Exhibit 10.2

 

EXECUTION VERSION

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “Agreement”) is made effective as of January 15,
2014 (the “Effective Date”), by and between Edgewater Bank, a federal stock
savings association (the “Bank”) and Richard E. Dyer (“Executive”).  The Bank
and Executive are sometimes collectively referred to herein as the “parties.” 
Any reference to the “Company” shall mean Edgewater Bancorp, Inc., the holding
company of the Bank.  The Company is a signatory to this Agreement for the
purpose of guaranteeing the Bank’s performance hereunder.

 

WITNESSETH

 

WHEREAS, Executive is currently employed as President and Chief Executive
Officer of the Bank;

 

WHEREAS, the Bank has adopted a Plan of Conversion pursuant to which the Bank
will convert to a federal stock savings bank and become a wholly owned
subsidiary of the Company;

 

WHEREAS, the Bank desires to assure itself 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.

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the terms and conditions hereinafter provided, the parties hereby agree as
follows:

 

1.                                      POSITION AND RESPONSIBILITIES.

 

During the term of this Agreement Executive agrees to serve as President and
Chief Executive Officer of the Bank, and will perform all duties and will have
all powers that are generally incident to the office of the President and Chief
Executive Officer.  Without limiting the generality of the foregoing, Executive
will be responsible for the overall management of the Bank, and will be
responsible for establishing the business objectives, policies and strategic
plans of the Bank in conjunction with the Board of Directors (the “Board”) of
the Bank. Executive also will be responsible for providing leadership and
direction to all departments or divisions of the Bank, and will be the primary
contact between the Board and other officers and employees of the Bank.  As
President and Chief Executive Officer, Executive will report directly to the
Board.  Executive also agrees to serve, if elected, as an officer and director
of any affiliate of the Bank.

 

2.                                      TERM AND DUTIES.

 

(a)                                 Three Year Contract; Annual Renewal.  The
term of this Agreement will begin as of the Effective Date and shall continue
thereafter for a period of three (3) years.  Beginning on the first annual
anniversary date of this Agreement, and on each annual anniversary date
thereafter, the term of this Agreement shall be extended for a period of one
year in addition to the then-remaining term; provided that (1) the Bank has not
given notice to the Executive in

 

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writing at least ninety (90) days prior to such renewal date that the term of
this Agreement shall not be extended further; and (2) prior to such renewal
date, the disinterested members of the Board of Directors of the Bank (the
“Board”) have explicitly reviewed and approved the extension and the results
thereof shall be included in the minutes of the Board’s meeting.  On an annual
basis prior to the deadline for the notice period referenced above, the Board
shall conduct a performance review of the Executive for purposes of determining
whether to provide notice of non-renewal.  Reference herein to the term of this
Agreement shall refer to both such initial term and such extended terms.

 

(b)                                 Termination of Agreement.  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.

 

(c)                                  Continued Employment Following Expiration
of Term.  Nothing in this Agreement shall mandate or prohibit a continuation of
Executive’s employment following the expiration of the term of this Agreement,
upon such terms and conditions as the Bank and Executive may mutually agree.

 

(d)                                 Duties; Membership on Other Boards.  During
the term of this Agreement, except for periods of absence occasioned by illness,
reasonable vacation periods, and reasonable leaves of absence approved by the
Board, Executive shall devote substantially all of his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder,
including activities and services related to the organization, operation and
management of the Bank; provided, however, that, Executive may serve, or
continue to serve, on the boards of directors of, and hold any other offices or
positions in, business companies or business or civic organizations, which, in
the Board’s judgment, will not present any conflict of interest with the Bank,
or materially affect the performance of Executive’s duties pursuant to this
Agreement.  Executive shall provide the Board of Directors annually for its
approval a list of organizations for which the Executive acts as a director or
officer.

 

3.                                      COMPENSATION, BENEFITS AND
REIMBURSEMENT.

 

(a)                                 Base Salary.  In consideration of
Executive’s performance of the duties set forth in Section 2, the Bank shall
provide Executive the compensation specified in this Agreement.  The Bank shall
pay Executive a salary of $162,000 per year (“Base Salary”).  The Base Salary
shall be payable biweekly, or with such other frequency as officers of the Bank
are generally paid. During the term of this Agreement, the Base Salary shall be
reviewed at least annually by the Board or by a committee designated by the
Board, and the Bank may increase, but not decrease (except for a decrease that
is generally applicable to all employees) Executive’s Base Salary. Any increase
in Base Salary shall become “Base Salary” for purposes of this Agreement.

 

(b)                                 Bonus and Incentive Compensation.  Executive
shall be entitled to equitable participation in incentive compensation and
bonuses in any plan or arrangement of the Bank or the Company in which Executive
is eligible to participate.  Nothing paid to Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.

 

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(c)                                  Employee Benefits.  The Bank shall provide
Executive with employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or from
which he was deriving benefit immediately prior to the commencement of the term
of this Agreement, and the Bank shall not, without Executive’s prior written
consent, make any changes in such plans, arrangements or perquisites that would
adversely affect Executive’s rights or benefits thereunder, except as to any
changes that are applicable to all participating employees. In addition to the
Base Salary provided in Section 3(a), (i) the Bank shall provide the Executive
with an automobile (whether Bank-owned or leased) suitable to the position of
President and Chief Executive Officer of the Bank, which automobile shall be for
Executive’s business and personal use, and the Bank will pay the cost of such
automobile, including insurance, repairs and fuel, and (ii) the Executive shall
be entitled to an annual physical examination under the Lakeland HealthCare
Executive Health Management Program (or its successor), with the Bank paying
such cost.  Without limiting the generality of the foregoing provisions of this
Section 3(c), Executive will be entitled to participate in and receive benefits
under any employee benefit plans including, but not limited to, retirement
plans, supplemental retirement plans, pension plans, profit-sharing plans,
health-and-accident insurance plans, medical coverage or any other employee
benefit plan or arrangement made available by the Bank and/or the Company in the
future to its senior executives, including any stock benefit plans, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements.

 

(d)                                 Paid Time Off.  Executive shall be entitled
to paid vacation time each year during the term of this Agreement (measured on a
fiscal or calendar year basis, in accordance with the Bank’s usual practices),
as well as sick leave, holidays and other paid absences in accordance with the
Bank’s policies and procedures for senior executives.  Any unused paid time off
during an annual period shall be treated in accordance with the Bank’s personnel
policies as in effect from time to time.

 

(e)                                  Expense Reimbursements.  The Bank shall
also pay or reimburse Executive for all reasonable travel, entertainment and
other reasonable expenses incurred by Executive during the course of performing
his obligations under this Agreement, including, without limitation, fees for
memberships in such clubs and organizations as Executive and the Board shall
mutually agree are necessary and appropriate in connection with the performance
of his duties under this Agreement, upon presentation to the Bank of an itemized
account of such expenses in such form as the Bank may reasonably require,
provided that such payment or reimbursement shall be made as soon as practicable
but in no event later than March 15 of the year following the year in which such
right to such payment or reimbursement occurred.

 

4.                                      PAYMENTS TO EXECUTIVE UPON AN EVENT OF
TERMINATION.

 

(a)                                 Upon the occurrence of an Event of
Termination (as herein defined) during the term of this Agreement, the
provisions of this Section 4 shall apply; provided, however, that in the event
such Event of Termination occurs within eighteen (18) months following a Change
in Control (as defined in Section 5 hereof), Section 5 shall apply instead. As
used in this Agreement, an “Event of Termination’’ shall mean and include any
one or more of the following:

 

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(i)                                     the involuntary termination of
Executive’s employment hereunder by the Bank for any reason other than
termination governed by Section 5 (in connection with or following a Change in
Control), Section 6 (due to Disability or death), Section 7 (due to Retirement),
or Section 8 (for Cause), provided that such termination constitutes a
“Separation from Service” within the meaning of Section 409A of the Internal
Revenue Code (“Code”); or

 

(ii)                                  Executive’s resignation from the Bank’s
employ upon any of the following, unless consented to by Executive:

 

(A)                             failure to appoint Executive to the position set
forth in Section 1, or a material change in Executive’s function, duties, or
responsibilities, which change would cause Executive’s position to become one of
lesser responsibility, importance, or scope from the position and
responsibilities described in Section 1, to which Executive has not agreed in
writing (and any such material change shall be deemed a continuing breach of
this Agreement by the Bank);

 

(B)                             a relocation of Executive’s principal place of
employment to a location that is more than 25 miles from the location of the
Bank’s principal executive offices as of the date of this Agreement;

 

(C)                             a material reduction in the benefits and
perquisites, including Base Salary, to Executive from those being provided as of
the Effective Date (except for any reduction that is part of a reduction in pay
or benefits that is generally applicable to officers or employees of the Bank);

 

(D)                             a liquidation or dissolution of the Bank; or

 

(E)                              a material breach of this Agreement by the
Bank.

 

Upon the occurrence of any event described in clause (ii) above, Executive shall
have the right to elect to terminate his employment under this Agreement by
resignation for “Good Reason” upon not less than thirty (30) days prior written
notice given within a reasonable period of time (not to exceed ninety (90) days)
after the event giving rise to the right to elect, which termination by
Executive shall be an Event of Termination.  The Bank shall have thirty (30)
days to cure the condition giving rise to the Event of Termination, provided
that the Bank may elect to waive said thirty (30) day period.

 

(b)                                 Upon the occurrence of an Event of
Termination, 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 Base Salary and bonuses that
Executive would be entitled to for the remaining unexpired term of the
Agreement.  For purposes of determining the bonus(es) payable hereunder, the
bonus(es) will be deemed to be (i) equal to the highest bonus paid at any time
during the prior three years, and (ii) otherwise paid at such time as such bonus
would have been paid absent an Event of Termination.  Such payments shall be
paid in a lump sum on the 30th day following the Executive’s Separation from
Service (within

 

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the meaning of Section 409A of the Code) and shall not be reduced in the event
Executive obtains other employment following the Event of Termination. 
Notwithstanding the foregoing, Executive shall not be entitled to any payments
or benefits under this Section 4 unless and until (i) Executive executes a
release of his claims against the Bank, the Company and any affiliate, and their
officers, directors, successors and assigns, releasing said persons from any and
all claims, rights, demands, causes of action, suits, arbitrations or grievances
relating to the employment relationship, including claims under the Age
Discrimination in Employment Act, but not including claims for benefits under
tax-qualified plans or other benefit plans in which Executive is vested, claims
for benefits required by applicable law or claims with respect to obligations
set forth in this Agreement that survive the termination of this Agreement (the
“Release”), and (ii) the payments and benefits shall begin on the 30th day
following the date of the Executive’s Separation from Service, provided that
before that date, the Executive has signed (and not revoked) the Release and the
Release is irrevocable under the time period set forth under applicable law.

 

(c)                                  Upon the occurrence of an Event of
Termination, 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, a
lump sum cash payment reasonably estimated to be equal to the present value of
the contributions that would have been made on the Executive’s behalf under the
Bank’s defined contribution plans (e.g., 401(k) Plan, ESOP, and any other
defined contribution plan maintained by the Bank), as if Executive had continued
working for the Bank for the remaining unexpired term of the Agreement following
such Event of Termination, earning the salary that would have been achieved
during such period.  Such payments shall be paid in a lump sum within thirty
(30) days of the Executive’s Separation from Service and shall not be reduced in
the event Executive obtains other employment following the Event of Termination.

 

(d)                                 Upon the occurrence of an Event of
Termination, the Bank shall provide, at the Bank’s expense, for the remaining
unexpired term of the Agreement, nontaxable medical and dental coverage and life
insurance coverage substantially comparable, as reasonably available, to the
coverage maintained by the Bank for Executive prior to the Event of Termination,
except to the extent such coverage may be changed in its application to all Bank
employees.  Notwithstanding the foregoing, if applicable law (including, but not
limited to, laws prohibiting discriminating in favor of highly compensated
employees), or, if participation by the Executive is not permitted under the
terms of the applicable health plans, or if providing such benefits would
subject the Bank to penalties, then the Bank shall pay the Executive a cash lump
sum payment reasonably estimated to be equal to the value of such non-taxable
medical and dental benefits, with such payment to be made by lump sum within )
business days of the Date of Termination, or if later, the date on which the
Bank determines that such insurance coverage (or the remainder of such insurance
coverage) cannot be provided for the foregoing reasons.

 

(e)                                  For purposes of this Agreement, a
“Separation from Service” shall have occurred if the Bank and Executive
reasonably anticipate that either no further services will be performed by the
Executive after the date of the Event of Termination (whether as an employee or
as an independent contractor) or the level of further services performed will
not exceed 49% of the average level of bona fide services in the 12 months
immediately preceding the Event of Termination.  For all purposes hereunder, the
definition of Separation from Service shall be interpreted consistent with
Treasury Regulation Section 1.409A-1(h)(ii).  If Executive is a

 

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Specified Employee, as defined in Code Section 409A and any payment to be made
under sub-paragraph (b) or (c) of this Section 4 shall be determined to be
subject to Code Section 409A, then if required by Code Section 409A, such
payment or a portion of such payment (to the minimum extent possible) shall be
delayed and shall be paid on the first day of the seventh month following
Executive’s Separation from Service.

 

5.                                      CHANGE IN CONTROL.

 

(a)                                 Any payments made to Executive pursuant to
this Section 5 are in lieu of any payments that may otherwise be owed to
Executive pursuant to this Agreement under Section 4, such that Executive shall
either receive payments pursuant to Section 4 or pursuant to Section 5, but not
pursuant to both Sections.

 

(b)                                 For purposes of this Agreement, the term
“Change in Control” shall mean:

 

(i)                                     a change in control of a nature that
would be required to be reported in response to Item 5.01(a) of the current
report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
were the Company’s equity shares registered under such Exchange Act; or

 

(ii)                                  a change in control of the Bank within the
meaning of the Home Owner’s Loan Act, as amended (“HOLA”), and applicable
rules and regulations promulgated thereunder, as in effect at the time of the
Change in Control; or

 

(iii)                               any of the following events, upon which a
Change in Control shall be deemed to have occurred:

 

(A)                             any “person” (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank or the Company representing 25% or more of the combined
voting power of such outstanding securities, except for any securities purchased
by any employee stock ownership plan or trust established by the Bank or the
Company; or

 

(B)                             individuals who constitute the Board on the
Effective Date (the “Incumbent Board”) cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the Effective Date whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by stockholders of the Bank or the Company was approved
by the same Nominating Committee serving under an Incumbent Board, shall be, for
purposes of this subsection (B), considered as though they were members of the
Incumbent Board; or

 

(C)                             a sale of all or substantially all the assets of
the Bank or the Company, or a plan of reorganization, merger, consolidation, or
similar transaction occurs in which the security holders of the Bank or the
Company

 

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immediately prior to the consummation of the transaction do not own at least
50.1% of the securities of the surviving entity to be outstanding upon
consummation of the transaction; or

 

(D)                             a proxy statement is issued soliciting proxies
from stockholders of the Bank or the Company by someone other than the current
management of the Bank or the Company of the Bank, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Bank or the Company,
or similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the plan are to be
exchanged for or converted into cash or property or securities not issued by the
Bank or the Company; or

 

(E)                              a tender offer is made for 25% or more of the
voting securities of the Bank or the Company, and stockholders owning
beneficially or of record 25% or more of the outstanding securities of the Bank
or the Company have tendered or offered to sell their shares pursuant to such
tender offer and such tendered shares have been accepted by the tender offeror.

 

(F)                               Notwithstanding anything herein to the
contrary, a Change in Control shall not be deemed to have occurred in connection
with the initial reorganization and conversion of the Bank to a stock Bank as a
subsidiary of the Company.

 

(c)                                  Upon the occurrence of a Change in Control
followed within eighteen (18) months by an Event of Termination (as defined in
Section 4 hereof), Executive, shall receive as severance pay or liquidated
damages, or both, a lump sum cash payment equal to three times the sum of
(i) Executive’s highest annual rate of Base Salary paid to Executive at any time
under this Agreement, plus (ii) the highest bonus paid to Executive with respect
to the three completed fiscal years prior to the Change in Control.  Such
payment shall be paid in a lump sum within ten (10) days of the Executive’s
Separation from Service (within the meaning of Section 409A of the Code) and
shall not be reduced in the event Executive obtains other employment following
the Event of Termination.

 

(d)                                 Upon the occurrence of a Change in Control
followed within eighteen (18) months by an Event of Termination (as defined in
Section 4 hereof), 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, a lump sum cash payment reasonably estimated to be equal to the present
value of the contributions that would have been made on Executive’s behalf under
the Bank’s defined contribution plans (e.g., 401(k) Plan, ESOP, and any other
defined contribution plan maintained by the Bank), as if Executive had continued
working for the Bank for thirty-six (36) months after the effective date of such
termination of employment, earning the salary that would have been achieved
during such period.  Such payments shall be paid in a lump sum within ten
(10) days of the Executive’s Separation from Service and shall not be reduced in
the event Executive obtains other employment following the Event of
Termination.  If Executive is a Specified Employee, as defined in Code
Section 409A and any payment to be made under this sub-paragraph (c) or (d) of
this Section 5 shall be determined to be subject to Code Section

 

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409A, then if required by Code Section 409A, such payment or a portion of such
payment (to the minimum extent possible) shall be delayed and shall be paid on
the first day of the seventh month following Executive’s Separation from
Service.

 

(e)                                  Upon the occurrence of a Change in Control
followed within eighteen (18) months by an Event of Termination (as defined in
Section 4 hereof), the Bank (or its successor) shall provide at the Bank’s (or
its successor’s) expense, nontaxable medical and dental coverage and life
insurance coverage substantially comparable, as reasonably available, to the
coverage maintained by the Bank for Executive prior to his termination, except
to the extent such coverage may be changed in its application to all Bank
employees and then the coverage provided to Executive shall be commensurate with
such changed coverage.  Such coverage shall cease thirty-six (36) months
following the termination of Executive’s employment.  Notwithstanding the
foregoing, if applicable law (including, but not limited to, laws prohibiting
discriminating in favor of highly compensated employees), or, if participation
by the Executive is not permitted under the terms of the applicable health
plans, or if providing such benefits would subject the Bank to penalties, then
the Bank shall pay the Executive a cash lump sum payment reasonably estimated to
be equal to the value of such non-taxable medical and dental benefits, with such
payment to be made by lump sum within ) business days of the Date of
Termination, or if later, the date on which the Bank determines that such
insurance coverage (or the remainder of such insurance coverage) cannot be
provided for the foregoing reasons.

 

(f)                                   Notwithstanding the preceding paragraphs
of this Section 5, in the event that the aggregate payments or benefits to be
made or afforded to Executive in the event of a Change in Control would be
deemed to include an “excess parachute payment” under Section 280G of the
Internal Revenue Code or any successor thereto, then such payments or benefits
shall be reduced to an amount, the value of which is one dollar ($1.00) less
than an amount equal to three (3) times Executive’s “base amount,” as determined
in accordance with Section 280G of the Code.  In the event a reduction is
necessary, then the cash severance payable by the Bank pursuant to Section 5
shall be reduced by the minimum amount necessary to result in no portion of the
payments and benefits payable by the Bank under Section 5 being non-deductible
to the Bank pursuant to Section 280G of the Code and subject to excise tax
imposed under Section 4999 of the Code.

 

6.                                      TERMINATION FOR DISABILITY OR DEATH.

 

(a)                                 Termination of Executive’s employment based
on “Disability” shall be construed to comply with Section 409A of the Internal
Revenue Code and shall be deemed to have occurred if: (i) Executive is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death, or last for a continuous period of not less than 12 months; (ii) by
reason of any medically determinable physical or mental impairment that can be
expected to result in death, or last for a continuous period of not less than 12
months, Executive is receiving income replacement benefits for a period of not
less than three months under an accident and health plan covering employees of
the Bank or the Company; or (iii) Executive is determined to be totally disabled
by the Social Security Administration. The provisions of Sections 6(b) and
(c) shall apply upon the termination of the Executive’s employment based on
Disability.  Upon the determination that

 

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Executive has suffered a Disability, disability payments hereunder shall
commence within thirty (30) days.

 

(b)                                 Executive shall be entitled to receive
benefits under all short-term or long-term disability plans maintained by the
Bank for its executives.  To the extent such benefits are less than Executive’s
Base Salary, the Bank shall pay Executive an amount equal to the difference
between such disability plan benefits and the amount of Executive’s Base Salary
for the longer of one (1) year following the termination of his employment due
to Disability or the remaining term of this Agreement, which shall be payable in
accordance with the regular payroll practices of the Bank.

 

(c)                                  The Bank shall cause to be continued life
insurance coverage and non-taxable medical and dental coverage substantially
comparable, as reasonably available, to the coverage maintained by the Bank for
Executive prior to the termination of his employment based on Disability, except
to the extent such coverage may be changed in its application to all Bank
employees or not available on an individual basis to an employee terminated
based on Disability.  This coverage shall cease upon the earlier of (i) the date
Executive returns to the full-time employment of the Bank; (ii) Executive’s
full-time employment by another employer; (iii) expiration of the remaining term
of this Agreement; or (iv) Executive’s death.

 

(d)                                 In the event of Executive’s death during the
term of this Agreement, his estate, legal representatives or named beneficiaries
(as directed by Executive in writing) shall be paid Executive’s Base Salary at
the rate in effect at the time of Executive’s death in accordance with the
regular payroll practices of the Bank for a period of one (1) year from the date
of Executive’s death, and the Bank shall continue to provide non-taxable
medical, dental and other insurance benefits normally provided for Executive’s
family (in accordance with its customary co-pay percentages) for twelve (12)
months after Executive’s death.  Such payments are in addition to any other life
insurance benefits that Executive’s beneficiaries may be entitled to receive
under any employee benefit plan maintained by the Bank for the benefit of
Executive, including, but not limited to, the Bank’s tax-qualified retirement
plans.

 

7.                                      TERMINATION UPON RETIREMENT.

 

Termination of Executive’s employment based on “Retirement” shall mean
termination of Executive’s employment at any time after Executive reaches age 70
or in accordance with any retirement policy established by the Board with
Executive’s consent as it applies to him.  Upon termination of Executive based
on Retirement, no amounts or benefits shall be due Executive under this
Agreement, and Executive shall be entitled to all benefits under any retirement
plan of the Bank and other plans to which Executive is a party.

 

8.                                      TERMINATION FOR CAUSE.

 

(a)                                 The Bank may terminate Executive’s
employment at any time, but any termination other than termination for “Cause,”
as defined herein, shall not prejudice Executive’s right to compensation or
other benefits under this Agreement.  Executive shall have no right to receive
compensation or other benefits for any period after termination for “Cause.” 
The term

 

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“Cause” as used herein, shall exist when there has been a good faith
determination by the Board that there shall have occurred one or more of the
following events with respect to the Executive:

 

(1)                                 personal dishonesty;

 

(2)                                 incompetence;

 

(3)                                 willful misconduct;

 

(4)                                 breach of fiduciary duty involving personal
profit;

 

(5)                                 material breach of the Bank’s Code of
Ethics;

 

(6)                                 intentional failure to perform stated duties
under this Agreement after written notice thereof from the Board;

 

(7)                                 willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) that reflect
adversely on the reputation of the Bank, any felony conviction, any violation of
law involving moral turpitude, or any violation of a final cease-and-desist
order; or

 

(8)                                 material breach by Executive of any
provision of this Agreement.

 

Notwithstanding the foregoing, Cause shall not be deemed to exist unless there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than a majority of the entire membership of
the Board at a meeting of the Board called and held for the purpose (after
reasonable notice to the Executive and an opportunity for the Executive to be
heard before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of conduct described above and specifying the particulars
thereof.  Prior to holding a meeting at which the Board is to make a final
determination whether Cause exists, if the Board determines in good faith at a
meeting of the Board, by not less than a majority of its entire membership, that
there is probable cause for it to find that the Executive was guilty of conduct
constituting Cause as described above, the Board may suspend the Executive from
his duties hereunder for a reasonable period of time not to exceed fourteen (14)
days pending a further meeting at which the Executive shall be given the
opportunity to be heard before the Board.  Upon a finding of Cause, the Board
shall deliver to the Executive a Notice of Termination, as more fully described
in Section 10 below.

 

(b)                                 For purposes of this Section 8, no act or
failure to act, on the part of Executive, shall be considered “willful” unless
it is done, or omitted to be done, by Executive in bad faith or without
reasonable belief that Executive’s action or omission was in the best interests
of the Bank.  Any act, or failure to act, based upon the direction of the Board
or based upon the advice of counsel for the Bank shall be conclusively presumed
to be done, or omitted to be done, by Executive in good faith and in the best
interests of the Bank.

 

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9.                                      RESIGNATION FROM BOARDS OF DIRECTORS

 

In the event of Executive’s termination of employment due to an Event of
Termination, Executive’s service as a director of the Bank, the Company, and any
affiliate of the Bank or the Company shall immediately terminate.  This
Section 9 shall constitute a resignation notice for such purposes.

 

10.                               NOTICE.

 

(a)                                 Any purported termination by the Bank for
Cause shall be communicated by Notice of Termination to Executive.  If, within
thirty (30) days after any Notice of Termination for Cause is given, Executive
notifies the Bank that a dispute exists concerning the termination, the parties
shall promptly proceed to arbitration, as provided in Section 20. 
Notwithstanding the pendency of any such dispute, the Bank shall discontinue
paying Executive’s compensation until the dispute is finally resolved in
accordance with this Agreement.  If it is determined that Executive is entitled
to compensation and benefits under Section 4 or 5, the payment of such
compensation and benefits by the Bank shall commence immediately following the
date of resolution by arbitration, with interest due Executive on the cash
amount that would have been paid pending arbitration (at the prime rate as
published in The Wall Street Journal from time to time).

 

(b)                                 Any other purported termination by the Bank
or by Executive shall be communicated by a “Notice of Termination” (as defined
in Section 10(c)) to the other party.  If, within thirty (30) days after any
Notice of Termination is given, the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
parties shall promptly proceed to arbitration as provided in Section 20. 
Notwithstanding the pendency of any such dispute, the Bank shall continue to pay
Executive his Base Salary, and other compensation and benefits in effect when
the notice giving rise to the dispute was given (except as to termination of
Executive for Cause); provided, however, that such payments and benefits shall
not continue beyond the date that is 36 months from the date the Notice of
Termination is given.  In the event the voluntary termination by Executive of
his employment is disputed by the Bank, and if it is determined in arbitration
that Executive is not entitled to termination benefits pursuant to this
Agreement, he shall return all cash payments made to him pending resolution by
arbitration, with interest thereon at the prime rate as published in The Wall
Street Journal from time to time, if it is determined in arbitration that
Executive’s voluntary termination of employment was not taken in good faith and
not in the reasonable belief that grounds existed for his voluntary
termination.  If it is determined that Executive is entitled to receive
severance benefits under this Agreement, then any continuation of Base Salary
and other compensation and benefits made to Executive under this Section 10
shall offset the amount of any severance benefits that are due to Executive
under this Agreement.

 

(c)                                  For purposes of this Agreement, a “Notice
of Termination” shall mean a written notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated.

 

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11.                               POST-TERMINATION OBLIGATIONS.

 

(a)                                 Executive hereby covenants and agrees that,
for a period of one year following his termination of employment with the Bank,
he shall not, without the written consent of the Bank, either directly or
indirectly:

 

(i)                                     solicit, offer employment to, or take
any other action intended (or that a reasonable person acting in like
circumstances would expect) to have the effect of causing any officer or
employee of the Bank or the Company, or any of their respective subsidiaries or
affiliates, to terminate his or her employment and accept employment or become
affiliated with, or provide services for compensation in any capacity whatsoever
to, any business whatsoever that competes with the business of the Bank or the
Company, or any of their direct or indirect subsidiaries or affiliates or has
headquarters or offices within 25 miles of the locations in which the Bank or
the Company has business operations or has filed an application for regulatory
approval to establish an office;

 

(ii)                                  become an officer, employee, consultant,
director, independent contractor, agent, sole proprietor, joint venturer,
greater than 5% equity owner or stockholder, partner or trustee of any savings
association, savings and loan association, savings and loan holding company,
credit union, bank or bank holding company, insurance company or agency, any
mortgage or loan broker or any other financial services entity or business that
competes with the business of the Bank or its affiliates or has headquarters or
offices within 25 miles of St. Joseph, Michigan; provided, however, that this
restriction shall not apply if Executive’s employment is terminated following a
Change in Control or if Executive does not have any right to or waives (or
returns to the Bank) any payments under Section 4 hereof; or

 

(b)                                 As used in this Agreement, “Confidential
Information” means information belonging to the Bank which is of value to the
Bank in the course of conducting its business and the disclosure of which could
result in a competitive or other disadvantage to the Bank. Confidential
Information includes, without limitation, financial information, reports, and
forecasts; inventions, improvements and other intellectual property; trade
secrets; know-how; designs, processes or formulae; software; market or sales
information or plans; customer lists; and business plans, prospects and
opportunities (such as possible acquisitions or dispositions of businesses or
facilities) which have been discussed or considered by the management of the
Bank. Confidential Information includes information developed by the Executive
in the course of the Executive’s employment by the Bank, as well as other
information to which the Executive may have access in connection with the
Executive’s employment.  Confidential Information also includes the confidential
information of others with which the Bank has a business relationship.
Notwithstanding the foregoing, Confidential Information does not include
information in the public domain.  The Executive understands and agrees that the
Executive’s employment creates a relationship of confidence and trust between
the Executive and the Bank with respect to all Confidential Information.  At all
times, both during the Executive’s employment with the Bank and after its
termination, the Executive will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential
Information without the written consent of the Bank, except as may be necessary
in the ordinary course of performing the Executive’s duties to the Bank.

 

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(c)                                  Executive shall, upon reasonable notice,
furnish such information and assistance to the Bank as may reasonably be
required by the Bank, in connection with any litigation in which it or any of
its subsidiaries or affiliates is, or may become, a party; provided, however,
that Executive shall not be required to provide information or assistance with
respect to any litigation between the Executive and the Bank or any of its
subsidiaries or affiliates.

 

(d)                                 All payments and benefits to Executive under
this Agreement shall be subject to Executive’s compliance with this Section 11. 
The parties hereto, recognizing that irreparable injury will result to the Bank,
its business and property in the event of Executive’s breach of this Section 11,
agree that, in the event of any such breach by Executive, the Bank will be
entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive and all persons acting
for or with Executive. Executive represents and admits that Executive’s
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Bank, and
that the enforcement of a remedy by way of injunction will not prevent Executive
from earning a livelihood.  Nothing herein will be construed as prohibiting the
Bank or the Company from pursuing any other remedies available to them for such
breach or threatened breach, including the recovery of damages from Executive.

 

12.                               SOURCE OF PAYMENTS.

 

All payments provided in this Agreement shall be timely paid in cash or check
from the general funds of the Bank. The Company may accede to this Agreement but
only for the purposed of guaranteeing payment and provision of all amounts and
benefits due hereunder to Executive.

 

13.                               EFFECT ON PRIOR AGREEMENTS AND EXISTING
BENEFITS PLANS.

 

This Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Bank or any predecessor of
the Bank and Executive, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to Executive of a kind elsewhere
provided.  No provision of this Agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.

 

14.                               NO ATTACHMENT; BINDING ON SUCCESSORS.

 

(a)                                 Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge, or
hypothecation, or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void, and of no effect.

 

(b)                                 This Agreement shall be binding upon, and
inure to the benefit of, Executive and the Bank and their respective successors
and assigns.

 

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15.                               MODIFICATION AND WAIVER.

 

(a)                                 This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto.

 

(b)                                 No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of
the party charged with such waiver or estoppel.  No such written waiver shall be
deemed a continuing waiver unless specifically stated therein, and each such
waiver shall operate only as to the specific term or condition waived and shall
not constitute a waiver of such term or condition for the future as to any act
other than that specifically waived.

 

16.                               REQUIRED PROVISIONS.

 

(a)                                 The Bank may terminate Executive’s
employment at any time, but any termination by the Board other than termination
for Cause shall not prejudice Executive’s right to compensation or other
benefits under this Agreement.  Executive shall have no right to receive
compensation or other benefits for any period after termination for Cause.

 

(b)                                 Notwithstanding anything herein contained to
the contrary, any payments to Executive by the Bank or the Company, whether
pursuant to this Agreement or otherwise, are subject to and conditioned upon
their compliance with Section 18(k) of the Federal Deposit Insurance Act,
12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12
C.F.R. Part 359.

 

17.                               SEVERABILITY.

 

If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

 

18.                               HEADINGS FOR REFERENCE ONLY.

 

The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

 

19.                               GOVERNING LAW.

 

This Agreement shall be governed by the laws of the State of Michigan except to
the extent superseded by federal law.

 

20.                               ARBITRATION.

 

Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a
panel of three arbitrators sitting in a location

 

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selected by Executive within fifty (50) miles from the main office of the Bank,
in accordance with the rules of the American Arbitration Bank’s National
Rules for the Resolution of Employment Disputes (“National Rules”) then in
effect.  One arbitrator shall be selected by Executive, one arbitrator shall be
selected by the Bank and the third arbitrator shall be selected by the
arbitrators selected by the parties.  If the arbitrators are unable to agree
within fifteen (15) days upon a third arbitrator, the arbitrator shall be
appointed for them from a panel of arbitrators selected in accordance with the
National Rules.  Judgment may be entered on the arbitrator’s award in any court
having jurisdiction.

 

21.                               INDEMNIFICATION.

 

(a)                                 Executive shall be provided with coverage
under a standard directors’ and officers’ liability insurance policy, and shall
be indemnified for the term of this Agreement and for a period of six years
thereafter to the fullest extent permitted under applicable law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been a director or officer of the Bank or any affiliate
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys’ fees and
the cost of reasonable settlements (such settlements must be approved by the
Board), provided, however, Executive shall not be indemnified or reimbursed for
legal expenses or liabilities incurred in connection with an action, suit or
proceeding arising from any illegal or fraudulent act committed by Executive. 
Any such indemnification shall be made consistent with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued
thereunder in 12 C.F.R. Part 359.

 

(b)                                 Any indemnification by the Bank shall be
subject to compliance with any applicable regulations of the Federal Deposit
Insurance Corporation.

 

22.                               NOTICE.

 

For the purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below:

 

To the Bank:

Chairman of the Board
Edgewater Bank
321 Main Street
St. Joseph, Michigan 49085

 

 

To Executive:

Richard E. Dyer
At the address last appearing on the personnel records of the Bank

 

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IN WITNESS WHEREOF, the Bank and the Company have caused this Agreement to be
executed by their duly authorized representatives, and Executive has signed this
Agreement, on the date first above written.

 

 

EDGEWATER BANK

 

 

 

 

 

By:

/s/ Kenneth F. Ankli III

 

 

Chairman of the Board

 

 

 

 

 

EDGEWATER BANCORP, INC.

 

 

 

 

 

By:

/s/ Kenneth F. Ankli III

 

 

Chairman of the Board

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

/s/ Richard E. Dyer

 

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