EXHIBIT 10.1
Employment Agreement between PNBC and Xxxxx X. Xxxxxx.
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of this
January 8, 2003 by and between Princeton National Bancorp, Inc., a Delaware
corporation ("Bancorp"), and Xxxxx Xxxxxx ("Executive").
WITNESSETH:
WHEREAS, Executive is currently employed by Bancorp, as its Executive
Vice President;
WHEREAS, Executive is currently employed by Citizens First National
Bank, a national banking association (the "Bank"), as its Executive Vice
President; and
WHEREAS, the Bank is a wholly-owned subsidiary of Bancorp; and
WHEREAS, Executive and Bancorp desire to enter into this Agreement
pertaining to the terms of the continued employment of Executive with Bancorp
and the Bank and the security Bancorp is providing to Executive with respect to
his employment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties agree as follows:
1. Employment. Bancorp hereby agrees to continue to employ
Executive as its Executive Vice President, and to cause the
Bank to continue to employ Executive as its Executive Vice
President, and Executive hereby accepts such continued
employment by Bancorp and the bank upon the terms and
conditions herein set forth. The primary place of employment
shall be at Bancorp's and the Bank's principal offices,
located at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
2. Term and Automatic Renewal. The term of this Agreement and
Executive's employment hereunder will be eighteen (18) months
commencing as of the date first written above. On each day
following the date first written above, this Agreement and the
term of Executive's employment hereunder will automatically
renew for one (1) additional day until such time as: (i) the
board of directors of the Company or Executive elects not to
extend the term of this Agreement by providing written notice
to the other of such party's election not to extend the term
beyond the then current termination date; or (ii) Executive's
employment is terminated in accordance with Section 7 of this
Agreement.
3. Duties. Executive will, during the term hereof:
(a) faithfully and diligently do and perform all such
acts and duties and furnish such services as the
Boards of Directors of Bancorp or the Bank shall
direct;
(b) do and perform any acts in the ordinary course of
Bancorp's or the Bank's businesses (with such limits
as the Boards of Directors of Bancorp or the Bank may
prescribe) necessary and conducive to Bancorp's and
the Bank's best interests;
(c) execute all duties attendant to his office; and
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(d) devote his full time, energy, and skill to the
business of Bancorp and the Bank and to the promotion
of Bancorp's and the Bank's best interests, except
for vacations, absences made necessary because of
illness, authorized leaves of absence, holidays,
professional meetings, and seminars.
During the term of this Agreement, Executive shall not, without the
consent of the Boards of Directors of Bancorp or the Bank, accept other
employment or perform other services for compensation, or have any direct or
indirect ownership interest in any business in competition with the Bank.
Notwithstanding anything to the contrary contained herein, the expenditure of
reasonable amounts of time on personal investments and charitable activities
shall not be deemed a breach of this Agreement, provided that such activities do
not materially interfere with the performance by Executive of his obligations
under this Agreement. The Board of Directors of the Bank shall not unreasonably
withhold consent to Executive's service as a member of the board of directors of
other companies.
4. Compensation. Bancorp shall cause the Bank to pay to Executive
for all services to be performed by Executive during the term
of this Agreement:
(a) a base salary at the rate of $139,984 Per annum,
payable in substantially equal periodic monthly
payments in accordance with Bancorp's and the Bank's
practices for other executives, managerial, and
supervisory employees, as such practices may be
determined from time to time (the "Base Salary"); and
(b) any annual increase in Base Salary, additional or
special compensation, such as incentive pay or other
bonuses, based upon Executive's performance, as the
Board of Directors of the Bank, in its discretion,
may from time to time determine, based upon annual
incentive opportunities made available to Executive
by the Bank and upon other discretionary criteria
deemed appropriate by the Board of Directors of the
Bank.
All such payments will be subject to such deductions
as may be required to be made pursuant to law,
government regulation or order, or by agreement with,
or consent of, Executive.
5. Fringe Benefits. During the term of this Agreement:
(a) Memberships. Bancorp will cause the Bank to pay or
reimburse Executive for the following: (i) all
reasonable annual dues and membership expenses in one
club selected and joined by Executive in which
memberships are used for or necessary to the
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performance of Executive's duties hereunder and all
reasonable expenses incurred in furtherance of or in
connection with the transaction of the business of
Bancorp or the Bank hereunder at such club; and
(ii) all reasonable annual dues and membership expenses in
such civic and lunch clubs selected by Executive as
are necessary or useful to the performance of
Executive's duties hereunder and all reasonable
expenses incurred in furtherance of or in connection
with the transaction of the business of Bancorp or
the Bank hereunder at such civic and lunch clubs.
All of the aforementioned amounts subject to
reimbursement by the Bank to Executive shall be
subject to an accounting by Executive and approval by
the Bank.
6. Additional Benefits. Bancorp shall cause the Bank to provide
the following additional benefits to Executive during the term
of this Agreement:
(a) Executive shall be eligible to participate in any
incentive plans or arrangements ("Incentive Plans")
that Bancorp or the Bank may establish or practices
it may follow for the benefit of its executives as in
effect from time to time, and shall be entitled to
receive any other bonus or discretionary compensation
payments as Bancorp or the Bank may determine from
time to time.
(b) Executive shall be entitled to paid vacations in
accordance with the Bank's customary vacation
practice. Executive shall also be entitled to all
paid holidays given by the Bank to its other
executives.
(c) Executive and his dependents shall be entitled to
participate in and receive benefits under any
qualified or supplemental employee pension plan,
including any defined benefit retirement plan or
defined contribution retirement plan ("Retirement
Plans"), health and dental plan, disability plan,
survivor income plan, and life insurance plan, or
arrangement ("Welfare Plans") made available by the
Bank in which Executive is currently eligible to
participate, and any additional or substitute
Retirement or Welfare Plans Bancorp or the Bank may
make available in the future to its executives,
subject to and on a basis consistent with the terms,
conditions, and overall administration of such
Retirement or Welfare Plans.
7. Termination.
(a) Good Cause. The Board of Directors of Bancorp may
terminate the employment of Executive with Bancorp
and the Bank at any time for "Good Cause". For
purposes of the
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preceding sentence, "Good Cause" shall be deemed to
exist if:
(i) Executive shall engage in an act or omission
constituting dishonesty, willful misconduct,
intentional breach of fiduciary obligation
or intentional wrongdoing or malfeasance;
(ii) Executive shall be convicted of a felony; or
(iii) Executive shall continue to substantially
non-perform his assigned duties for a period
of thirty (30) days after the Bank has given
written notice to Executive of such
non-performance and its intention to
terminate the employment of Executive with
Bancorp and the Bank because of such
non-performance.
Without limiting the generality of the foregoing, the
following shall not constitute cause for the
termination of employment of Executive or the
modification or diminution of any of his authority
hereunder:
(i) any personal or policy disagreement between
Executive and Bancorp or the Bank or any
member of the board of Directors of Bancorp
or Bank; or
(ii) any action taken by Executive in connection
with his duties hereunder if Executive acted
in good faith and in a manner he reasonably
believed to be in, and not opposed to, the
best interest of Bancorp or the Bank and had
no reasonable cause to believe this conduct
was unlawful.
Notwithstanding anything herein to the contrary, in the event
Bancorp shall terminate the employment of Executive for cause
hereunder, Bancorp shall give at least thirty (30) days prior written
notice to Executive.
(b) Voluntary Termination. Executive shall have the right
at any time during the term of this Agreement to
terminate his employment with Bancorp upon giving
ninety (90) days written notice of said termination
to Bancorp.
(c) Good Reason. Executive may terminate his employment
with Bancorp and the Bank at any time for "Good
Reason". "Good Reason" shall be deemed to exist if
Executive terminates his employment because, without
his express written consent: (i) Bancorp breaches any
of the terms of this Agreement; (ii) He is assigned
duties materially inconsistent with the duties and
responsibilities stated in the by-laws of Bancorp and
the Bank for his positions; (iii) The duties and
responsibilities for the Executive Vice President
stated in the by-laws of Bancorp and the Bank,
respectively, are amended to be materially
inconsistent with the
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duties and responsibilities that would typically be
expected of an Executive Vice President of Bancorp
and the Bank, respectively; or (iv) Bancorp or the
Bank changes by 50 miles or more the principal
location in which Executive is required to perform
services.
(d) Change in Control. At the option of Executive, the
employment of Executive hereunder shall terminate
upon the effective date of a Change in Control. A
"Change in Control" shall be deemed to occur on the
earliest of:
(i) the acquisition by any individual, entity or
group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership, as
that term is defined in rule 13d-3 under the
Exchange Act, of capital stock of Bancorp
entitled to exercise more than twenty-five
percent (25%) or more of the outstanding
voting power of all capital stock of Bancorp
entitled to vote for the election of
directors ("Voting Stock");
(ii) the commencement by any entity, person, or
group (other than Bancorp or a subsidiary of
Bancorp) of a tender offer or an exchange
offer for more than twenty percent (20%) of
the outstanding Voting Stock of Bancorp;
(iii) the effective time of (A) a merger or
consolidation of Bancorp with one or more
other corporations as a result of which the
holders of the outstanding Voting Stock of
Bancorp immediately prior to such merger or
consolidation hold less than twenty-five
percent (25%) of the Voting Stock of the
surviving or resulting corporation or (B) a
transfer of twenty-five percent (25%) or
more of the Voting Stock, or substantially
all of the property of Bancorp, other than
to an entity of which Bancorp owns at least
fifty percent (50%) of the Voting Stock; or
(iv) the effective time of (A) a merger or
consolidation of the Bank with one or more
other corporations as a result of which the
holders of the outstanding Voting Stock of
the Bank immediately prior to such merger or
consolidation hold less than twenty-five
percent (25%) of the Voting Stock of the
surviving or resulting corporation or (B) a
transfer of twenty-five percent (25%) or
more of the Voting Stock, or substantially
all of the property of the Bank, other than
to an entity of which Bancorp or the Bank
owns at least fifty percent (50%) of the
Voting Stock.
(e) Benefits Upon Termination. The following provisions
will apply during the term of this Agreement: (i) if
the employment of Executive with Bancorp or the Bank
is terminated by
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Bancorp or the Bank for any reason other than Good
Cause, (ii) if Executive terminates his employment
with Bancorp or the Bank for Good Reason, (iii) if
Executive terminates his employment following a
Change in Control, or (iv) if the employment of
Executive with Bancorp or the Bank is terminated by
Bancorp or the Bank during the twenty-four month
period following a Change in Control:
(i) An amount equal to Executive's aggregate
Base Salary (at the rate most recently
determined) for a period equal to the
greater of (x) eighteen months or (y) the
balance of the term of this Agreement
pursuant to Paragraph 2 (the "Severance
Period"), shall be paid to Executive in a
lump sum within thirty (30) days after the
date of termination.
(ii) Executive or any other person entitled to
receive benefits with respect to Executive
under any Incentive Plan, Retirement Plan,
or any other plan or program maintained by
Bancorp or the Bank shall receive any and
all benefits accrued under such Plan or
other plan or program, to the date of
termination of employment, the amount, form
and time of payment of such benefits to be
determined by the terms of such Incentive
Plan and Retirement Plan and other plan or
program, the Executive's employment shall be
deemed to have terminated by reason of
retirement under each such Plan or other
plan or program under circumstances that
have the most favorable result for Executive
thereunder. Payment shall be made at the
earliest date permitted under any such Plan
or other plan or program.
(iii) During the Severance Period, Executive and
his spouse and other dependents will
continue to be covered by all Welfare Plans
in which he and his spouse and other
dependants were participating immediately
prior to the date of his termination as if
he continued to be an employee of Bancorp or
the Bank, and Bancorp will, or will cause
the Bank to, continue to pay the costs of
coverage of Executive and his spouse and
other dependents under such Welfare Plans on
the same basis as is applicable to active
employees covered thereunder; provided that,
if participation in any one or more of such
Welfare Plans is not possible under the
terms thereof, Bancorp will, or will cause
the Bank to, provide substantially identical
benefits.
(iv) If the employment of Executive with Bancorp
or the Bank is terminated by Bancorp or the
Bank for Good Cause or by the voluntary
action of Executive
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without Good Reason, other than due to a
Change in Control, Executive's Base Salary
(at the rate most recently determined) and a
bonus (a pro-rata portion of the bonus paid
for the most recent calendar year) shall be
paid through the date of his termination,
and Bancorp shall have no obligation to
Executive or any other person under this
Agreement. Such termination shall have no
effect upon Executive's other rights,
including but not limited to rights under
any Incentive, Retirement or Welfare Plan.
(8) Death. If Executive dies during the term of this Agreement,
Bancorp agrees to cause the Bank:
(a) during the Death Benefit Period, to cover the spouse
and other dependants of Executive under all Welfare
Plans in which Executive and his spouse and other
dependents were participating immediately prior to
the date of his death as if he continued to be an
employee of Bancorp or the Bank; provided that, if
participation in any one or more of such plans and
arrangements is not possible under the terms thereof,
Bancorp will, or will cause the Bank to, provide
substantially identical benefits; and
(b) for a period of twenty-four (24) months following the
Death Benefit Period, to cover the spouse and other
dependents of Executive under all Welfare Plans in
which Executive and his spouse and other dependents
were participating immediately prior to the date of
his death as if he were a retired employee of Bancorp
or the Bank; provided that, if participation in any
one or more of such plans and arrangements is not
possible under the terms thereof, Bancorp will, or
will cause the Bank to, provide substantially
identical benefits.
Any death benefits payable under this Paragraph 8 are in
addition to any other benefits due to Executive or his
beneficiary or dependents from Bancorp, including, but not
limited to, payments under any of the Incentive, Retirement,
and Welfare Plans.
9. Disability. If Executive incurs a Disability during the term
of this Agreement, Executive's obligation to perform such
services hereunder will terminate and in such event Bancorp
agrees to cause the Bank:
(a) to continue to pay Executive his aggregate Base
Salary (at the rate most recently determined) from
the date of onset of such Disability until such time
as Executive is eligible to receive disability
benefits under the Bank's disability plan, as
presently or hereafter in effect (the "Disability
Period"); and
(b) during the Disability Period and such period of time
as Executive is eligible to receive
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disability benefits under the Bank's disability plan,
to continue to cover Executive and his dependents
under all Welfare Plans in which Executive and his
spouse and other dependents were participating
immediately prior to the date of onset of such
Disability as if Executive continued to be an
employee of Bancorp or the Bank; provided that, if
participating in any one or more of such plans and
arrangements is not possible under the terms
thereunder, Bancorp will provide, or cause the Bank
to provide, substantially identical benefits.
Notwithstanding the foregoing, any payments to Executive
pursuant to this Paragraph 9 shall be reduced by the amount of
any disability benefits otherwise payable to Executive under
any disability program maintained by Bancorp or the Bank.
Amounts payable to Executive under this Paragraph 9 shall
continue to be paid to a beneficiary designated in writing by
him if he dies during the Disability Period. If Executive is
receiving benefits hereunder and his disability ceases, his
benefits under this Paragraph 9 shall terminate, provided that
if his employment with Bancorp and the Bank does not
recommence (because no offer of re-employment in the same
position is made), the benefits he is then receiving under
this Paragraph 9 shall continue for a period of twelve (12)
additional months. For purposes of this Agreement, the term
"Disability" shall mean a physical or mental disability, as
determined by an independent physician selected with the
approval of both Bancorp and Executive, which will render
Executive incapable of performing his duties under this
Agreement for six consecutive months.
10. Indemnity. Bancorp shall indemnify Executive to the extent
provided in Article VIII, Sections 1, 2, 3, 4 and 5 of the
by-laws of Bancorp, as may be amended from time-to-time.
11. Setoff. The payments or benefits payable to or with respect to
Executive or his spouse or beneficiary pursuant to this
Agreement shall not be reduced by the amount of any claim,
counterclaim, recoupment defense or other right of Bancorp or
the Bank against Executive or his spouse or other beneficiary
or obligation of Executive or his spouse or other beneficiary
owing to Bancorp or the Bank. The payment of benefits payable
to or with respect to Executive or his spouse or other
beneficiary after termination of employment as a result of a
change in control shall be absolute and unconditional. No
payments or benefits payable to or with respect to Executive
pursuant to this Agreement shall be reduced by any amount
Executive or his spouse or other beneficiary may earn or
receive from employment with another employer or from any
other source. All amounts so payable by Bancorp or the Bank
shall be paid without notice or demand. Each and every such
payment made by Bancorp or the Bank shall be final, and
Bancorp and the Bank will not
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seek to recover all or any part of such payment from Executive
or from whomsoever may be entitled thereto, for any reason
whatsoever.
12. Confidentiality. Executive acknowledges that preservation of a
continuing business relationship between Bancorp, the Bank and
their respective customers, representatives and employees is
of critical importance to the continued business success of
Bancorp and the Bank and that it is the active policy of
Bancorp and the Bank to guard as confidential certain
information not available to the public and relating to the
business affairs of Bancorp and the Bank. In view of the
foregoing, Executive agrees that he shall not during the term
of this Agreement and at any time thereafter, without the
prior written consent of Bancorp, disclose to any person or
entity any such confidential information that was obtained by
Executive in the course of his employment with Bancorp or the
Bank. This section shall not be applicable if and to the
extent Executive is required to testify in a legislative,
judicial, or regulatory proceeding pursuant to an order of
Congress, any state or local legislature, a judge, or an
administrative law judge or is otherwise required by law to
disclose such information.
13. Bancorp Assignment. Neither, Bancorp nor Executive may assign
this Agreement without the other party's prior written
consent, except that Bancorp's obligations hereunder shall be
binding legal obligations of any successor to all or
substantially all of Bancorp's business by purchase, merger,
consolidation, or otherwise.
14. Executive Assignment. No interest of Executive or his spouse
or other beneficiary under this Agreement, or any right to
receive any payment or distribution hereunder, shall be
subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment or other alienation or encumbrance of
any kind, nor may such interest or right to receive payment or
distribution be taken, voluntarily or involuntarily, for the
satisfaction of the obligations or debts of, or other claims
against, Executive or his spouse or other beneficiary,
including claims for alimony, support, separate maintenance
and claims in bankruptcy proceedings.
15. Benefits Unfunded. All rights under this Agreement of
Executive and his spouse or other beneficiary, shall at all
times be entirely unfunded, and no provision shall at any time
be made with respect to segregating any assets of Bancorp or
the Bank for payment of any amounts due hereunder. Neither
Executive nor his spouse or other beneficiary, shall have any
interest in or rights against any specific assets of Bancorp
or the Bank, and Executive and his spouse and other
beneficiary shall have only the rights of a general unsecured
creditor of Bancorp and the Bank.
16. Waiver. No waiver by any party at any time of any breach by
the other party of, or compliance
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with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of any
other provisions or conditions at the same time or at any
prior or subsequent time.
17. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original.
18. Severability. In the event any provision of this Agreement is
held illegal or invalid, the remaining provisions of this
Agreement shall not be affected thereby.
19. Successors. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs,
representatives, and successors.
20. Notice. Notices required under this Agreement shall be in
writing and sent by registered mail, return receipt requested,
to the following addresses or to such address as the party
being notified may have previously furnished to the other
party by written notice.
If to Bancorp: Princeton National Bancorp, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chairman of the Board
If to Executive: Xxxxx Xxxxxx
C/O Princeton National Bancorp, Inc.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
21. Applicable Law. This Agreement shall be construed and
interpreted pursuant to the laws of the State of Illinois.
22. Entire Agreement. This Agreement contains the entire agreement
between Bancorp and Executive and supersedes any and all
previous agreements, written or oral, between the parties
relating to the subject matter hereof. No amendment or
modification of the terms of this Agreement shall be binding
upon the parties hereto unless reduced to writing and signed
by Bancorp and Executive.
23. Withholding. Bancorp or the Bank may withhold from any payment
that is required to make under this Agreement amounts
sufficient to satisfy applicable withholding requirements
under any federal, state or local law.
24. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.
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IN WITNESS WHEREOF, Executive has hereunto set his hand, and Bancorp
has caused this Agreement to be executed in its name and on its behalf, all as
of the day and year first above written.
PRINCETON NATIONAL BANCORP, INC.
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
Chairman of the Board of Directors
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx, Executive
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