**Exhibit10.1**

 

**EMPLOYMENT AGREEMENT**

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**THISEMPLOYMENT AGREEMENT**(“**Agreement**”)is entered into as of November 1, 2002 (the “**Effective Date**”), by and between JOCK BROWN (“**Executive**”) and FIRST NATIONAL BANK OFOTTAWA, a national banking association (the “**Bank**”)and FIRST OTTAWA BANCSHARES, INC., a Delaware corporation (the “**Holding Company**”) (the Bank and the HoldingCompany shall collectively be referred to as the “**Corporation**,” which shall be deemed to include any affiliateor related entity of the Bank or the Holding Company whether currently inexistence or later created or acquired), the terms of which are as follows:

 

# **Section 1.              TermWith Automatic Renewal Provisions. The Executive’s employment hereunder shall be for a two (2) year termcommencing as of the Effective Date and shall automatically renew for anadditional one (1) year period on each anniversary of the Effective Date,unless sooner terminated at any time by either party, with or without Cause (asdefined below), such termination to be effective as of ninety (90) days afterwritten notice to that effect is delivered to the other party; provided thateither party may provide the other party with notice that the term of thisAgreement shall not renew, in which case this Agreement shall terminate at theend of the then-current term of this Agreement.  Notwithstanding any other provision of this Section 1 to thecontrary, this Agreement shall automatically terminate upon Executive’sattainment of age sixty-five (65).**

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# **Section 2.             ****Employment Duties.** During the term of this Agreement, Executivewill serve as the President and Chief Executive Officer of the Bank and theHolding Company, subject to the terms of this Agreement and to the direction ofthe Board of Directors of the Corporation (the “**Board**”),and to the direction of the Chairman of the Board (the “**Chairman**”).Executive shall perform such duties commensurate with his position and title asare reasonable and customary, including, but not limited to personnel matters,expense items, product pricing, loan approval, etc. and shall, on a full-timebasis, serve the Corporation faithfully, diligently and competently and to thebest of his ability. Executive shall serve as a member of the Board ofDirectors of the Bank and the Holding Company (a “**Director**”),and as an ex-officio member of each committee of each of such Boards, exceptingaudit committee; provided that Executive shall not receive directors fees oradditional compensation for his services as a Director.

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# **Section 3.             ****Compensation.** In exchange for Executive’s services asPresident and Chief Executive Officer, Executive shall be compensated asfollows:

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## (a)                                  TheCorporation shall pay Executive an annual base salary of $193,000 (the “**Base Salary**”).  TheBase Salary shall be adjusted on January 1, 2003 and annually thereafter, tothe greater of the previous year’s Base Salary or the average base salary(exclusive of bonuses and other incentive compensation) of the third quartilefor a president and chief executive officer of an independent bank forsimilarly-situated institutions in Illinois as reported in the most recentIllinois Banker’s Association Annual Survey. The Base Salary shall be payablein accordance with the Corporation’s ordinary payment practices and shall besubject to withholding and employment taxes.

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## (b)                                 Executiveshall continue to participate in the employee bonus plan (the phantom shareplan) and shall remain a participant in the “Impact Group” for allocation ofbonuses under the plan.  The “ImpactGroup” shall be entitled to an allocation of 50% of the total, and Executiveshall receive and shall be entitled to 50% of the “Impact Group”allocation.  The Corporation may adjustthe allocation, as necessary, to accommodate non-operating fluctuations in bookvalue.

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# **Section 4.              Benefits.**

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## (a)                                  Executivealso shall be entitled to participate in all coverages, including life, health,and disability insurance and employee benefit plans and programs as offeredfrom time to time to executive officers of the Corporation or to directors.  Executive’s and his dependents’participation in any such plan or program shall be subject to the provisions,rules, regulations and laws applicable thereto.

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## (b)                                 Executiveshall be entitled to paid vacation in accordance with Corporation policiesapplicable to its executive officers.

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## (c)                                  TheCorporation shall provide Executive with a monthly automobile allowance of$600.00.

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## (d)                                 TheCorporation shall pay reasonable expenses related to Executive’s participationin business and business-related social events and for such club, community andprofessional association dues and expenses that Executive and the Chairman ofthe Compensation Committee of the Board agree are in the best interests of theCorporation.

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# **Section 5.             ****Restrictive Covenants. **Executive acknowledges and agrees thatin the course of his employment he will learn valuable trade secrets and otherproprietary information, and that the Corporation would be irreparably damagedif Executive were to use or disclose such information and/or to provide servicesto any person or entity in violation of the restrictions contained in thisAgreement.  Accordingly, Executiveagrees that during the term of this Agreement and for twelve (12) monthsthereafter (the “**Restricted Period**”), Executiveshall not, directly or indirectly, either for himself or for any other personor entity:

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## (a)                                  Engageor participate in any activity or business, or assist, advise or be connectedwith (including as an employee, owner, partner, shareholder, officer, director,advisor, consultant, agent or otherwise), or permit his name to be used by orotherwise render services, directly or indirectly, for any person or entitywhich directly competes with the Corporation and which has a facility locatedwithin twenty (20) miles of any facility of the Corporation or within twenty(20) miles of any facility that the Corporation, as of the date of Executive’stermination of employment, plans to acquire, merge with, or establish withinthe twelve (12)-month period following Executive’s termination ofemployment;

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## (b)                                 Directlyor indirectly solicit or attempt to solicit business from any customer of theCorporation with which Executive has had contact during the six (6) monthsprior to Executive’s termination of employment with the Corporation for the 

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## purpose of having such customer or otherbusiness relation of the Corporation to cease doing business with theCorporation; or

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## (c)                                  Directlyor indirectly solicit or induce or attempt to solicit or induce any officer,employee or agent of the Corporation who is an officer, employee or agent ofthe Corporation as of the effective date of Executive’s termination ofemployment to cease employment or association with the Corporation.

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# **Section 6.             ****Confidential Information. **Executive recognizes that, as a resultof his employment by the Corporation, he will gain possession of ConfidentialInformation as defined below. Accordingly, Executive agrees as follows:

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## (a)                                  Executiveshall not at any time during or after termination of this Agreement, in anyform or manner, whether directly or indirectly, disclose or communicate anyConfidential Information to any third party, or otherwise utilize anyConfidential Information for Executive’s benefit or for the benefit of anythird party. For purposes of this Agreement, “Confidential Information” shallinclude, any financial data, business plans and strategies, and lists of actualor potential customers of the Corporation and information concerningrelationships therewith, any of which (i) derives independent economic value,actual or potential, from not being generally known to the public and (ii) isthe subject of efforts that are reasonably under the circumstances to maintainits secrecy. “Confidential information” shall also include any informationconcerning a third party that has been disclosed to the Corporation inconfidence which the Corporation has an obligation to treat as confidential.

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## (b)                                 Executiveshall, immediately following a request from the Corporation, return to theCorporation, without retaining copies, all tangible items of Corporationproperty which are or which contain Confidential Information. Executive shalldestroy any Confidential Information stored in electronic, magnetic, or othermechanical medium.

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# **Section 7.             ****Specific Performance.** Executive acknowledges that the restrictionscontained in Sections 5 and 6 are reasonable and necessary for the protectionof the legitimate business interests of the Corporation and that any violationof these restrictions would cause substantial injury to the Corporation andwould cause irreparable harm to the Corporation, and that the Corporation wouldnot have entered into this Agreement with Executive without receiving theadditional consideration offered by the Executive in binding himself to theserestrictions and that such restrictions were a material inducement to theCorporation to enter into this Agreement. By reason of the foregoing, Executive consents and agrees that if heviolates any provision of Section 5 or 6 of this Agreement, the Corporationshall be entitled, in addition to any other rights and remedies that it mayhave, to apply to any court of competent jurisdiction for specific performanceand/or injunctive or other equitable relief in order to enforce, or prevent anycontinuing violation of, the provisions of such Section. In the event Executivebreaches Section 5 of this Agreement and the Corporation brings legal actionfor injunctive or other relief, the Corporation shall not, as a result of thetime involved in obtaining such relief, be deprived of the benefit of the fullRestricted Period.  Accordingly, theRestricted Period shall be deemed to 

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# have theduration specified in Section 5 computed from the date the relief is grantedbut reduced by the time between the period when the Restricted Period began torun and the date of the first violation of Section 5 by Executive.

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# **Section 8.             ****Enforcement.** Executive acknowledges that the territorial,time and scope limitations set forth in Sections 5 and 6, as applicable, arereasonable and are properly required for the protection of the Corporation andin the event that any such territorial, time or scope limitation is deemed tobe unseasonable by a court of competent jurisdiction, the Corporation andExecutive agree, and Executive submits, to the reduction of any or all of saidterritorial, time or scope limitations to such an area, period of scope as saidcourt shall deem reasonable and enforceable under the circumstances.

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# **Section 9.             ****Termination; Severance.** Notwithstanding the provisions of Section 1and the other provisions of this Agreement, Executive’s employment with theCorporation and this Agreement may be terminated prior to the expiration of thethen-current term of this Agreement as follows:

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## (a)                                  ForCause.  The Board may at any timeterminate this Agreement (provided that the provisions of Sections 5 and 6shall survive the termination of this Agreement) and Executive’s employment forCause.  “**Cause**,”is defined as (i) Executive’s conviction for, or plea of nolo contendereto, a felony or crime involving moral turpitude; (ii) Executive’scommission of an act involving self-dealing, fraud or personal profit that isinjurious to the Corporation; (iii) Executive’s material failure toperform his duties hereunder, and (iv) Executive’s breach of any materialprovision of this Agreement. Any termination by the Corporation under thisSection 9(a) shall be in writing. In the event of termination under thisSection 9(a), the Corporation’s obligations under this Agreement shall cease,except that Executive shall be entitled to his Base Salary for servicesperformed through the date of such termination.

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## (b)                                 WithoutCause.  The Board may at any time,terminate this Agreement (provided that the provisions of Sections 5 and 6shall survive the termination of this Agreement) and Executive’s employmentwithout Cause, upon ninety (90) days’ written notice to Executive. In the eventof termination pursuant to this Section 9(b), Executive shall be entitled tohis Base Salary for what would have been the remainder of the then-current termof this Agreement, which amounts shall be paid in equal installments over whatwould have been the remainder of the term of this Agreement.

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## (c)                                  UponDeath or Disability.  In the eventof Executive’s death or “total disability,” which for purposes of this Section9(c) shall be defined as Executive’s inability to perform the essentialfunctions of his job, with or without reasonable accommodation, due to illness,injury or other physical or mental incapacity, for a period of ninety (90) ormore days in any twelve (12) month period this Agreement and Executive’semployment shall terminate (provided that the provisions of Sections 5 and 6shall survive the termination of this Agreement).  In the event of termination under this Section 9(c), theCorporation’s obligations 

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## under this Agreement shall cease, except thatExecutive shall be entitled to his Base Salary for services performed throughthe date of such termination.

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## (d)                                 Changeof Control.  If a Change of Control,as defined below, occurs and Executive’s employment is terminated by theExecutive or the Board for any reason within ninety (90) days following theChange of Control, then the Corporation or its successor, as the case may be,shall pay Executive in one (1) lump sum within five (5) business days followinghis termination of employment two (2) times the sum of (i) his annual BaseSalary as of the date of termination (which amount shall be no less than theamount of his Base Salary immediately preceding the date of Change of Control),and (ii) the average of his cash bonus paid with respect to the two (2) yearsimmediately preceding the date of the Change of Control.  In addition, the Corporation or itssuccessor, as the case may be, shall pay Executive’s COBRA premium for eighteen(18) months, consistent with Executive’s elections under COBRA and his right tocontinuation of benefits thereunder. For purposes of this Section 9(d) “**Change of Control**”  shall be defined as:

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### (i)                                     Theconsummation of the acquisition by any person (as such term is defined inSection 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the“**1934 Act**”)) of beneficial ownership(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fiftypercent (50%) or more of the combined voting power of the then outstandingvoting securities of the Company; or

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### (ii)                                  Theindividuals who, as of the date hereof, are members of the Board of Directorsof the Holding Company (the “**Holding Company Board”**)cease for any reason to constitute a majority of the Holding Company Board,unless the election, or nomination for election by the stockholders, of any newdirector was approved by a vote of a majority of the Holding Company Board, andsuch new director shall, for purposes of this Agreement, be considered as amember of the Holding Company Board; or

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### (iii)                               Consummationof (1) a merger or consolidation if the stockholders, immediately before suchmerger or consolidation, do not, as a result of such merger or consolidation,own, directly or indirectly, more than fifty percent (50%) of the combinedvoting power of the then outstanding voting securities of the entity resultingfrom such merger or consolidation, in substantially the same proportion astheir ownership of the combined voting power of the voting securitiesoutstanding immediately before such merger or consolidation or (2) a completeliquidation or dissolution or an agreement for the sale or other disposition ofsubstantially all of the consolidated assets of the Holding Company or theBoard.

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Notwithstanding the foregoing, a Change of Controlshall not be deemed to occur solely because fifty percent (50%) or more of thecombined voting power of the 

 

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then outstanding securities is acquired by (1) atrustee or other fiduciary holding securities under one or more employeebenefit plans maintained for employees of the entity or (2) any corporationwhich, immediately prior to such acquisition, is owned directly or indirectlyby the stockholders in the same proportion as their ownership of stockimmediately prior to such acquisition.

 

## (e)                                  Limitationson Severance.  It is the intentionof the Corporation and the Executive that no portion of any payment under thisAgreement, or payments to or for the benefit of the Executive under any otheragreement 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 agreedthat the present value of and payments to or for the benefit of the Executivein the nature of compensation, receipt of which is contingent on the Change ofControl, and to which Section 280G of the Code applies (in the aggregate “**Total Payments**”) shall not exceed an amount equal to onedollar less than the maximum amount which the Corporation may pay without lossof deduction under Section 280G(a) of the Code. Present value for purposes ofthis Agreement shall be calculated in accordance with Section 280G(d)(4) of theCode. Within one hundred and twenty (120) days following the earlier of (A) thegiving of the notice of termination or (B) the giving of notice by theCorporation to the Executive of its belief that there is a payment or benefitdue the Executive which will result in an excess parachute payment as definedin Section 280G of the Code, the Executive and the Corporation, at theCorporation’s expense, shall obtain the opinion of such legal counsel andcertified public accountants as the Corporation may choose (notwithstanding thefact that such persons have acted or may also be acting as the legal counsel orcertified public accountants for the Corporation), which opinions need not beunqualified, which sets forth (A) the amount of the Base Period Income of theExecutive, (B) the present value of Total Payments and (C) the amount andpresent value of any excess parachute payments. In the event that such opinionsdetermine that there would be an excess parachute payment, the paymenthereunder or any other payment determined by such counsel to be includable inTotal Payments shall be modified, reduced or eliminated as specified by theExecutive in writing delivered to the Corporation within ninety (90) days ofhis receipt of such opinions or, if the Executive fails to so notify theCorporation, then as the Corporation shall reasonably determine, so that underthe bases of calculation set forth in such opinions there will be no excessparachute payment. The provisions of this subparagraph, including thecalculations, notices and opinions provided for herein shall be based upon theconclusive presumption that (A) the compensation and benefits provided for inSections 3 and 4 hereof and (B) any other compensation earned by the Executivepursuant to the Corporation’s compensation programs which would have been paidin any event, are reasonable compensation for services rendered, even thoughthe timing of such payment is triggered by the Change of Control; provided,however, that in the event such legal counsel so requests in connection withthe opinion required by this subparagraph, the Executive and the Corporationshall obtain, at the Corporation’s expense, and the legal counsel may rely onin providing the opinion, the advice of a firm of recognized executivecompensation 

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## consultants as to the reasonableness of anyitem of compensation to be received by the Executive. In the event that theprovisions of Sections 280G and 4999 of the Code are repealed withoutsuccession, this subparagraph shall be of no further force or effect.

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# **Section 10.            RequiredProvisions.**

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## (a)                                  RegulatorySuspension and Termination.

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### (i)                                     Ifthe Executive is suspended from office and/or temporarily prohibited fromparticipating in the conduct of the Corporation’s affairs by a notice servedunder Section 8(e)(3) (12 U.S.C. § 1818(e)(3)) or 8(g) (12 U.S.C. § 1818(g)) ofthe Federal Deposit Insurance Act, as amended, (the “**FDIA**”)the Corporation’s obligations under this contract shall be suspended as of thedate of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, theCorporation may in its discretion (A) pay the Executive all or part of thecompensation withheld while the Executive’s contract obligations were suspendedand (B) reinstate (in whole or in part) any of the obligations which weresuspended.

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### (ii)                                  Ifthe Executive is removed and/or permanently prohibited from participating inthe conduct of the Corporation’s affairs by an order issued under Section 8(e)(12 U.S.C. § 1818(e)) or 8(g) (12 U.S.C. § 1818(g)) of the FDIA, allobligations of the Corporation under this contract shall terminate as of theeffective date of the order, but vested rights of the contracting parties shallnot be affected.

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### (iii)                               Ifthe Corporation is in default as defined in Section 3(x) (12 U.S.C. §1813(x)(1)) of the FDIA, all obligations of the Corporation under this contractshall terminate as of the date of default, but this paragraph shall not affectany vested rights of the contracting parties.

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### (iv)                              Allobligations of the Corporation under this contract shall be terminated, exceptto the extent determined that continuation of the contract is necessary for thecontinued operation of the institution by the Federal Deposit InsuranceCorporation (the “FDIC”), at the time the FDIC enters into an agreement toprovide assistance to or on behalf of the Corporation under the authoritycontained in Section 13(c) (12 U.S.C. § 1823(c)) of the FDIA, or when theCorporation is determined by the Office of the Comptroller of the Currency orthe 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.

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# **Section 11.           ****Prior Business Relationships.** Executive represents that there are no claimsor actions, whether pending, threatened or potential, with respect to any ofhis prior employment, independent contractor or other business relationshipsthat prevent him, or that would prevent him, from carrying out his duties underthis Agreement or that subjects the 

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# Corporation toany potential or actual liability. Executive agrees and understands that anysuch claim or action shall be reviewed by the Board and may be grounds for histermination of employment. Notwithstanding the foregoing, this Section 10 shall not prevent theCorporation from pursuing any other remedy available at law or in equity.

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# **Section 12.            Miscellaneous.**

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## (a)                                  Allnotices hereunder shall be in writing and shall be deemed given when deliveredin person or when telecopied with hard copy to follow, or three (3) businessdays after being deposited in the United States mail, postage prepaid,registered or certified mail, or two (2) business days after delivery to anationally recognized express courier, expenses prepaid, addressed as follows:

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| If to Executive:                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                               |
| Jock Brown  2835 Emerald Drive  Ottawa, Illinois  61350                                                                       |
|                                                                                                                               |
| If the Corporation:                                                                                                                |
|                                                                                                                               |
| First Ottawa Bancshares, Inc.  701 LaSalle Street  P. O. Box 657  Ottawa, Illinois  61350  Attn.:  Chairman of the Board |

 

and/or at such addresses as may be designated by noticegiven in accordance with the provisions hereof.

 

## (b)                                 ThisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective heirs, successors and permitted assigns. No party shallassign this Agreement or its rights hereunder without the prior written consentof the other party hereto; provided, however, that the Corporation will requireany person or entity acquiring all or substantially all of the business of theCorporation (whether by sale of stock, sale of assets, merger, consolidation orotherwise) to assume its obligations pursuant to this Agreement upon closing.

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## (c)                                  ThisAgreement contains all of the agreements between the parties with respect tothe subject matter hereof and this Agreement supersedes all other agreements,oral or written, between the parties hereto with respect to the subject matterhereof.

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## (d)                                 Nochange or modification of this Agreement shall be valid unless the same shallbe in writing and signed by the parties hereto. No waiver of any provision ofthis Agreement shall be valid unless in writing and signed by the waivingparty. No waiver of any of the provisions of this Agreement shall be deemed orshall constitute a waiver of any other provision, nor shall any waiverconstitute a continuing waiver, unless so provided in the waiver.

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## (e)                                  Ifany provision of this Agreement (or portion thereof) shall, for any reason, beconsidered invalid or unenforceable by any court of competent jurisdiction andsuch provision is not subject to revision pursuant to Section 8, such provision(or portion thereof) shall be ineffective only to the extent of such invalidityor unenforceability, and the remaining provisions of this Agreement (orportions thereof) shall nevertheless be valid, enforceable and of full forceand effect.

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## (f)                                    Thesection headings or titles herein are for convenience of reference only andshall not be deemed a part of this Agreement.

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## (g)                                 ThisAgreement shall be governed and controlled as a validity, enforcement,interpretation, construction, effect and in all other respects by the laws ofthe State of Illinois applicable to contracts made in that State (other thanany conflict of laws rule which might result in the application of the laws ofany other jurisdiction).

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The parties have executedthis Agreement on the date first above written.

 
|   | **FIRST NATIONAL BANK OF OTTAWA** |
|--------|-----------------------------------|
|   |                              |
|   |                              |
|   | By:                               | Thomas E. Haeberle |   |
|   |                              |
|   | Title:                            |  Chairman |   |
|   |                              |
|   |                              |
|   | **FIRST OTTAWA BANCSHARES, INC.** |
|   |                              |
|   |                              |
|   | By:                               | Thomas E. Haeberle |   |
|   |                              |
|   | Title:                            |  Chairman |   |
|   |                              |
|   |                              |
|   | **EXECUTIVE**                     |
|   |                              |
|   |                              |
|   | /s/ Jock Brown                    |   |
|   | JOCK BROWN                        |
|        |                                   |  |  |  |  |

 

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