle's expense, and the counsel or accountants
may rely on in providing its opinion, the advice of a firm of recognized
executive compensation consultants as to the reasonableness of any item of
compensation to be received by the Executive. If the provisions of Section
280G and 4999 of the Code are repealed without succession, this subparagraph
shall be of no further force or effect.
g. REGULATORY SUSPENSION AND TERMINATION.
i) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of any of Pinnacle's subsidiaries'
affairs by a notice served under Section 8(e)(3)(12 U.S.C. Section 1818(e)(3))
or 8(g)(12 U.S.C. Section 1818(g)) of the Federal Deposit Insurance Act, as
amended, Pinnacle'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, Pinnacle may in its discretion (A) pay the
Executive all or part of the compensation withheld while their contract
obligations were suspended and (B)
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reinstate (in whole or in part) any of the obligations which were suspended.
ii) If the Executive is removed and/or permanently prohibited
from participating in the conduct of Pinnacle's subsidiaries' affairs by an
order issued under Section 8(e)(12 U.S.C. Section 1818(e)) or 8(g)(12 U.S.C.
Section 1818(g)) of the Federal Deposit Insurance Act, as amended, all
obligations of Pinnacle under this Agreement shall terminate as of the effective
date of the order.
iii) If a subsidiary of Pinnacle is in default as defined in
Section 3(x)(12 U.S.C. Section 1813(x)(1)) of the Federal Deposit Insurance Act,
as amended, all obligations of Pinnacle under this Agreement shall terminate as
of the date of default, but this paragraph shall not affect any vested rights of
the contracting parties.
iv) All obligations of Pinnacle under this Agreement shall be
terminated, except to the extent determined that continuation of the Agreement
is necessary for the continued operation of the institution by the Federal
Deposit Insurance Corporation (the "FDIC"), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of a subsidiary of Pinnacle
under the authority contained in Section 13(c)(12 U.S.C. Section 1823(c)) of the
Federal Deposit Insurance Act, as amended, or when a subsidiary of Pinnacle is
determined by the FDIC to be in an unsafe or unsound condition. Any rights of
the parties that have already vested, however, shall not be affected by such
action.
v) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of any of Pinnacle's affairs by a
notice served by any regulatory agency having authority over Pinnacle,
Pinnacle'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, Pinnacle may in its discretion (A) pay the Executive all or part
of the compensation withheld while their contract obligations were suspended and
(B) reinstate (in whole or in part) any of the obligations which were suspended.
6. NON-COMPETITION COVENANT.
a. RESTRICTIVE COVENANT. Pinnacle and the Executive have jointly
reviewed the lists of depositors and borrowers, and the operations of
Pinnacle's subsidiaries and have agreed that the primary service area of
Pinnacle's subsidiaries' lending and deposit taking functions extends to an
area encompassing a ten mile radius from the main office of Pinnacle Bank and
or any branch office of Pinnacle Bank and its subsidiaries. Therefore, as an
essential ingredient of and in consideration of this Agreement and the
payment of the amounts described in Sections 2 and 5 hereof,
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the Executive hereby agrees that, except with the express prior written
consent of Pinnacle, for a period of one (1) year after the termination of
the Executive's employment with Pinnacle (the "Restrictive Period"), he will
not directly or indirectly compete with the business of Pinnacle, including,
but not by way of limitation, by directly or indirectly owning, managing,
operating, controlling, financing, or by directly or indirectly serving as an
employee, officer or director of or consultant to, or by soliciting or
inducing, or attempting to solicit or induce, any employee or agent of
Pinnacle to terminate employment with Pinnacle and become employed by any
person, firm, partnership, corporation, trust or other entity which owns or
operates, a bank, savings and loan association, credit union or similar
financial institution (a "Financial Institution") within a ten mile radius of
the main office of Pinnacle Bank or any branch office of Pinnacle Bank and
any of its subsidiaries existing at the time of termination (the "Restrictive
Covenant"). If the Executive violates the Restrictive Covenant and Pinnacle
brings legal action for injunctive or other relief, Pinnacle shall not, as a
result of the time involved in obtaining such relief, be deprived of the
benefit of the full period of the Restrictive Covenant. Accordingly, the
Restrictive Covenant shall be deemed to have the duration specified in this
Section 6(a) computed from the date the relief is granted but reduced by the
time between the period when the Restrictive Period began to run and the date
of the first violation of the Restrictive Covenant by the Executive. The
foregoing Restrictive Covenant shall not prohibit the Executive from owning
directly or indirectly capital stock or similar securities which are listed
on a securities exchange or quoted on a national securities exchange which do
not represent more than five percent (5%) of the outstanding capital stock of
any Financial Institution.
b. REMEDIES FOR BREACH OF RESTRICTIVE COVENANT. The Executive
acknowledges that the restrictions contained in Sections 4 and 6(a) of this
Agreement are reasonable and necessary for the protection of the legitimate
business interests of Pinnacle, that any violation of these restrictions
would cause substantial injury to Pinnacle and such interests, that Pinnacle
would not have entered into this Agreement with the Executive without
receiving the additional consideration offered by the Executive in binding
himself to these restrictions and that such restrictions were a material
inducement to Pinnacle to enter into this Agreement. If there is any
violation or threatened violation of these restrictions, Pinnacle, in
addition to and not in limitation of, any other rights, remedies or damages
available to Pinnacle under this Agreement or otherwise at law or in equity,
shall be entitled to preliminary and permanent injunctive relief to prevent
or restrain any such violation by the Executive and any and all persons
directly or indirectly acting for or with him, as the case may be.
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7. INTERCORPORATE TRANSFERS. If the Executive shall be voluntarily
transferred to a subsidiary or an Affiliate of Pinnacle, such transfer shall
not be deemed to terminate or modify this Agreement and the employing
corporation to which the Executive shall have been transferred shall, for all
purposes of this Agreement, be construed as standing in the same place and
stead as Pinnacle as of the date of such transfer. For purposes of this
Agreement, an Affiliate of Pinnacle shall mean any corporation, partnership
or entity directly or indirectly controlling, controlled by or under common
control with Pinnacle.
8. INTEREST IN ASSETS. Neither the Executive nor his estate shall
acquire hereunder any rights in funds or assets of Pinnacle, otherwise than
by and through the actual payment of amounts payable hereunder; nor shall the
Executive or his estate have any power to transfer, assign, anticipate,
hypothecate or otherwise encumber in advance any of said payments; nor shall
any of such payments be subject to seizure for the payment of any debt,
judgment, or be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise of the Executive.
9. GENERAL PROVISIONS.
a. SUCCESSORS; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Executive, Pinnacle and his and its
respective personal representatives, successors and assigns, and any
successor or assign of Pinnacle shall be deemed the "Pinnacle" hereunder.
Pinnacle shall require any successor to all or substantially all of the
business and/or assets of Pinnacle, whether directly or indirectly, by
purchase, merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent as Pinnacle would be required to perform if no such succession had
taken place.
b. ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes
the entire agreement between the parties respecting the subject matter
hereof, and supersedes all prior negotiations, undertakings, agreements and
arrangements with respect thereto, whether written or oral. Except as
otherwise explicitly provided herein, this Agreement may not be amended or
modified except by written agreement signed by the Executive and Pinnacle.
c. ENFORCEMENT AND GOVERNING LAW. The provisions of this
Agreement shall be regarded as divisible and separate; if any of said
provisions should be declared invalid or unenforceable by the court of
competent jurisdiction, the validity and enforceability of the remaining
provisions shall not be affected thereby. This Agreement shall be construed
and the legal relations of the parties hereto shall be determined in
accordance with the
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laws of the state of Illinois without reference to the law regarding
conflicts of law.
d. WAIVER. No waiver by either party at any time of any breach
by the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party, shall be deemed a waiver of any
similar or dissimilar provisions or conditions at the same time or any prior
or subsequent time.
e. NOTICES. Notices pursuant to this Agreement shall be in
writing and shall be deemed given when received; and, if mailed, shall be
mailed by United States registered or certified mail, return receipt
requested, postage prepaid; and if to Pinnacle, addressed to the principal
headquarters of Pinnacle, attention: Chairman of the Board; or, if to the
Executive, to the address set forth below the Executive's signature on this
Agreement, or to such other address as the party to be notified shall have
given to the other.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: PINNACLE BANC GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxx Name: Xxxx X. Xxxxxxx
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Title: Secretary Title: Chairman
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/s/ Xxxx X. Xxxxxxx, Xx.
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(Signature of Executive)
000 Xxxxxxxxx Xxxxxx
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Xxxxxxx, Xxxxxxxx 00000
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(Address of Executive)
