Document:

Exhibit 10.3

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered
into as of June 9, 2005,  (the “Effective
Date”), by and between STEVE GONZALO (“Executive”) and FIRST NATIONAL BANK OF
OTTAWA, a national banking association (the “Bank”),  (which shall be deemed to include any
affiliate or related entity of the Bank whether currently in existence or later
created or acquired, including specifically the covenant not to compete and
change of control provisions herein), the terms of which are as follows:

 

Term With Automatic Renewal Provisions.  The Executive’s employment hereunder shall be
for a two (2) year term commencing as of the Effective Date and shall
automatically renew for an additional one (1) year period on each anniversary
of the Effective Date, unless sooner terminated at any time by either party,
with or without Cause (as defined below), such termination to be effective as
of ninety (90) days after written notice to that effect is delivered to the
other party; provided that either party may provide the other party with notice
that the term of this Agreement shall not renew, in which case this Agreement
shall terminate at the end of the then-current term of this Agreement.  Notwithstanding any other provision of this
Section 1 to the contrary, this Agreement shall automatically terminate upon
Executive’s attainment of age sixty-five (65).

 

Section 1.                                          Employment
Duties.  During the term of this Agreement, Executive
will serve as the Chief Technology Officer of the Bank, subject to the terms of
this Agreement and to the direction of the President of the Bank. Executive
shall perform such duties commensurate with his position and title as are
reasonable and customary, including, but not limited to personnel matters,
expense control, non-interest income, interest expense, operational and data
processing procedures and controls and shall, on a full-time basis, serve the
Bank faithfully, diligently and competently and to the best of his ability.

 

Section 2.                                          Compensation.  In exchange for Executive’s services as Chief
Technology Officer, Executive shall be compensated as follows:

 

(a)                                  The Bank shall pay Executive an
annual base salary for 2005 of $115,805.00 (the “Base Salary”).  The Base Salary
shall be adjusted on January 1, 2006 and annually thereafter, pursuant to the
normal compensation practices of the Bank but shall not be less than either the
previous year’s Base Salary or the base salary (exclusive of bonuses and other
incentive compensation)  of the third
quartile for a chief information officer of an independent bank of $101-250
million dollars in total assets in Illinois as reported in the most recent
Illinois Banker’s Association Annual Survey. The Base Salary shall be payable
in accordance with the Bank’s ordinary payment practices and shall be subject
to withholding and employment taxes.

 

(b)                                 Executive shall continue to
participate in the employee bonus plan and shall remain a participant in the “Impact
Group” for allocation of bonuses under the plan, as that plan is constituted
and as amended from time to time.  The
Bank may

 

 

adjust the
allocation, as necessary, to accommodate non-operating fluctuations in book
value.

 

(c)                                  Executive may, at the discretion
of the board, be granted stock options or other and further compensation.

 

(d)                                 Executive has been included in
the Bank’s supplemental Executive Retirement Program (SERP), which is partially
funded with certain “bank-owned life insurance” (BOLI) policies, and shall
continue to be included in that plan, as heretofore established by the board of
directors and as may be amended or modified by them in the future.

 

Section 3.                                          Benefits.

 

(a)                                  Executive also shall be entitled
to participate in all coverages, including life, health, and disability
insurance and employee benefit plans and programs as offered from time to time
to executive officers of the Bank 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.

 

(b)                                 Executive shall be entitled to
paid vacation in accordance with Bank policies applicable to its executive
officers.

 

(c)                                  The Bank shall pay reasonable
expenses related to Executive’s participation in business and business-related
social events and for such club, community and professional association dues
and expenses that Executive and the President of the Bank agree are in the best
interests of the Bank.

 

Section 4.                                          Restrictive
Covenants.  Executive
acknowledges and agrees that in the course of his employment he will learn
valuable trade secrets and other proprietary information, and that the Bank
would be irreparably damaged if Executive were to use or disclose such
information and/or to provide services to any person or entity in violation of
the restrictions contained in this Agreement. 
Accordingly, Executive agrees that during the term of this Agreement and
for twelve (12) months thereafter (the “Restricted Period”),
Executive shall not, directly or indirectly, either for himself or for any
other person or entity:

 

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

 

(b)                                 Directly or indirectly solicit
or attempt to solicit business from any customer of the Bank with which
Executive has had contact during the six (6) months prior to

 

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Executive’s
termination of employment with the Bank for the purpose of having such customer
or other business relation of the Bank to cease doing business with the Bank;
or

 

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

 

Section 5.                                          Confidential
Information.  Executive
recognizes that, as a result of his employment by the Bank, he will gain
possession of Confidential Information as defined below. Accordingly, Executive
agrees as follows:

 

(a)                                  Executive shall not at any time
during or after termination of this Agreement, in any form or manner, whether
directly or indirectly, disclose or communicate any Confidential Information to
any third party, or otherwise utilize any Confidential Information for
Executive’s benefit or for the benefit of any third party. For purposes of this
Agreement, “Confidential Information” shall include, any financial data,
business plans and strategies, and lists of actual or potential customers of
the Bank and information concerning relationships therewith, any of which (i)
derives independent economic value, actual or potential, from not being
generally known to the public and (ii) is the subject of efforts that are
reasonably under the circumstances to maintain its secrecy. “Confidential
information” shall also include any information concerning a third party that
has been disclosed to the Bank in confidence which the Bank has an obligation to
treat as confidential.

 

(b)                                 Executive shall, immediately
following a request from the Bank, return to the Bank, without retaining
copies, all tangible items of Bank property which are or which contain
Confidential Information. Executive shall destroy any Confidential Information
stored in electronic, magnetic, or other mechanical medium.

 

Section 6.                                          Specific
Performance.  Executive acknowledges that the restrictions
contained in Sections 5 and 6 are reasonable and necessary for the protection
of the legitimate business interests of the Bank and that any violation of
these restrictions would cause substantial injury to the Bank and would cause
irreparable harm to the Bank, and that the Bank would not have entered into
this Agreement with Executive without receiving the additional consideration
offered by the Executive in binding himself to these restrictions and that such
restrictions were a material inducement to the Bank to enter into this
Agreement.  By reason of the foregoing,
Executive consents and agrees that if he violates any provision of Section 5 or
6 of this Agreement, the Bank shall be entitled, in addition to any other
rights and remedies that it may have, to apply to any court of competent
jurisdiction for specific performance and/or injunctive or other equitable
relief in order to enforce, or prevent any continuing violation of, the
provisions of such Section. In the event Executive breaches Section 5 of this
Agreement and the Bank brings legal action for injunctive or other relief, the
Bank shall not, as a result of the time involved in obtaining such relief, be
deprived of the benefit of the full Restricted Period.  Accordingly, the Restricted Period shall be
deemed to have the duration specified in Section 5

 

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computed from the date the relief
is granted but reduced by the time between the period when the Restricted
Period began to run and the date of the first violation of Section 5 by
Executive.

 

Section 7.                                          Enforcement.  Executive acknowledges that the territorial,
time and scope limitations set forth in Sections 5 and 6, as applicable, are
reasonable and are properly required for the protection of the Bank and in the
event that any such territorial, time or scope limitation is deemed to be unseasonable
by a court of competent jurisdiction, the Bank and Executive agree, and
Executive submits, to the reduction of any or all of said territorial, time or
scope limitations to such an area, period of scope as said court shall deem
reasonable and enforceable under the circumstances.

 

Section 8.                                          Termination;
Severance.  Notwithstanding the provisions of Section 1
and the other provisions of this Agreement, Executive’s employment with the
Bank and this Agreement may be terminated prior to the expiration of the
then-current term of this Agreement as follows:

 

(a)                                  For Cause.  The Bank may at any time terminate this
Agreement (provided that the provisions of Sections 5 and 6 shall survive the
termination of this Agreement) and Executive’s employment for Cause.  “Cause,”
is defined as (i) Executive’s conviction for, or plea of nolo contendere
to, a felony or crime involving moral turpitude; (ii) Executive’s
commission of an act involving self-dealing, fraud or personal profit that is
injurious to the Bank; (iii) Executive’s material failure to perform his
duties hereunder, and (iv) Executive’s breach of any material provision of
this Agreement. Any termination by the Bank under this Section 9(a) shall be in
writing. In the event of termination under this Section 9(a), the Bank’s
obligations under this Agreement shall cease, except that Executive shall be
entitled to his Base Salary for services performed through the date of such
termination.

 

(b)                                 Without Cause.  The Bank may at any time, terminate this
Agreement (provided that the provisions of Sections 5 and 6 shall survive the
termination of this Agreement) and Executive’s employment without Cause, upon
ninety (90) days’ written notice to Executive. In the event of termination
pursuant to this Section 9(b), Executive shall be entitled to his Base Salary
for what would have been the remainder of the then-current term of this
Agreement, which amounts shall be paid in equal installments over what would
have been the remainder of the term of this Agreement.

 

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

 

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this Agreement shall
cease, except that Executive shall be entitled to his Base Salary for services
performed through the date of such termination.

 

(d)                                 Change of Control.  If a Change of Control, as defined below,
occurs and Executive’s employment is terminated by the Executive or the Bank
for any reason within ninety (90) days following the Change of Control, then
the Bank or its successor, as the case may be, shall pay Executive in one (1)
lump sum within five (5) business days following his termination of employment
two (2) times the sum of (i) his annual Base Salary as of the date of termination
(which amount shall be no less than the amount 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) years immediately preceding the date of
the Change of Control.  In addition, the
Bank or its successor, 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 to continuation of benefits thereunder.  For purposes of this Section 9(d) “Change of Control”  shall be defined as:

 

(i)            The consummation of the
acquisition by any person (as such term is defined in Section 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 fifty percent
(50%) or more of the combined voting power of the then outstanding voting
securities of the Company; or

 

(ii)           The individuals who, as of the date hereof, are members of
the Board of Directors of 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 new director was approved
by a vote of a majority of the Holding Company Board, and such new director
shall, for purposes of this Agreement, be considered as a member of the Holding
Company Board; or

 

(iii)          Consummation of (1) a merger or consolidation if the
stockholders, immediately before such merger or consolidation, do not, as a
result of such merger or consolidation, own, directly or indirectly, more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of the entity resulting from such merger or consolidation, in
substantially the same proportion as their ownership of the combined voting
power of the voting securities outstanding immediately before such merger or
consolidation or (2) a complete liquidation or dissolution or an agreement for
the sale or other disposition of substantially all of the consolidated assets
of the Holding Company or the Board.

 

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

 

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then
outstanding securities is acquired by (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for employees of
the entity or (2) any corporation which, immediately prior to such acquisition,
is owned directly or indirectly by the stockholders in the same proportion as
their ownership of stock immediately prior to such acquisition.

 

(e)                                  Limitations on Severance.  It is the intention of the Bank and the
Executive that no portion of any payment under this Agreement, or payments to
or for the benefit of the Executive under any other agreement or plan, be
deemed to be an “Excess Parachute Payment” as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”),
or its successors. It is agreed that the present value of and payments to or
for the benefit of the Executive in the nature of compensation, receipt of
which is contingent on the Change of Control, and to which Section 280G of the
Code applies (in the aggregate “Total Payments”)
shall not exceed an amount equal to one dollar less than the maximum amount
which the Bank may pay without loss of deduction under Section 280G(a) of the
Code. Present value for purposes of this Agreement shall be calculated in
accordance with Section 280G(d)(4) of the Code. Within one hundred and twenty
(120) days following the earlier of (A) the giving of the notice of termination
or (B) the giving of notice by the Bank to the Executive of its belief that
there is a payment or benefit due the Executive which will result in an excess
parachute payment as defined in Section 280G of the Code, the Executive and the
Bank, at the Bank’s expense, shall obtain the opinion of such legal counsel and
certified public accountants as the Bank may choose (notwithstanding the fact
that such persons have acted or may also be acting as the legal counsel or
certified public accountants for the Bank), which opinions need not be
unqualified, which sets forth (A) the amount of the Base Period Income of the
Executive, (B) the present value of Total Payments and (C) the amount and
present value of any excess parachute payments. In the event that such opinions
determine that there would be an excess parachute payment, the payment
hereunder or any other payment determined by such counsel to be includable in
Total Payments shall be modified, reduced or eliminated as specified by the
Executive in writing delivered to the Bank within ninety (90) days of his
receipt of such opinions or, if the Executive fails to so notify the Bank, then
as the Bank shall reasonably determine, so that under the bases of calculation
set forth in such opinions there will be no excess parachute payment. The
provisions of this subparagraph, including the calculations, notices and
opinions provided for herein shall be based upon the conclusive presumption
that (A) the compensation and benefits provided for in Sections 3 and 4 hereof
and (B) any other compensation earned by the Executive pursuant to the Bank’s
compensation programs which would have been paid in any event, are reasonable
compensation for services rendered, even though the timing of such payment is
triggered by the Change of Control; provided, however, that in the event such
legal counsel so requests in connection with the opinion required by this
subparagraph, the Executive and the Bank shall obtain, at the Bank’s expense,
and the legal counsel may rely on in providing the opinion, the advice of a
firm of recognized executive compensation consultants as to the reasonableness
of any item of compensation to be received by the Executive. In

 

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the event that the
provisions of Sections 280G and 4999 of the Code are repealed without succession,
this subparagraph shall be of no further force or effect.

 

Section 9.                                          Required
Provisions.

 

(a)                                  Regulatory Suspension and
Termination.

 

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

 

(ii)           If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank’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, all obligations of the Bank under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.

 

(iii)          If the Bank is in default as defined in Section 3(x) (12
U.S.C. § 1813(x)(1)) of the FDIA, all obligations of the Bank under this
contract shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties.

 

(iv)          All obligations of the Bank under this contract shall be
terminated, except to the extent determined that continuation of the contract
is necessary for the continued operation of the institution by the Federal
Deposit Insurance Corporation (the “FDIC”), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) (12 U.S.C. § 1823(c)) of the FDIA, or when the
Corporation is determined by the Office of the Comptroller of the Currency or
the FDIC to be in an unsafe or unsound condition.  Any rights of the parties that have already
vested, however, shall not be affected by such action.

 

Section 10.                                   Prior
Business Relationships.  Executive represents that there are no claims
or actions, whether pending, threatened or potential, with respect to any of
his prior employment, independent contractor or other business relationships
that prevent him, or that would prevent him, from carrying out his duties under
this Agreement or that subjects the Bank to any potential or actual liability.
Executive agrees and understands that any such claim or action shall be
reviewed by the Bank and may be grounds for his termination of employment.

 

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Notwithstanding the foregoing,
this Section 10 shall not prevent the Bank from pursuing any other remedy
available at law or in equity.

 

Section 11.                                   Miscellaneous.

 

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

 

If to Executive:

 

Steve Gonzalo

307 Kain Street.

Ottawa, Illinois 61350

 

If to Bank

 

First National Bank of Ottawa

701 LaSalle Street

Ottawa, Illinois 61350

 

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

 

(b)                                 This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. No party shall assign this Agreement or its
rights hereunder without the prior written consent of the other party hereto;
provided, however, that the Bank will require any person or entity acquiring
all or substantially all of the business of the Bank (whether by sale of stock,
sale of assets, merger, consolidation or otherwise) to assume its obligations
pursuant to this Agreement upon closing.

 

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

 

(d)                                 No change or modification of
this Agreement shall be valid unless the same shall be in writing and signed by
the parties hereto. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the waiving party. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision, nor shall any waiver constitute a continuing waiver,
unless so provided in the waiver.

 

(e)                                  If any provision of this
Agreement (or portion thereof) shall, for any reason, be considered invalid or
unenforceable by any court of competent jurisdiction and

 

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such provision is
not subject to revision pursuant to Section 8, such provision (or portion
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions of this Agreement (or portions
thereof) shall nevertheless be valid, enforceable and of full force and effect.

 

(f)                                    The section headings or titles
herein are for convenience of reference only and shall not be deemed a part of
this Agreement.

 

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

 

The parties have executed this Agreement on the date
first above written.

 

	
   

  	
  FIRST
  NATIONAL BANK OF OTTAWA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  STEVE GONZALOExhibit 10.4

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of June 9,
2005 , with an “effective date” of September 24, 2005, (executive’s anniversary
of initial employment), by and between VINCE EASI (“Executive”) and FIRST NATIONAL BANK OF OTTAWA, a national
banking association (the “Bank”),  (which shall be deemed to include any
affiliate or related entity of the Bank whether currently in existence or later
created or acquired,  including
specifically the covenant not to compete and change of control provisions
herein ), the terms of which are as follows:

 

Term With Automatic Renewal
Provisions.  The
Executive’s employment hereunder shall be for a one (1) year term commencing as
of the Effective Date and shall automatically renew for an additional one (1)
year period on each anniversary of the Effective Date, unless sooner terminated
at any time by either party, with or without Cause (as defined below), such
termination to be effective as of ninety (90) days after written notice to that
effect is delivered to the other party; provided that either party may provide
the other party with notice that the term of this Agreement shall not renew, in
which case this Agreement shall terminate at the end of the then-current term of
this Agreement.  Notwithstanding any
other provision of this Section 1 to the contrary, this Agreement shall
automatically terminate upon Executive’s attainment of age sixty-five (65).

 

Section 1.                                          Employment
Duties.  During the term of this Agreement, Executive
will serve as the Chief Financial Officer of the Bank and its holding company,
subject to the terms of this Agreement and to the direction of the President of
the Bank. Executive shall perform such duties commensurate with his position
and title as are reasonable and customary, including, but not limited to
personnel matters, expense control, interest income, non-interest income, all
regulatory and financial reporting, auditing and internal controls and
procedures and shall, on a full-time basis, serve the Bank faithfully,
diligently and competently and to the best of his ability.

 

Section 2.                                          Compensation.  In exchange for Executive’s services as Chief
Financial Officer, Executive shall be compensated as follows:

 

(a)                                  The Bank shall pay Executive an
annual base salary for 2005 of $81,637.00 (the “Base Salary”).  The Base Salary
shall be adjusted on January 1, 2006 and annually thereafter, pursuant to the
normal compensation practices of the Bank but shall not be less than either the
previous year’s Base Salary or the base salary (exclusive of bonuses and other
incentive compensation)  of the mean for
a chief financial officer of an independent bank in region 3  in Illinois as reported in the most recent
Illinois Banker’s Association Annual Survey. The Base Salary shall be payable
in accordance with the Bank’s ordinary payment practices and shall be subject
to withholding and employment taxes.

 

(b)                                 Executive shall continue to
participate in the employee bonus plan and shall remain a participant in the “Impact
Group” for allocation of bonuses under the plan, as that plan is constituted
and as amended from time to time.  The
Bank may

 

 

adjust the
allocation, as necessary, to accommodate non-operating fluctuations in book
value.

 

(c)                                  Executive may, at the discretion
of the board, be granted stock options or other and further compensation.

 

(d)                                 Executive has been included in
the Bank’s supplemental Executive Retirement Program (SERP), which is partially
funded with certain “bank-owned life insurance” (BOLI) policies, and shall
continue to be included in that plan, as heretofore established by the board of
directors and as may be amended or modified by them in the future.

 

Section 3.                                          Benefits.

 

(a)                                  Executive also shall be entitled
to participate in all coverages, including life, health, and disability
insurance and employee benefit plans and programs as offered from time to time
to executive officers of the Bank 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.

 

(b)                                 Executive shall be entitled to
paid vacation in accordance with Bank policies applicable to its executive
officers.

 

(c)                                  The Bank shall pay reasonable
expenses related to Executive’s participation in business and business-related
social events and for such club, community and professional association dues
and expenses that Executive and the President of the Bank agree are in the best
interests of the Bank.

 

Section 4.                                          Restrictive
Covenants.  Executive
acknowledges and agrees that in the course of his employment he will learn
valuable trade secrets and other proprietary information, and that the Bank
would be irreparably damaged if Executive were to use or disclose such
information and/or to provide services to any person or entity in violation of
the restrictions contained in this Agreement. 
Accordingly, Executive agrees that during the term of this Agreement and
for twelve (12) months thereafter (the “Restricted Period”), Executive
shall not, directly or indirectly, either for himself or for any other person
or entity:

 

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

 

(b)                                 Directly or indirectly solicit
or attempt to solicit business from any customer of the Bank with which
Executive has had contact during the six (6) months prior to

 

2

 

Executive’s termination
of employment with the Bank for the purpose of having such customer or other
business relation of the Bank to cease doing business with the Bank; or

 

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

 

Section 5.                                          Confidential
Information.  Executive
recognizes that, as a result of his employment by the Bank, he will gain
possession of Confidential Information as defined below. Accordingly, Executive
agrees as follows:

 

(a)                                  Executive shall not at any time
during or after termination of this Agreement, in any form or manner, whether
directly or indirectly, disclose or communicate any Confidential Information to
any third party, or otherwise utilize any Confidential Information for
Executive’s benefit or for the benefit of any third party. For purposes of this
Agreement, “Confidential Information” shall include, any financial data,
business plans and strategies, and lists of actual or potential customers of
the Bank and information concerning relationships therewith, any of which (i)
derives independent economic value, actual or potential, from not being
generally known to the public and (ii) is the subject of efforts that are
reasonably under the circumstances to maintain its secrecy. “Confidential
information” shall also include any information concerning a third party that has
been disclosed to the Bank in confidence which the Bank has an obligation to
treat as confidential.

 

(b)                                 Executive shall, immediately
following a request from the Bank, return to the Bank, without retaining
copies, all tangible items of Bank property which are or which contain
Confidential Information. Executive shall destroy any Confidential Information
stored in electronic, magnetic, or other mechanical medium.

 

Section 6.                                          Specific
Performance.  Executive acknowledges that the restrictions
contained in Sections 5 and 6 are reasonable and necessary for the protection
of the legitimate business interests of the Bank and that any violation of
these restrictions would cause substantial injury to the Bank and would cause
irreparable harm to the Bank, and that the Bank would not have entered into
this Agreement with Executive without receiving the additional consideration
offered by the Executive in binding himself to these restrictions and that such
restrictions were a material inducement to the Bank to enter into this
Agreement.  By reason of the foregoing,
Executive consents and agrees that if he violates any provision of Section 5 or
6 of this Agreement, the Bank shall be entitled, in addition to any other
rights and remedies that it may have, to apply to any court of competent
jurisdiction for specific performance and/or injunctive or other equitable
relief in order to enforce, or prevent any continuing violation of, the
provisions of such Section. In the event Executive breaches Section 5 of this
Agreement and the Bank brings legal action for injunctive or other relief, the
Bank shall not, as a result of the time involved in obtaining such relief, be
deprived of the benefit of the full Restricted Period.  Accordingly, the Restricted Period shall be
deemed to have the duration specified in Section 5

 

3

 

computed from the date the relief
is granted but reduced by the time between the period when the Restricted
Period began to run and the date of the first violation of Section 5 by
Executive.

 

Section 7.                                          Enforcement.  Executive acknowledges that the territorial,
time and scope limitations set forth in Sections 5 and 6, as applicable, are
reasonable and are properly required for the protection of the Bank and in the
event that any such territorial, time or scope limitation is deemed to be
unseasonable by a court of competent jurisdiction, the Bank and Executive
agree, and Executive submits, to the reduction of any or all of said
territorial, time or scope limitations to such an area, period of scope as said
court shall deem reasonable and enforceable under the circumstances.

 

Section 8.                                          Termination;
Severance.  Notwithstanding the provisions of Section 1
and the other provisions of this Agreement, Executive’s employment with the
Bank and this Agreement may be terminated prior to the expiration of the
then-current term of this Agreement as follows:

 

(a)                                  For Cause.  The Bank may at any time terminate this
Agreement (provided that the provisions of Sections 5 and 6 shall survive the
termination of this Agreement) and Executive’s employment for Cause.  “Cause,”
is defined as (i) Executive’s conviction for, or plea of nolo contendere
to, a felony or crime involving moral turpitude; (ii) Executive’s
commission of an act involving self-dealing, fraud or personal profit that is
injurious to the Bank; (iii) Executive’s material failure to perform his
duties hereunder, and (iv) Executive’s breach of any material provision of
this Agreement. Any termination by the Bank under this Section 9(a) shall be in
writing. In the event of termination under this Section 9(a), the Bank’s
obligations under this Agreement shall cease, except that Executive shall be
entitled to his Base Salary for services performed through the date of such
termination.

 

(b)                                 Without Cause.  The Bank may at any time, terminate this
Agreement (provided that the provisions of Sections 5 and 6 shall survive the
termination of this Agreement) and Executive’s employment without Cause, upon
ninety (90) days’ written notice to Executive. In the event of termination
pursuant to this Section 9(b), Executive shall be entitled to his Base Salary
for what would have been the remainder of the then-current term of this
Agreement, which amounts shall be paid in equal installments over what would
have been the remainder of the term of this Agreement.

 

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

 

4

 

this Agreement shall
cease, except that Executive shall be entitled to his Base Salary for services
performed through the date of such termination.

 

(d)                                 Change of Control.  If a Change of Control, as defined below,
occurs and Executive’s employment is terminated by the Executive or the Bank
for any reason within ninety (90) days following the Change of Control, then
the Bank or its successor, as the case may be, shall pay Executive in one (1)
lump sum within five (5) business days following his termination of employment
two (2) times the sum of (i) his annual Base Salary as of the date of
termination (which amount shall be no less than the amount 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) years immediately preceding the
date of the Change of Control.  In
addition, the Bank or its successor, 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 to continuation of benefits thereunder.  For purposes of this Section 9(d) “Change of Control”  shall be defined as:

 

(i)            The consummation of the
acquisition by any person (as such term is defined in Section 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 fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Company; or

 

(ii)           The individuals who, as of the date hereof, are members of
the Board of Directors of 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 new director was approved
by a vote of a majority of the Holding Company Board, and such new director
shall, for purposes of this Agreement, be considered as a member of the Holding
Company Board; or

 

(iii)          Consummation of (1) a merger or consolidation if the
stockholders, immediately before such merger or consolidation, do not, as a
result of such merger or consolidation, own, directly or indirectly, more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of the entity resulting from such merger or consolidation, in
substantially the same proportion as their ownership of the combined voting
power of the voting securities outstanding immediately before such merger or consolidation
or (2) a complete liquidation or dissolution or an agreement for the sale or
other disposition of substantially all of the consolidated assets of the
Holding Company or the Board.

 

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

 

5

 

then
outstanding securities is acquired by (1) a trustee or other fiduciary holding
securities under one or more employee benefit plans maintained for employees of
the entity or (2) any corporation which, immediately prior to such acquisition,
is owned directly or indirectly by the stockholders in the same proportion as
their ownership of stock immediately prior to such acquisition.

 

(e)                                  Limitations on Severance.  It is the intention of the Bank and the
Executive that no portion of any payment under this Agreement, or payments to
or for the benefit of the Executive under any other agreement or plan, be
deemed to be an “Excess Parachute Payment” as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”),
or its successors. It is agreed that the present value of and payments to or
for the benefit of the Executive in the nature of compensation, receipt of
which is contingent on the Change of Control, and to which Section 280G of the
Code applies (in the aggregate “Total Payments”)
shall not exceed an amount equal to one dollar less than the maximum amount
which the Bank may pay without loss of deduction under Section 280G(a) of the
Code. Present value for purposes of this Agreement shall be calculated in
accordance with Section 280G(d)(4) of the Code. Within one hundred and twenty
(120) days following the earlier of (A) the giving of the notice of termination
or (B) the giving of notice by the Bank to the Executive of its belief that
there is a payment or benefit due the Executive which will result in an excess
parachute payment as defined in Section 280G of the Code, the Executive and the
Bank, at the Bank’s expense, shall obtain the opinion of such legal counsel and
certified public accountants as the Bank may choose (notwithstanding the fact
that such persons have acted or may also be acting as the legal counsel or
certified public accountants for the Bank), which opinions need not be
unqualified, which sets forth (A) the amount of the Base Period Income of the
Executive, (B) the present value of Total Payments and (C) the amount and
present value of any excess parachute payments. In the event that such opinions
determine that there would be an excess parachute payment, the payment
hereunder or any other payment determined by such counsel to be includable in
Total Payments shall be modified, reduced or eliminated as specified by the
Executive in writing delivered to the Bank within ninety (90) days of his
receipt of such opinions or, if the Executive fails to so notify the Bank, then
as the Bank shall reasonably determine, so that under the bases of calculation
set forth in such opinions there will be no excess parachute payment. The
provisions of this subparagraph, including the calculations, notices and
opinions provided for herein shall be based upon the conclusive presumption
that (A) the compensation and benefits provided for in Sections 3 and 4 hereof
and (B) any other compensation earned by the Executive pursuant to the Bank’s
compensation programs which would have been paid in any event, are reasonable
compensation for services rendered, even though the timing of such payment is
triggered by the Change of Control; provided, however, that in the event such
legal counsel so requests in connection with the opinion required by this
subparagraph, the Executive and the Bank shall obtain, at the Bank’s expense,
and the legal counsel may rely on in providing the opinion, the advice of a
firm of recognized executive compensation consultants as to the reasonableness
of any item of compensation to be received by the Executive. In

 

6

 

the event that the
provisions of Sections 280G and 4999 of the Code are repealed without
succession, this subparagraph shall be of no further force or effect.

 

Section 9.                                          Required
Provisions.

 

(a)                                  Regulatory Suspension and
Termination.

 

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

 

(ii)           If the Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank’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, all obligations of the Bank under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.

 

(iii)          If the Bank is in default as defined in Section 3(x) (12
U.S.C. § 1813(x)(1)) of the FDIA, all obligations of the Bank under this
contract shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties.

 

(iv)          All obligations of the Bank under this contract shall be
terminated, except to the extent determined that continuation of the contract
is necessary for the continued operation of the institution by the Federal
Deposit Insurance Corporation (the “FDIC”), at the time the FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) (12 U.S.C. § 1823(c)) of the FDIA, or when the
Corporation is determined by the Office of the Comptroller of the Currency or
the FDIC to be in an unsafe or unsound condition.  Any rights of the parties that have already
vested, however, shall not be affected by such action.

 

Section 10.                                   Prior
Business Relationships.  Executive represents that there are no claims
or actions, whether pending, threatened or potential, with respect to any of
his prior employment, independent contractor or other business relationships
that prevent him, or that would prevent him, from carrying out his duties under
this Agreement or that subjects the Bank to any potential or actual liability.
Executive agrees and understands that any such claim or action shall be
reviewed by the Bank and may be grounds for his termination of employment.

 

7

 

Notwithstanding the foregoing,
this Section 10 shall not prevent the Bank from pursuing any other remedy
available at law or in equity.

 

Section 11.                                   Miscellaneous.

 

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

 

If to Executive:

 

Vince Easi

4495 E. 2551

Leland, Illinois 60531

 

If to Bank

 

First National Bank of Ottawa

701 LaSalle Street

Ottawa, Illinois 61350

 

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

 

(b)                                 This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. No party shall assign this Agreement or its
rights hereunder without the prior written consent of the other party hereto;
provided, however, that the Bank will require any person or entity acquiring
all or substantially all of the business of the Bank (whether by sale of stock,
sale of assets, merger, consolidation or otherwise) to assume its obligations
pursuant to this Agreement upon closing.

 

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

 

(d)                                 No change or modification of
this Agreement shall be valid unless the same shall be in writing and signed by
the parties hereto. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the waiving party. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision, nor shall any waiver constitute a continuing waiver,
unless so provided in the waiver.

 

(e)                                  If any provision of this
Agreement (or portion thereof) shall, for any reason, be considered invalid or
unenforceable by any court of competent jurisdiction and such provision is not
subject to revision pursuant to Section 8, such provision (or

 

8

 

portion thereof) shall be ineffective only to
the extent of such invalidity or unenforceability, and the remaining provisions
of this Agreement (or portions thereof) shall nevertheless be valid,
enforceable and of full force and effect.

 

(f)                                    The section headings or titles
herein are for convenience of reference only and shall not be deemed a part of
this Agreement.

 

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

 

The parties have executed this Agreement on the date
first above written.

 

 

	
   

  	
  FIRST
  NATIONAL BANK OF OTTAWA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VINCE EASI

  
					

 

9

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