<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
---
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997
----------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission File Number 0-18301
-------
IROQUOIS BANCORP, INC.
----------------------
(Exact name of Registrant as specified in its charter)
NEW YORK 16-1351101
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
115 Genesee Street, Auburn, New York 13021
------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315) 252-9521
--------------
____________________________________________________________________
Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,373,438 shares of common
---------
stock on March 31, 1997.
<PAGE>
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996.................. 3
Condensed Consolidated Statements of Income -
Three Months Ended March 31, 1997 and 1996............ 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996............ 5-6
Notes to Condensed Consolidated Financial
Statements............................................ 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 8-10
PART II OTHER INFORMATION.................................... 11
SIGNATURES.................................................... 12
(2)
<PAGE>
ITEM 1. FINANCIAL INFORMATION
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 12,216 $ 10,375
Federal funds sold and interest-bearing
deposits with other financial institutions 2,000 300
Securities available for sale 48,050 43,895
Securities held to maturity 54,065 54,392
Loans receivable 348,735 348,463
Less allowance for loan losses 3,589 3,389
-------- --------
Loans receivable, net 345,146 345,074
Premises and equipment, net 7,121 7,114
Federal Home Loan Bank stock, at cost 2,434 2,279
Accrued interest receivable 3,705 3,571
Other assets 6,468 5,908
- ------------------------------------------------ -------- --------
Total Assets 481,205 472,908
================================================ ======== ========
LIABILITIES
Savings and time deposits $398,242 $385,288
Demand deposits 24,590 24,934
Borrowings 20,333 25,536
Accrued expenses and other liabilities 2,546 2,348
- ------------------------------------------------ -------- --------
Total Liabilities $445,711 $438,106
- ------------------------------------------------ -------- --------
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value,
3,000,000 shares authorized:
Series A - 30,059 and 30,957 shares
issued and outstanding in March 1997
and December 1996 respectively,
liquidation value $3,006 30 31
Series B - 18,652 and 19,082 shares
issued and outstanding in March 1997
and December 1996 respectively,
liquidation value $1,865 19 19
Common Stock $1.00 par value; 6,000,000 shares
authorized; 2,373,438 and 2,367,440 shares
issued and outstanding at March 31, 1997
and December 31, 1996, respectively 2,373 2,368
Additional paid-in capital 13,482 13,520
Retained earnings 20,193 19,260
Net unrealized gain(loss) on securities
available for sale (166) 56
Unallocated shares of Stock Ownership Plans (437) (452)
- ------------------------------------------------ -------- --------
Total Shareholders' Equity 35,494 34,802
- ------------------------------------------------ -------- --------
Total Liabilities and Shareholders' Equity $481,205 $472,908
================================================ ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(3)
<PAGE>
IROQUOIS BANCORP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
---------- -------
<S> <C> <C>
Interest Income:
Loans $7,447 7,110
Securities 1,628 1,372
Other 37 36
- ------------------------------------------ ------ -----
9,112 8,518
------ -----
Interest Expense:
Deposits 3,701 3,535
Borrowings 345 540
- ------------------------------------------ ------ -----
4,046 4,075
------ -----
Net Interest Income 5,066 4,443
Provision for loan losses 373 296
- ------------------------------------------ ------ -----
Net Interest Income after Provision
for Loan Losses 4,693 4,147
- ------------------------------------------ ------ -----
Non-Interest Income:
Service charges, commissions and fees 616 551
Net gain on sales of securities
and loans 30 2
Other 78 34
- ------------------------------------------ ------ -----
Total Non-Interest Income 724 587
- ------------------------------------------ ------ -----
Non-Interest Expense:
Salaries and employee benefits 1,813 1,583
Occupancy and equipment expenses 444 412
Computer and product service fees 317 221
Promotion and marketing expenses 74 82
Deposit insurance 24 50
Other 757 754
- ------------------------------------------ ------ -----
Total Non-Interest Expenses 3,429 3,102
- ------------------------------------------ ------ -----
Income Before Income Taxes 1,988 1,632
Income taxes 759 640
- ------------------------------------------ ------ -----
Net Income $1,229 992
Preferred stock dividend 108 118
- ------------------------------------------ ------ -----
Net income attributable to common stock $1,121 874
========================================== ====== =====
Net income per common share $.48 .38
========================================== ====== =====
Cash dividends declared $.08 .08
</TABLE>
See accompanying notes to condensed consolidated financial statements.
(4)
<PAGE>
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,229 992
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense,
provision for loan losses, deferred
taxes and other 475 329
Net (gain) loss on sale of securities
and loans (30) (2)
(Decrease) in accrued interest receivable
and other assets (489) (120)
Increase (decrease) in accrued expenses
and other liabilities 169 1,259
- --------------------------------------------- ------- -------
Net cash provided by operating activities 1,354 2,458
- --------------------------------------------- ------- -------
Cash flows from investing activities:
Proceeds from sales of securities available
for sale 891 --
Proceeds from maturities and redemptions
of securities available for sale 914 2,177
Proceeds from maturities and redemptions
of securities held to maturity 4,567 2,216
Purchases of securities available for sale (5,450) (3,633)
Purchases of securities held to maturity (5,106) (7,324)
Loans made to customers net of principal
payments received (649) (4,631)
Proceeds from sales of loans 375 976
Capital expenditures (156) (154)
Purchase of FHLB stock (156) (53)
Other - net (119) (2,435)
- --------------------------------------------- ------- -------
Net cash provided (used) by investing
activities (4,889) (12,861)
- --------------------------------------------- ------- -------
Cash flows from financing activities:
Net increase (decrease) in savings
accounts and demand deposits 9,452 (4,302)
Net increase in time deposits 3,159 (798)
Net (decrease) in borrowings and other
liabilities (5,203) 7,854
Proceeds from issuance of Common stock 89 101
Dividends paid (296) (305)
Redemption of Preferred stock (123) (24)
- --------------------------------------------- ------- -------
Net cash provided (used) by financing
activities 7,076 11,130
- --------------------------------------------- ------- -------
</TABLE>
(5)
<PAGE>
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended
March 31,
1997 1996
--------- -------
<S> <C> <C>
Net increase (decrease) in cash and
cash equivalents $ 3,541 727
Cash and cash equivalents at beginning of
period 10,675 12,390
- --------------------------------------------- ------- ------
Cash and cash equivalents at end of period 14,216 13,117
- --------------------------------------------- ------- ------
Supplemental disclosures of cash flow
=============================================
information:
Cash paid during the period for:
Interest 4,076 3,936
Income taxes 343 274
Supplemental schedule of non-cash investing
activities:
Loans to facilitate the sale of ORE 29 40
Additions to other real estate 94 707
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
(6)
<PAGE>
IROQUOIS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) Financial Statements
--------------------
The interim financial statements contained herein are unaudited, but in
the opinion of management of the Company, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the results of operations for these periods. The results
of operations for the interim periods are not necessarily indicative of the
results of operations for the full year.
2) Earnings Per Share
------------------
Net income per common share for 1997 and 1996 was calculated for the
respective periods by dividing net income applicable to common shares of
$1,121,000 in 1997 and $874,000 in 1996 by the weighted average number of
shares outstanding of 2,346,096 in 1997 and 2,314,374 in 1996. The
exercise of outstanding stock options was not considered in the calculation
because, if exercised, they would not materially affect earnings per share,
as presented.
3) Other Accounting Issues
-----------------------
In June 1996 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." SFAS 125 provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment of
liabilities occurring after December 31, 1996, and is based on consistent
application of a "financial components approach" that focuses on control.
The Statement provides consistent standards for distinguishing transfer of
financial assets that are sales from transfers that are secured borrowings.
In December 1996, FASB deferred for one year the effective date of SFAS 125
as it relates to transfers of financial assets and secured borrowings and
collateral. Effective January 1, 1997, the Company adopted SFAS 125 and
the adoption did not have a material impact on its financial condition or
results of operations.
In February 1997 the FASB issued SFAS No. 128, "Earnings per Share." SFAS
128 establishes standards for computing and presenting earnings per share
(EPS) and applies to entities with publicly held common stock or potential
common stock. SFAS 128 is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. Upon
adoption, prior period EPS will be restated to conform with the provisions
of SFAS 128. Management does not believe the adoption of SFAS 128 will
have a material impact on its financial condition or results of operation.
(7)
<PAGE>
IROQUOIS BANCORP, INC.
AND CONSOLIDATED SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO MARCH 31, 1996
- ------------------------------------------------------------
Net income for the three months ended March 31, 1997 was $1,229,000, or $.48 per
share, compared to net income of $992,000, or $.38 per share, for the three
months ended March 31, 1996.
Net interest income was $5,066,000 for the first quarter of 1997 compared to
$4,443,000 for the first quarter of 1996. Net interest spread improved to 4.36%
for the current quarter compared to 4.02% for the same quarter the year earlier.
The improvement in net interest spread reflected a decline in the Company's cost
of funds from 4.09% for the quarter ended March 31, 1996 to 3.76% for the
quarter ended March 31, 1997. The overall increase in net interest income
compared to the prior year quarter primarily reflects the Company's growth from
its May 1996 branch acquisition.
Interest income from investments and loans increased to $9.1 million for the
quarter ended March 31, 1997 compared to $8.5 million for the quarter ended
March 31, 1996. Average earning assets increased from $421.2 million for the
first quarter of 1996 to $450.8 million for the first quarter of 1997. Interest
expense remained relatively constant at approximately $4.1 million while average
costing liabilities increased from $403.6 million in 1996 to $435.0 million in
1997.
The loan loss provision increased from $296,000 for the first quarter of 1996 to
$373,000 for the first quarter of 1997. The increased provision reflects
additions to the allowance for loan losses consistent with the continued loan
growth and current levels of non-performing loans. The ratio of non-performing
loans to total loans decreased from 1.87% at March 31, 1996 to 1.13% at March
31, 1997. The ratio of non-performing assets to total assets also decreased
from 1.59% at the end of March 1996 to .91% at the end of March 1997.
Total non-interest income increased 23% to $724,000 for the quarter ended March
31, 1997 compared to the same period of 1996. Increases in loan and deposit
service fees, brokerage fees, and a $30,000 gain on the sale of securities
contributed to the growth in non-interest income.
(8)
<PAGE>
Total non-interest expense increased 23% to $3.4 million for the quarter ended
March 31, 1997 from $3.1 million for the quarter ending March 31, 1996. The
increase is primarily attributed to the additional expenses including salaries
and benefits and deposit premium amortization relating to the three branches
acquired in May 1996.
The provision for income taxes was $759,000 for the first quarter of 1997
compared to $640,000 for the first quarter of 1996, reflecting the increase in
income before taxes in 1997.
(9)
<PAGE>
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------------------------
Consolidated assets were $481.2 million at March 31, 1997, compared to $472.9
million at December 31, 1996.
Loans receivable at March 31, 1997 compared to December 31, 1996 remained
relatively constant at $345.1 million. Within the loan portfolio, residential
mortgage loans increased $820,000, commercial mortgage loans decreased $2.2
million, consumer loans increased $478,000, and commercial loans increased $1.2
million.
The allowance for loan losses increased from $3.4 million at December 31, 1996
to $3.6 million at March 31, 1997. The allowance for loan losses as a
percentage of total loans was .97% at December 31, 1996 and 1.03% at March 31,
1997. The allowance as a percentage of non-performing loans was 93.3% at
December 31, 1996 and 91.0% at March 31, 1997.
Securities held as available for sale increased from $43.9 million at December
31, 1996 to $48.1 million at March 31, 1997 while Federal Funds sold increased
from $300,000 to $2.0 million for the same time periods. The increase in
securities held as available for sale were primarily in U.S. Agencies which were
$3.8 million higher at the end of the first quarter of 1997 compared to year-end
1996.
Total deposits increased from $410.2 million to $422.8 million during the first
quarter of 1997. The increase was primarily in municipal deposits which
accounted for $20.8 million of deposits at the end of the quarter. As part of
its charter change effective January 1, 1997, Cayuga was able to begin accepting
municipal deposits. With the increase in deposits, total borrowings declined
from $25.3 million at year-end 1996 to $20.3 million at March 31, 1997. The
outstanding balance of term advances from the Federal Home Loan Bank of New York
("FHLBNY") increased $3.1 million while overnight draws against lines of credit
from FHLBNY decreased $8.3 million.
At March 31, 1997, Iroquois Bancorp, Inc. had total shareholders' equity of
$35.5 million compared to $34.8 million at December 31, 1996. The average
equity to assets ratio increased from 7.19% at December 31, 1996 to 7.34% at
March 31, 1997. The tangible equity to assets ratio ended the period March 31,
1997 at 6.79%.
As of March 31, 1997, the capital ratios of the Company and both of its banking
subsidiaries exceeded the capital ratio requirements of the "well capitalized"
category under the regulatory framework for prompt corrective actions.
At March 31, 1997, the Company held as available for sale short term liquid
assets including securities and loans of $50.1 million compared to $44.2 million
at December 31, 1996. The Company considers its current level of liquidity and
additional sources of funds as both sufficient and within acceptable ranges.
(10)
<PAGE>
IROQUOIS BANCORP, INC.
AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 10(A) Employment Agreement with Richard D. Callahan
Exhibit 10(B) Employment Agreement with Richard J.
Notebaert, Jr.
Exhibit 10(C) Employment Agreement with Marianne R. O'Connor
Exhibit 10(D) Employment Agreement with W. Anthony Shay, Jr.
Exhibit 10(E) Employment Agreement with Henry M. O'Reilly
Exhibit 10(F) Separation Agreement with James H. Paul
(11)
<PAGE>
IROQUOIS BANCORP, INC.
AND SUBSIDIARIES
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Iroquois Bancorp, Inc.
(Registrant)
Date: May 13, 1997 /s/Richard D. Callahan
-----------------------------
Richard D. Callahan
President & CEO
Date: May 13, 1997 /s/Marianne R. O'Connor
----------------------------
Marianne R. O'Connor
Treasurer & CFO
(12)
<PAGE>
EXHIBITS INDEX
Exhibit 10(A) Employment Agreement with Richard D. Callahan
Exhibit 10(B) Employment Agreement with Richard J. Notebaert, Jr.
Exhibit 10(C) Employment Agreement with Marianne R. O'Connor
Exhibit 10(D) Employment Agreement with W. Anthony Shay, Jr.
Exhibit 10(E) Employment Agreement with Henry M. O'Reilly
Exhibit 10(F) Separation Agreement with James H. Paul
<PAGE>
EXHIBIT 10(A)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 1ST day of JANUARY, 1997, by and
among Iroquois Bancorp, Inc., a New York corporation ("Iroquois"), CAYUGA
SAVINGS BANK ("Member Bank") (Iroquois and Member Bank each an "Employer" and
collectively, "Employers") and RICHARD CALLAHAN, a New York State resident (the
"Executive").
WHEREAS, the services of the Executive and the Executive's managerial
experience is of great value to the Employers; and
WHEREAS, the Employers and the Executive desire and agree to enter into
and/or continue the employment relationship by means of this Employment
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. EMPLOYMENT AND DUTIES.
(a) Iroquois and Member Bank each hereby employ the Executive as PRESIDENT
AND CEO of IROQUOIS BANCORP, with all the powers and duties customary to
such position in similar corporations and banking institutions, and the
Executive hereby accepts such employment. The Executive shall perform
such other duties and have such other powers and responsibilities as may
be assigned to the Executive by the Employers and which are commensurate
with the Executive's position. The Executive shall report directly to
the president/chief executive officer of Iroquois or such other
executive officer as the president/chief executive officer may designate
or to the board of directors of the Employers, as appropriate.
(b) During the term of this Agreement, the Executive shall devote his or her
entire time and attention to the business and affairs of the Employers
and shall do all that is reasonably in his or her power to promote,
develop, and extend the business of Iroquois and its affiliates. The
Executive shall at all times during employment hereunder, conduct
himself or herself faithfully and diligently in a manner consistent with
the position and shall not knowingly perform any act contrary to the
best interests of the Employers or any affiliate thereof.
2. TERM.
Unless sooner terminated as provided by Section 5 herein, the term of this
Agreement shall be one year commencing as of January 1, 1997. The term may be
renewed annually by affirmative action of the boards of directors of the
Employers upon the same terms and conditions and at such compensation level
determined appropriate by the boards of directors at the time of renewal.
Employers shall notify the Executive of the Employers' intention not to renew
this Agreement not
<PAGE>
less than thirty (30) days prior to expiration of the initial term of this
Agreement or any renewal of such term.
3. COMPENSATION.
(a) The annual base salary of the Executive during the initial term of this
Agreement shall be $211,000.00, subject to adjustment at the time of
renewal by the appropriate board of directors. The Executive will be
advised of any adjustment to base salary not later than forty-five (45)
days after the commencement of the renewal term. Any such adjustment in
base salary however, shall be made in the sole discretion of such board
of directors, and nothing herein contained shall be construed to provide
the Executive with any assurance that base salary will be increased upon
affirmative renewal of this Agreement.
(b) The Executive, if otherwise eligible under any particular program or
plan, shall participate in any bonus or incentive compensation plan,
stock purchase or stock option plan, profit sharing plan, retirement
plan, supplemental retirement plan or other plan or program designed for
or available generally to senior management of Iroquois and its
affiliates.
4. ADDITIONAL BENEFITS.
(a) The Executive shall be entitled to reimbursement of reasonable expenses
incurred in the performance of the duties required hereunder in
furtherance of the business of the Employers and affiliates of the
Employers, upon submission of appropriate invoices or vouchers
documenting such expenses and provided such expenditures were consistent
with the Employers' policies.
(b) The Executive shall be eligible for FOUR (4) weeks of paid vacation in
any calendar year, to be taken at such time or times as the Executive
shall elect in accordance with Employers' policies then in effect.
Unused vacation may not be accrued or carried over from year to year.
(c) The Executive shall be eligible to receive full salary during any period
of disability, subject to a limitation of eighteen (18) months of
continued salary and benefits with respect to any single disability. In
the event that the Executive is entitled to payments under any
disability insurance policy during such period of disability, the
aggregate payments from such disability insurance coverage and from the
Employers for salary and benefits shall not exceed an amount equal to
the Executive's full salary and benefits for such period.
(d) The Executive shall be eligible to participate in any Employer group
medical or hospitalization insurance plan and in any other fringe
benefit plan generally available to employees of the Employers. The
Executive shall also be entitled to special fringe benefits identified
on Schedule A attached hereto, which Schedule may be amended by such
board of directors at the time of renewal or such other time as the
boards of directors deem appropriate under the circumstances. The
foregoing benefits and special benefits described in clauses (a) through
(d) of this Section 4 shall be known collectively as the "Welfare
Benefits."
2
<PAGE>
5. TERMINATION.
(a) Termination Events: the Executive's employment shall terminate during
------------------
the term of this Agreement upon the occurrence of any of the following
events:
(i) the Executive's death;
(ii) termination by the Employers of the Executive's employment for
reasons of Disability (as hereinafter defined) upon fifteen (15)
days written notice to the Executive;
(iii) termination by the Employers of the Executive's employment for
Cause (as hereinafter defined) upon written notice to the
Executive;
(iv) termination by the Employers of the Executive's employment other
than for Cause (as hereinafter defined) upon thirty (30) days
written notice to the Executive; or
(v) resignation of the Executive.
(b) Termination Definitions: The following words and phrases shall have the
-----------------------
meanings indicated below:
(i) Disability. "Disability" shall mean the Executive's incapacity or
inability to further perform services contemplated under this
Agreement for a period of at least eighteen (18) months because
of an impairment of his or her physical or mental health so as to
make it impossible or impractical for the Executive to perform
the duties and responsibilities contemplated hereunder.
(ii) Cause. "Cause" shall mean personal dishonesty, willful or
negligent misconduct, breach of fiduciary duty, intentional
failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar
minor offenses) or court or administrative order, or any removal
or permanent prohibition of the Executive from participating in
the conduct or affairs of Iroquois or a Member Bank by an order
of any regulatory authority having jurisdiction.
(iii) Date of Termination. "Date of Termination" shall mean:
- with respect to termination due to the death or resignation of
the Executive, the date of death or resignation;
- with respect to termination due to Disability, fifteen (15)
days following the giving of notice as referred to in Section
5(a)(ii) above;
3
<PAGE>
- with respect to termination by the Employers for Cause, the
date notice is given to the Executive, as referred to in
Section 5(a)(iii) above;
- with respect to termination by the Employers other than for
Cause, thirty (30) days following the giving of notice as
referred to in Section 5(a)(iv) above.
(c) Employers' Obligations Upon Termination:
---------------------------------------
(i) Death. If the Executive's employment is terminated by reason of
the Executive's death during the term of this Agreement, this
Agreement shall terminate without further obligation to any legal
representative of the Executive, other than for any obligations
accrued prior to the Executive's death, which shall be payable
(in a lump sum) within thirty (30) days of the Date of
Termination. Notwithstanding such termination, the Executive's
legal representative shall be obligated to return Employer's
property pursuant to Section 7 herein.
(ii) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the term of this Agreement,
this Agreement shall terminate (with the exception of Section 7
herein) without further obligation to the Executive, other than
for any obligations accrued prior to the Executive's Date of
Termination, which shall be payable (in a lump sum) within thirty
(30) days of the Date of Termination.
(iii) Cause. If the Executive's employment is terminated for Cause
during the term of this Agreement, this Agreement shall terminate
(with the exception of Section 7 herein) without further
obligation to the Executive other than for any obligations
accrued prior to the Executive's Date of Termination.
(iv) Termination by the Employers other than for Cause. If, during the
term of this Agreement, the Executive's employment shall be
terminated by Employers other than for Cause, or for reasons
other than the Executive's death, Disability or voluntary
resignation, then the Executive shall be entitled to the benefits
provided below:
(A) The Employers shall pay to the Executive any accrued but
unpaid base salary through the Date of Termination.
(B) In lieu of any further base salary and annual incentive
payments for periods subsequent to the Date of
Termination, the Employers shall pay to the Executive,
within thirty (30) days of the Date of Termination, a cash
payment in an amount equal to 200% (hereinafter the
"Severance Percentage") of the sum of (x) the Executive's
annual base salary for the year in which the Executive is
terminated and the two years immediately preceding the
year of termination, divided by three, and (y) the
Executive's target annual incentive (under the Iroquois
Annual Management Incentive Compensation Plan) for the
year in which the Executive is terminated and the annual
incentive earned by the Executive over the two years
immediately preceding the year of termination, divided by
three.
(C) The Employers shall continue to provide the Executive with
Welfare
4
<PAGE>
Benefits in the amounts and upon the terms and
conditions present immediately prior to the Date of
Termination (and only to the extent the benefit is
permissible under such contract or plan), for a Severance
Period consisting of a number of months calculated based
on the Severance Percentage applicable to the Executive
where a Severance Percentage of 200% results in a
Severance Period of TWENTY FOUR (24) months (the
"Severance Period"); provided, however, that such Welfare
Benefits shall cease upon the Executive's becoming
eligible to receive substantially similar Welfare Benefits
from a new employer.
(D) For the period of months set forth in Schedule B attached,
the Employers shall reimburse all reasonable expenses (as
determined in the sole discretion of the appropriate board
of directors) incurred by the Executive for professional
outplacement services; provided, however, that such
reimbursement shall not exceed that percentage of the
Executive's annual base salary set forth in Schedule B and
that such reimbursement shall be discontinued once the
Executive attains employment in a position with duties,
responsibilities and level of compensation substantially
similar to his or her duties, responsibilities and level
of compensation with the Employers.
(v) Resignation. If the Executive's employment is terminated by
reason of the Executive's voluntary resignation during the term
of this Agreement, this Agreement shall terminate (with the
exception of Section 7 below) without further obligation to the
Executive, other than for any obligations accrued prior to the
Executive's resignation, which shall be payable (in a lump sum)
within thirty (30) days of the Date of Termination.
(d) In the event the Executive's employment is terminated for any reason
with either Iroquois or Member Bank, employment shall be terminated
automatically with both Employers unless the non-terminating Employer
shall agree in writing to continue the terms of this Agreement solely
between the Executive and such non-terminating Employer.
(e) In the event this Agreement is not renewed at the discretion of the
Board and without cause pursuant to Section 2 above, the Executive shall
be entitled to:
(i) the compensation and benefits described in Sections 3 and 4
above, for the remainder of the term of this Agreement; and
(ii) if the Executive is no longer employed by the Employers or any
affiliates of the Employers, those benefits described in
Subsections (A), (B), (C) and (D) of Section 5(c)(iv) above.
6. SUSPENSION.
If the Executive is suspended or temporarily prohibited from participating in
the conduct or the affairs of Iroquois or Member Bank by action of any
regulatory authority having jurisdiction, the obligations of the Employers under
this Agreement shall be suspended as of the date of service of
5
<PAGE>
written notice of such suspension by such regulatory agency, unless stayed by
appropriate proceedings. If the charges underlying such actions are dismissed,
the Executive shall be entitled to reinstatement and any compensation withheld
while the Employers' obligations under this Agreement were suspended.
7. CONFIDENTIAL INFORMATION AND BUSINESS MATERIALS.
(a) During the term of this Agreement and for a period of two years
following the termination or non-renewal of this Agreement, the
Executive agrees to receive confidential and proprietary information of
Employers and any affiliates in confidence, and not to disclose such
information to others except as authorized by the relevant Employer or
affiliate. Confidential and proprietary information shall mean
information not generally known to the public that is disclosed to the
Executive and is a consequence of employment by either Employer, whether
or not pursuant to this Agreement.
(b) The Executive further covenants and agrees that every document, computer
disc, computer software program, notation, record, diary, memorandum,
development, investigation, file, or the like, and any method or manner
of doing business of either Employer or any affiliate made or acquired
by the Executive during employment, is and shall be the sole and
exclusive property of such Employer or affiliate. The Executive will
deliver the same (and every copy, disc, abstract, summary or
reproduction of same made by or for the Executive or acquired by the
Executive) whenever either Employer may so require and in any event
prior to or at the termination of said employment.
(c) Employers and the Executive hereby acknowledge that the restrictions
stated herein above are reasonably necessary for the protection of
Employers' legitimate proprietary interests and Employers may enforce
such provisions through action for specific performance.
8. CHANGE OF CONTROL.
(a) In the event the Executive's employment is terminated for any reason
(whether by the Employers or the Executive), other than for Cause,
within twenty-four (24) months following a Change Of Control (as defined
in Section 8(b) below), then:
(i) The Employers shall pay the Executive, within thirty (30) days
after the Date of Termination:
(A) any accrued but unpaid base salary earned through the Date
of Termination; and
(B) a pro-rata incentive award in an amount equal to the
product of (x) the target incentive amount which the
Executive could earn for the year in which the Date of
Termination occurs pursuant to the Iroquois Annual
Management Incentive Plan, and (y) a fraction, the
numerator of which is the number of days in the fiscal
year through the Date of Termination, and the denominator
of which is 365; and
6
<PAGE>
(C) a lump-sum cash payment equal to 2.99 times the sum of:
(x) the Executive's base salary immediately preceding the
Date of Termination, or immediately preceding the Change
of Control, whichever is greater, and (y) the average
annual incentive received by the Executive during the
three years immediately preceding the Date of Termination
(such cash payment being in lieu of any further base
salary and annual incentive payments the Executive may
have been entitled to pursuant to this Agreement).
(ii) The Employer shall continue all Welfare Benefits received by the
Executive for the Severance Period; provided, however, that such
Welfare Benefits shall cease upon the Executive becoming eligible
to receive substantially similar benefits from a new employer.
(iii) For the period of months set forth in Schedule B attached, the
Employers shall reimburse all reasonable expenses (as determined
in the sole discretion of the appropriate board of directors)
incurred by the Executive for professional outplacement services;
provided, however, that such reimbursement shall not exceed that
percentage of the Executive's annual base salary set forth in
Schedule B and that such reimbursement shall be discontinued once
the Executive attains employment in a position with duties,
responsibilities and level of compensation substantially similar
to his or her duties, responsibilities and level of compensation
with the Employers.
(b) For the purposes of this Agreement, a "Change Of Control" shall mean:
(i) any "person," including a "group" as determined in accordance with
the Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of Iroquois representing 20% or more of the combined voting
power of the then outstanding securities of Iroquois; (ii) as a result
of, or in connection with, any tender offer or exchange offer, merger or
other business combination (a "Transaction"), the persons who were
directors of Iroquois before the Transaction shall cease to constitute a
majority of the board of directors of Iroquois or any successor of
Iroquois, (iii) Iroquois is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 80%
of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
shareholders of Iroquois, other than (A) affiliates within the meaning
of the Exchange Act, or (B) any party to the merger or consolidation;
(iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of Iroquois representing 20% or more of the
combined voting power of Iroquois' then outstanding voting securities;
or (v) Iroquois transfers substantially all of its assets to another
corporation which is not controlled by Iroquois.
(c) Iroquois agrees that during the term of this Agreement, any options
granted to the Executive under the 1988 Stock Option Plan, as amended,
or the 1996 Stock Option Plan, as amended, or any other similar plan
subsequently instituted by the Employers (collectively the "Plans"),
shall provide that the Executive may, upon a Change Of Control of
Iroquois, and without regard to any restrictions on exercise that may
otherwise apply, within twelve (12) months of the date the Executive
receives written notice of such Change Of Control, (i) surrender such
option or options for a cash payment equal to the difference between the
7
<PAGE>
aggregate option exercise price and the aggregate fair market value of
the shares of stock subject to the option as such fair market value is
determined in accordance with the Plan, or (ii) exercise such option or
options, whether or not such options are exercisable pursuant to the
terms of the Plans.
(d) Notwithstanding anything contained in this Agreement to the contrary, to
the extent that the payments and benefits provided under this Agreement
or provided for the benefit of the Executive under any other plan or
agreement of or with the Employers (each such payment of benefit, a
"Payment," and such payments and benefits collectively, the "Payments"),
would be subject to the excise tax imposed under Sections 4999 and 280G
of the Internal Revenue Code, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties are hereinafter collectively referred to as the "Excise Tax"),
the Payments shall be reduced to the maximum amount which may be paid so
that no such Payment shall be subject to the Excise Tax. If necessary,
the Employers shall reduce or eliminate the Payments by first reducing
or eliminating the payments due under Section 8(a)(i)(B) above, then by
reducing or eliminating the amounts payable under Section 8(a)(i)(C),
and then by reducing or eliminating benefits which are not payable in
cash, in each case, in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the date of the
Termination.
9. COMPLIANCE WITH LAWS.
Any payments made to the Executive pursuant to this Agreement, or otherwise, by
Iroquois or a Member Bank, are subject to and conditioned upon compliance with
all federal and state laws and regulations as may be applicable at the time to
Iroquois, the Member Bank or any other affiliate for which the Executive has
been assigned direct duties or responsibilities, including without limitation,
Section 18(k) of the Federal Deposit Insurance Act.
10. BINDING EFFECT; BENEFITS.
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, except that insofar as the Executive is concerned, this
Agreement, being personal, cannot be assigned.
11. NOTICES.
All notices and other communications which are required or permitted hereunder
shall be in writing and shall be sufficient if delivered or mailed by registered
or certified mail, postage prepaid, to the following addresses or such other
address as any party hereto shall have specified by a notice in writing to the
other parties hereto:
If to the Executive: Richard Callahan
4 Prentiss Drive
Skaneateles, New York 13152
8
<PAGE>
If to Iroquois: Iroquois Bancorp, Inc.
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
If to Member Bank: Cayuga Savings Bank
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
All such notices and communications shall be deemed to have been received on the
date of delivery thereof or the fifth business day after the mailing thereof,
whichever is earlier. A copy of any notice to either Iroquois or to Member Bank
shall be sent promptly by the Executive to the other.
12. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties hereto and
supersedes all other discussions and understandings, oral or written, between
the parties hereto with respect to the subject matter hereof.
13. AMENDMENT AND WAIVERS.
This Agreement may not be modified or amended except by an instrument or
instruments in writing signed by the party against whom enforcement or any such
modification or amendment is sought. The waiver by any party hereto of a breach
of any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach.
14. SECTION AND OTHER HEADINGS.
This section and other headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
control or affect the meaning or construction of any provision of this
Agreement.
15. SEVERABILITY.
If any term or provision of this Agreement is held or deemed to be invalid or
unenforceable, in whole or in part, by a court of competent jurisdiction, this
Agreement shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforeceable the remaining terms
and provisions of this Agreement.
9
<PAGE>
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of
the date first above written.
IROQUOIS BANCORP, INC.
By: /s/ Joseph P. Ganey /s/ Richard D. Callahan
---------------------------------- ----------------------------
Its: Chairman of the Board [the Executive]
Member Bank
By: /s/ Joseph P. Ganey
-----------------------------------
Its: Chairman of the Board
11
<PAGE>
SCHEDULE A
In accordance with Section 4(d) of the Agreement, the Executive shall be
entitled to the following "special fringe benefits" in addition to his or her
regular benefits:
1) Annual club membership to the Owasco Country Club
2) Personal income taxes prepared annually by Peat Marwick
3) Bi-annual physical examination per the Iroquois Bancorp Executive
Physical Examination Policy
4) Annual club membership to the Century Club
<PAGE>
SCHEDULE B
In accordance with Sections 5(c)(iv)(C) and 8(a)(iii) of the Agreement, the
Executive shall be entitled, based upon his or her position, to the
reimbursement of outplacement expenses for the number of months set forth in the
table below and up to the percentage (also set forth below) of the Executive's
annual base salary immediately preceding his or her Date of Termination:
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
POSITION MONTHS BASE SALARY
- --------------------------------------------------------------------------------
Chief Executive Officers of
Iroquois and Member Banks 12 15%
<PAGE>
EXHIBIT 10(B)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 1ST day of JANUARY, 1997, by and
among Iroquois Bancorp, Inc., a New York corporation ("Iroquois"), THE HOMESTEAD
SAVINGS ("Member Bank") (Iroquois and Member Bank each an "Employer" and
collectively, "Employers") and RICHARD NOTEBAERT, a New York State resident (the
"Executive").
WHEREAS, the services of the Executive and the Executive's managerial
experience is of great value to the Employers; and
WHEREAS, the Employers and the Executive desire and agree to enter into
and/or continue the employment relationship by means of this Employment
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. EMPLOYMENT AND DUTIES.
(a) Iroquois and Member Bank each hereby employ the Executive as PRESIDENT
AND CEO of THE HOMESTEAD SAVINGS, with all the powers and duties
customary to such position in similar corporations and banking
institutions, and the Executive hereby accepts such employment. The
Executive shall perform such other duties and have such other powers and
responsibilities as may be assigned to the Executive by the Employers
and which are commensurate with the Executive's position. The Executive
shall report directly to the president/chief executive officer of
Iroquois or such other executive officer as the president/chief
executive officer may designate or to the board of directors of the
Employers, as appropriate.
(b) During the term of this Agreement, the Executive shall devote his or her
entire time and attention to the business and affairs of the Employers
and shall do all that is reasonably in his or her power to promote,
develop, and extend the business of Iroquois and its affiliates. The
Executive shall at all times during employment hereunder, conduct
himself or herself faithfully and diligently in a manner consistent with
the position and shall not knowingly perform any act contrary to the
best interests of the Employers or any affiliate thereof.
2. TERM.
Unless sooner terminated as provided by Section 5 herein, the term of this
Agreement shall be one year commencing as of January 1, 1997. The term may be
renewed annually by affirmative action of the boards of directors of the
Employers upon the same terms and conditions and at such compensation level
determined appropriate by the boards of directors at the time of renewal.
Employers shall notify the Executive of the Employers' intention not to renew
this Agreement not
<PAGE>
less than thirty (30) days prior to expiration of the initial term of this
Agreement or any renewal of such term.
3. COMPENSATION.
(a) The annual base salary of the Executive during the initial term of this
Agreement shall be $121,000.00, subject to adjustment at the time of
renewal by the appropriate board of directors. The Executive will be
advised of any adjustment to base salary not later than forty-five (45)
days after the commencement of the renewal term. Any such adjustment in
base salary however, shall be made in the sole discretion of such board
of directors, and nothing herein contained shall be construed to provide
the Executive with any assurance that base salary will be increased upon
affirmative renewal of this Agreement.
(b) The Executive, if otherwise eligible under any particular program or
plan, shall participate in any bonus or incentive compensation plan,
stock purchase or stock option plan, profit sharing plan, retirement
plan, supplemental retirement plan or other plan or program designed for
or available generally to senior management of Iroquois and its
affiliates.
4. ADDITIONAL BENEFITS.
(a) The Executive shall be entitled to reimbursement of reasonable expenses
incurred in the performance of the duties required hereunder in
furtherance of the business of the Employers and affiliates of the
Employers, upon submission of appropriate invoices or vouchers
documenting such expenses and provided such expenditures were consistent
with the Employers' policies.
(b) The Executive shall be eligible for FOUR (4) weeks of paid vacation in
any calendar year, to be taken at such time or times as the Executive
shall elect in accordance with Employers' policies then in effect.
Unused vacation may not be accrued or carried over from year to year.
(c) The Executive shall be eligible to receive full salary during any period
of disability, subject to a limitation of eighteen (18) months of
continued salary and benefits with respect to any single disability. In
the event that the Executive is entitled to payments under any
disability insurance policy during such period of disability, the
aggregate payments from such disability insurance coverage and from the
Employers for salary and benefits shall not exceed an amount equal to
the Executive's full salary and benefits for such period.
(d) The Executive shall be eligible to participate in any Employer group
medical or hospitalization insurance plan and in any other fringe
benefit plan generally available to employees of the Employers. The
Executive shall also be entitled to special fringe benefits identified
on Schedule A attached hereto, which Schedule may be amended by such
board of directors at the time of renewal or such other time as the
boards of directors deem appropriate under the circumstances. The
foregoing benefits and special benefits described in clauses (a) through
(d) of this Section 4 shall be known collectively as the "Welfare
Benefits."
2
<PAGE>
5. TERMINATION.
(a) Termination Events: the Executive's employment shall terminate during
------------------
the term of this Agreement upon the occurrence of any of the following
events:
(i) the Executive's death;
(ii) termination by the Employers of the Executive's employment for
reasons of Disability (as hereinafter defined) upon fifteen (15)
days written notice to the Executive;
(iii) termination by the Employers of the Executive's employment for
Cause (as hereinafter defined) upon written notice to the
Executive;
(iv) termination by the Employers of the Executive's employment other
than for Cause (as hereinafter defined) upon thirty (30) days
written notice to the Executive; or
(v) resignation of the Executive.
(b) Termination Definitions: The following words and phrases shall have the
-----------------------
meanings indicated below:
(i) Disability. "Disability" shall mean the Executive's incapacity or
inability to further perform services contemplated under this
Agreement for a period of at least eighteen (18) months because
of an impairment of his or her physical or mental health so as to
make it impossible or impractical for the Executive to perform
the duties and responsibilities contemplated hereunder.
(ii) Cause. "Cause" shall mean personal dishonesty, willful or
negligent misconduct, breach of fiduciary duty, intentional
failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar
minor offenses) or court or administrative order, or any removal
or permanent prohibition of the Executive from participating in
the conduct or affairs of Iroquois or a Member Bank by an order
of any regulatory authority having jurisdiction.
(iii) Date of Termination. "Date of Termination" shall mean:
- with respect to termination due to the death or resignation of
the Executive, the date of death or resignation;
- with respect to termination due to Disability, fifteen (15)
days following the giving of notice as referred to in Section
5(a)(ii) above;
- with respect to termination by the Employers for Cause, the
date notice is given to the Executive, as referred to in
Section 5(a)(iii) above;
3
<PAGE>
- with respect to termination by the Employers other than for
Cause, thirty (30) days following the giving of notice as
referred to in Section 5(a)(iv) above.
(c) Employers' Obligations Upon Termination:
---------------------------------------
(i) Death. If the Executive's employment is terminated by reason of
the Executive's death during the term of this Agreement, this
Agreement shall terminate without further obligation to any legal
representative of the Executive, other than for any obligations
accrued prior to the Executive's death, which shall be payable
(in a lump sum) within thirty (30) days of the Date of
Termination. Notwithstanding such termination, the Executive's
legal representative shall be obligated to return Employer's
property pursuant to Section 7 herein.
(ii) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the term of this Agreement,
this Agreement shall terminate (with the exception of Section 7
herein) without further obligation to the Executive, other than
for any obligations accrued prior to the Executive's Date of
Termination, which shall be payable (in a lump sum) within thirty
(30) days of the Date of Termination.
(iii) Cause. If the Executive's employment is terminated for Cause
during the term of this Agreement, this Agreement shall terminate
(with the exception of Section 7 herein) without further
obligation to the Executive other than for any obligations
accrued prior to the Executive's Date of Termination.
(iv) Termination by the Employers other than for Cause. If, during the
term of this Agreement, the Executive's employment shall be
terminated by Employers other than for Cause, or for reasons
other than the Executive's death, Disability or voluntary
resignation, then the Executive shall be entitled to the benefits
provided below:
(A) The Employers shall pay to the Executive any accrued but
unpaid base salary through the Date of Termination.
(B) In lieu of any further base salary and annual incentive
payments for periods subsequent to the Date of
Termination, the Employers shall pay to the Executive,
within thirty (30) days of the Date of Termination, a cash
payment in an amount equal to 200% (hereinafter the
"Severance Percentage") of the sum of (x) the Executive's
annual base salary for the year in which the Executive is
terminated and the two years immediately preceding the
year of termination, divided by three, and (y) the
Executive's target annual incentive (under the Iroquois
Annual Management Incentive Compensation Plan) for the
year in which the Executive is terminated and the annual
incentive earned by the Executive over the two years
immediately preceding the year of termination, divided by
three.
(C) The Employers shall continue to provide the Executive with
Welfare
4
<PAGE>
Benefits in the amounts and upon the terms and
conditions present immediately prior to the Date of
Termination (and only to the extent the benefit is
permissible under such contract or plan), for a Severance
Period consisting of a number of months calculated based
on the Severance Percentage applicable to the Executive
where a Severance Percentage of 200% results in a
Severance Period of TWENTY FOUR (24) months (the
"Severance Period"); provided, however, that such Welfare
Benefits shall cease upon the Executive's becoming
eligible to receive substantially similar Welfare Benefits
from a new employer.
(D) For the period of months set forth in Schedule B attached,
the Employers shall reimburse all reasonable expenses (as
determined in the sole discretion of the appropriate board
of directors) incurred by the Executive for professional
outplacement services; provided, however, that such
reimbursement shall not exceed that percentage of the
Executive's annual base salary set forth in Schedule B and
that such reimbursement shall be discontinued once the
Executive attains employment in a position with duties,
responsibilities and level of compensation substantially
similar to his or her duties, responsibilities and level
of compensation with the Employers.
(v) Resignation. If the Executive's employment is terminated by
reason of the Executive's voluntary resignation during the term
of this Agreement, this Agreement shall terminate (with the
exception of Section 7 below) without further obligation to the
Executive, other than for any obligations accrued prior to the
Executive's resignation, which shall be payable (in a lump sum)
within thirty (30) days of the Date of Termination.
(d) In the event the Executive's employment is terminated for any reason
with either Iroquois or Member Bank, employment shall be terminated
automatically with both Employers unless the non-terminating Employer
shall agree in writing to continue the terms of this Agreement solely
between the Executive and such non-terminating Employer.
(e) In the event this Agreement is not renewed at the discretion of the
Board and without cause pursuant to Section 2 above, the Executive shall
be entitled to:
(i) the compensation and benefits described in Sections 3 and 4
above, for the remainder of the term of this Agreement; and
(ii) if the Executive is no longer employed by the Employers or any
affiliates of the Employers, those benefits described in
Subsections (A), (B), (C) and (D) of Section 5(c)(iv) above.
6. SUSPENSION.
If the Executive is suspended or temporarily prohibited from participating in
the conduct or the affairs of Iroquois or Member Bank by action of any
regulatory authority having jurisdiction, the obligations of the Employers under
this Agreement shall be suspended as of the date of service of
5
<PAGE>
written notice of such suspension by such regulatory agency, unless stayed by
appropriate proceedings. If the charges underlying such actions are dismissed,
the Executive shall be entitled to reinstatement and any compensation withheld
while the Employers' obligations under this Agreement were suspended.
7. CONFIDENTIAL INFORMATION AND BUSINESS MATERIALS.
(a) During the term of this Agreement and for a period of two years
following the termination or non-renewal of this Agreement, the
Executive agrees to receive confidential and proprietary information of
Employers and any affiliates in confidence, and not to disclose such
information to others except as authorized by the relevant Employer or
affiliate. Confidential and proprietary information shall mean
information not generally known to the public that is disclosed to the
Executive and is a consequence of employment by either Employer, whether
or not pursuant to this Agreement.
(b) The Executive further covenants and agrees that every document, computer
disc, computer software program, notation, record, diary, memorandum,
development, investigation, file, or the like, and any method or manner
of doing business of either Employer or any affiliate made or acquired
by the Executive during employment, is and shall be the sole and
exclusive property of such Employer or affiliate. The Executive will
deliver the same (and every copy, disc, abstract, summary or
reproduction of same made by or for the Executive or acquired by the
Executive) whenever either Employer may so require and in any event
prior to or at the termination of said employment.
(c) Employers and the Executive hereby acknowledge that the restrictions
stated herein above are reasonably necessary for the protection of
Employers' legitimate proprietary interests and Employers may enforce
such provisions through action for specific performance.
8. CHANGE OF CONTROL.
(a) In the event the Executive's employment is terminated for any reason
(whether by the Employers or the Executive), other than for Cause,
within twenty-four (24) months following a Change Of Control (as defined
in Section 8(b) below), then:
(i) The Employers shall pay the Executive, within thirty (30) days
after the Date of Termination:
(A) any accrued but unpaid base salary earned through the Date
of Termination; and
(B) a pro-rata incentive award in an amount equal to the
product of (x) the target incentive amount which the
Executive could earn for the year in which the Date of
Termination occurs pursuant to the Iroquois Annual
Management Incentive Plan, and (y) a fraction, the
numerator of which is the number of days in the fiscal
year through the Date of Termination, and the denominator
of which is 365; and
6
<PAGE>
(C) a lump-sum cash payment equal to 2.99 times the sum of:
(x) the Executive's base salary immediately preceding the
Date of Termination, or immediately preceding the Change
of Control, whichever is greater, and (y) the average
annual incentive received by the Executive during the
three years immediately preceding the Date of Termination
(such cash payment being in lieu of any further base
salary and annual incentive payments the Executive may
have been entitled to pursuant to this Agreement).
(ii) The Employer shall continue all Welfare Benefits received by the
Executive for the Severance Period; provided, however, that such
Welfare Benefits shall cease upon the Executive becoming eligible
to receive substantially similar benefits from a new employer.
(iii) For the period of months set forth in Schedule B attached, the
Employers shall reimburse all reasonable expenses (as determined
in the sole discretion of the appropriate board of directors)
incurred by the Executive for professional outplacement services;
provided, however, that such reimbursement shall not exceed that
percentage of the Executive's annual base salary set forth in
Schedule B and that such reimbursement shall be discontinued once
the Executive attains employment in a position with duties,
responsibilities and level of compensation substantially similar
to his or her duties, responsibilities and level of compensation
with the Employers.
(b) For the purposes of this Agreement, a "Change Of Control" shall mean:
(i) any "person," including a "group" as determined in accordance with
the Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of Iroquois representing 20% or more of the combined voting
power of the then outstanding securities of Iroquois; (ii) as a result
of, or in connection with, any tender offer or exchange offer, merger or
other business combination (a "Transaction"), the persons who were
directors of Iroquois before the Transaction shall cease to constitute a
majority of the board of directors of Iroquois or any successor of
Iroquois, (iii) Iroquois is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 80%
of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
shareholders of Iroquois, other than (A) affiliates within the meaning
of the Exchange Act, or (B) any party to the merger or consolidation;
(iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of Iroquois representing 20% or more of the
combined voting power of Iroquois' then outstanding voting securities;
or (v) Iroquois transfers substantially all of its assets to another
corporation which is not controlled by Iroquois.
(c) Iroquois agrees that during the term of this Agreement, any options
granted to the Executive under the 1988 Stock Option Plan, as amended,
or the 1996 Stock Option Plan, as amended, or any other similar plan
subsequently instituted by the Employers (collectively the "Plans"),
shall provide that the Executive may, upon a Change Of Control of
Iroquois, and without regard to any restrictions on exercise that may
otherwise apply, within twelve (12) months of the date the Executive
receives written notice of such Change Of Control, (i) surrender such
option or options for a cash payment equal to the difference between the
7
<PAGE>
aggregate option exercise price and the aggregate fair market value of
the shares of stock subject to the option as such fair market value is
determined in accordance with the Plan, or (ii) exercise such option or
options, whether or not such options are exercisable pursuant to the
terms of the Plans.
(d) Notwithstanding anything contained in this Agreement to the contrary, to
the extent that the payments and benefits provided under this Agreement
or provided for the benefit of the Executive under any other plan or
agreement of or with the Employers (each such payment of benefit, a
"Payment," and such payments and benefits collectively, the "Payments"),
would be subject to the excise tax imposed under Sections 4999 and 280G
of the Internal Revenue Code, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties are hereinafter collectively referred to as the "Excise Tax"),
the Payments shall be reduced to the maximum amount which may be paid so
that no such Payment shall be subject to the Excise Tax. If necessary,
the Employers shall reduce or eliminate the Payments by first reducing
or eliminating the payments due under Section 8(a)(i)(B) above, then by
reducing or eliminating the amounts payable under Section 8(a)(i)(C),
and then by reducing or eliminating benefits which are not payable in
cash, in each case, in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the date of the
Termination.
9. COMPLIANCE WITH LAWS.
Any payments made to the Executive pursuant to this Agreement, or otherwise, by
Iroquois or a Member Bank, are subject to and conditioned upon compliance with
all federal and state laws and regulations as may be applicable at the time to
Iroquois, the Member Bank or any other affiliate for which the Executive has
been assigned direct duties or responsibilities, including without limitation,
Section 18(k) of the Federal Deposit Insurance Act.
10. BINDING EFFECT; BENEFITS.
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, except that insofar as the Executive is concerned, this
Agreement, being personal, cannot be assigned.
11. NOTICES.
All notices and other communications which are required or permitted hereunder
shall be in writing and shall be sufficient if delivered or mailed by registered
or certified mail, postage prepaid, to the following addresses or such other
address as any party hereto shall have specified by a notice in writing to the
other parties hereto:
If to the Executive: Richard Notebaert
11 Barley Mow Run
New Hartford, New York 13413
8
<PAGE>
If to Iroquois: Iroquois Bancorp, Inc.
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
If to Member Bank: The Homestead Savings
283 Genesee Street
Utica, New York 13501
Attn: Chairman- Compensation and
Benefits Committee
All such notices and communications shall be deemed to have been received on the
date of delivery thereof or the fifth business day after the mailing thereof,
whichever is earlier. A copy of any notice to either Iroquois or to Member Bank
shall be sent promptly by the Executive to the other.
12. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties hereto and
supersedes all other discussions and understandings, oral or written, between
the parties hereto with respect to the subject matter hereof.
13. AMENDMENT AND WAIVERS.
This Agreement may not be modified or amended except by an instrument or
instruments in writing signed by the party against whom enforcement or any such
modification or amendment is sought. The waiver by any party hereto of a breach
of any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach.
14. SECTION AND OTHER HEADINGS.
This section and other headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
control or affect the meaning or construction of any provision of this
Agreement.
15. SEVERABILITY.
If any term or provision of this Agreement is held or deemed to be invalid or
unenforceable, in whole or in part, by a court of competent jurisdiction, this
Agreement shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforeceable the remaining terms
and provisions of this Agreement.
9
<PAGE>
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of
the date first above written.
IROQUOIS BANCORP, INC.
By: /s/ Richard D. Callahan /s/ Richard J. Notebaert, Jr.
--------------------------------- -------------------------------
Its: President & CEO [the Executive]
Member Bank
By: /s/ Edward D. Peterson
---------------------------------
Its:
11
<PAGE>
SCHEDULE A
In accordance with Section 4(d) of the Agreement, the Executive shall be
entitled to the following "special fringe benefits" in addition to his or her
regular benefits:
1) Annual club membership to the Yahnundasis Country Club
2) Annual club membership to the Fort Schuyler Club
3) Bi-annual physical examination per the Iroquois Bancorp Executive
Physical Examination Policy
<PAGE>
SCHEDULE B
In accordance with Sections 5(c)(iv)(C) and 8(a)(iii) of the Agreement, the
Executive shall be entitled, based upon his or her position, to the
reimbursement of outplacement expenses for the number of months set forth in the
table below and up to the percentage (also set forth below) of the Executive's
annual base salary immediately preceding his or her Date of Termination:
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
POSITION MONTHS BASE SALARY
- --------------------------------------------------------------------------------
Chief Executive Officers of
Iroquois and Member Banks 12 15%
<PAGE>
EXHIBIT 10(C)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 1ST day of JANUARY, 1997, by and
among Iroquois Bancorp, Inc., a New York corporation ("Iroquois"), CAYUGA
SAVINGS BANK ("Member Bank") (Iroquois and Member Bank each an "Employer" and
collectively, "Employers") and MARIANNE O'CONNOR, a New York State resident (the
"Executive").
WHEREAS, the services of the Executive and the Executive's managerial
experience is of great value to the Employers; and
WHEREAS, the Employers and the Executive desire and agree to enter into
and/or continue the employment relationship by means of this Employment
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. EMPLOYMENT AND DUTIES.
(a) Iroquois and Member Bank each hereby employ the Executive as TREASURER
AND CHIEF FINANCIAL OFFICER of CAYUGA SAVINGS BANK, with all the powers
and duties customary to such position in similar corporations and
banking institutions, and the Executive hereby accepts such employment.
The Executive shall perform such other duties and have such other powers
and responsibilities as may be assigned to the Executive by the
Employers and which are commensurate with the Executive's position. The
Executive shall report directly to the president/chief executive officer
of Iroquois or such other executive officer as the president/chief
executive officer may designate or to the board of directors of the
Employers, as appropriate.
(b) During the term of this Agreement, the Executive shall devote his or her
entire time and attention to the business and affairs of the Employers
and shall do all that is reasonably in his or her power to promote,
develop, and extend the business of Iroquois and its affiliates. The
Executive shall at all times during employment hereunder, conduct
himself or herself faithfully and diligently in a manner consistent with
the position and shall not knowingly perform any act contrary to the
best interests of the Employers or any affiliate thereof.
2. TERM.
Unless sooner terminated as provided by Section 5 herein, the term of this
Agreement shall be one year commencing as of January 1, 1997. The term may be
renewed annually by affirmative action of the boards of directors of the
Employers upon the same terms and conditions and at such compensation level
determined appropriate by the boards of directors at the time of renewal.
Employers shall notify the Executive of the Employers' intention not to renew
this Agreement not
<PAGE>
less than thirty (30) days prior to expiration of the initial term of this
Agreement or any renewal of such term.
3. COMPENSATION.
(a) The annual base salary of the Executive during the initial term of this
Agreement shall be $100,800.00, subject to adjustment at the time of
renewal by the appropriate board of directors. The Executive will be
advised of any adjustment to base salary not later than forty-five (45)
days after the commencement of the renewal term. Any such adjustment in
base salary however, shall be made in the sole discretion of such board
of directors, and nothing herein contained shall be construed to provide
the Executive with any assurance that base salary will be increased upon
affirmative renewal of this Agreement.
(b) The Executive, if otherwise eligible under any particular program or
plan, shall participate in any bonus or incentive compensation plan,
stock purchase or stock option plan, profit sharing plan, retirement
plan, supplemental retirement plan or other plan or program designed for
or available generally to senior management of Iroquois and its
affiliates.
4. ADDITIONAL BENEFITS.
(a) The Executive shall be entitled to reimbursement of reasonable expenses
incurred in the performance of the duties required hereunder in
furtherance of the business of the Employers and affiliates of the
Employers, upon submission of appropriate invoices or vouchers
documenting such expenses and provided such expenditures were consistent
with the Employers' policies.
(b) The Executive shall be eligible for FOUR (4) weeks of paid vacation in
any calendar year, to be taken at such time or times as the Executive
shall elect in accordance with Employers' policies then in effect.
Unused vacation may not be accrued or carried over from year to year.
(c) The Executive shall be eligible to receive full salary during any period
of disability, subject to a limitation of eighteen (18) months of
continued salary and benefits with respect to any single disability. In
the event that the Executive is entitled to payments under any
disability insurance policy during such period of disability, the
aggregate payments from such disability insurance coverage and from the
Employers for salary and benefits shall not exceed an amount equal to
the Executive's full salary and benefits for such period.
(d) The Executive shall be eligible to participate in any Employer group
medical or hospitalization insurance plan and in any other fringe
benefit plan generally available to employees of the Employers. The
Executive may also be entitled to special fringe benefits, if
applicable, as identified on Schedule A attached hereto, which Schedule
may be amended by the appropriate board of directors at the time of
renewal or such other time as such boards of directors deem appropriate
under the circumstances. The foregoing benefits and special benefits
described in clauses (a) through (d) of this Section 4 shall be known
collectively as the "Welfare Benefits."
2
<PAGE>
5. TERMINATION.
(a) Termination Events: the Executive's employment shall terminate during
------------------
the term of this Agreement upon the occurrence of any of the following
events:
(i) the Executive's death;
(ii) termination by the Employers of the Executive's employment for
reasons of Disability (as hereinafter defined) upon fifteen (15)
days written notice to the Executive;
(iii) termination by the Employers of the Executive's employment for
Cause (as hereinafter defined) upon written notice to the
Executive;
(iv) termination by the Employers of the Executive's employment other
than for Cause (as hereinafter defined) upon thirty (30) days
written notice to the Executive; or
(v) resignation of the Executive.
(b) Termination Definitions: The following words and phrases shall have the
-----------------------
meanings indicated below:
(i) Disability. "Disability" shall mean the Executive's incapacity or
inability to further perform services contemplated under this
Agreement for a period of at least eighteen (18) months because
of an impairment of his or her physical or mental health so as to
make it impossible or impractical for the Executive to perform
the duties and responsibilities contemplated hereunder.
(ii) Cause. "Cause" shall mean personal dishonesty, willful or
negligent misconduct, breach of fiduciary duty, intentional
failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar
minor offenses) or court or administrative order, or any removal
or permanent prohibition of the Executive from participating in
the conduct or affairs of Iroquois or a Member Bank by an order
of any regulatory authority having jurisdiction.
(iii) Date of Termination. "Date of Termination" shall mean:
- with respect to termination due to the death or resignation of
the Executive, the date of death or resignation;
- with respect to termination due to Disability, fifteen (15)
days following the giving of notice as referred to in Section
5(a)(ii) above;
- with respect to termination by the Employers for Cause, the
date notice is given to the Executive, as referred to in
Section 5(a)(iii) above;
3
<PAGE>
- with respect to termination by the Employers other than for
Cause, thirty (30) days following the giving of notice as
referred to in Section 5(a)(iv) above.
(c) Employers' Obligations Upon Termination:
---------------------------------------
(i) Death. If the Executive's employment is terminated by reason of
the Executive's death during the term of this Agreement, this
Agreement shall terminate without further obligation to any legal
representative of the Executive, other than for any obligations
accrued prior to the Executive's death, which shall be payable
(in a lump sum) within thirty (30) days of the Date of
Termination. Notwithstanding such termination, the Executive's
legal representative shall be obligated to return Employer's
property pursuant to Section 7 herein.
(ii) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the term of this Agreement,
this Agreement shall terminate (with the exception of Section 7
herein) without further obligation to the Executive, other than
for any obligations accrued prior to the Executive's Date of
Termination, which shall be payable (in a lump sum) within thirty
(30) days of the Date of Termination.
(iii) Cause. If the Executive's employment is terminated for Cause
during the term of this Agreement, this Agreement shall terminate
(with the exception of Section 7 herein) without further
obligation to the Executive other than for any obligations
accrued prior to the Executive's Date of Termination.
(iv) Termination by the Employers other than for Cause. If, during the
term of this Agreement, the Executive's employment shall be
terminated by Employers other than for Cause, or for reasons
other than the Executive's death, Disability or voluntary
resignation, then the Executive shall be entitled to the benefits
provided below:
(A) The Employers shall pay to the Executive any accrued but
unpaid base salary through the Date of Termination.
(B) In lieu of any further base salary and annual incentive
payments for periods subsequent to the Date of
Termination, the Employers shall pay to the Executive,
within thirty (30) days of the Date of Termination, a cash
payment in an amount equal to 100 percent (hereinafter the
"Severance Percentage") of the sum of (x) the Executive's
annual base salary for the year in which the Executive is
terminated and the two years immediately preceding the
year of termination, divided by three, and (y) the
Executive's target annual incentive (under the Iroquois
Annual Management Incentive Compensation Plan) for the
year in which the Executive is terminated and the annual
incentive earned by the Executive over the two years
immediately preceding the year of termination, divided by
three.
4
<PAGE>
(C) The Employers shall continue to provide the Executive with
Welfare Benefits in the amounts and upon the terms and
conditions present immediately prior to the Date of
Termination (and only to the extent the benefit is
permissible under such contract or plan), for a Severance
Period consisting of a number of months calculated based
on the Severance Percentage applicable to the Executive
where a Severance Percentage of 100% results in a
Severance Period of TWELVE (12) months (the "Severance
Period"); provided, however, that such Welfare Benefits
shall cease upon the Executive's becoming eligible to
receive substantially similar Welfare Benefits from a new
employer.
(D) For the period of months set forth in Schedule B attached,
the Employers shall reimburse all reasonable expenses (as
determined in the sole discretion of the appropriate board
of directors) incurred by the Executive for professional
outplacement services; provided, however, that such
reimbursement shall not exceed that percentage of the
Executive's annual base salary set forth in Schedule B and
that such reimbursement shall be discontinued once the
Executive attains employment in a position with duties,
responsibilities and level of compensation substantially
similar to his or her duties, responsibilities and level
of compensation with the Employers.
(v) Resignation. If the Executive's employment is terminated by
reason of the Executive's voluntary resignation during the term
of this Agreement, this Agreement shall terminate (with the
exception of Section 7 herein) without further obligation to the
Executive, other than for any obligations accrued prior to the
Executive's resignation, which shall be payable (in a lump sum)
within thirty (30) days of the Date of Termination.
(d) In the event the Executive's employment is terminated for any reason
with either Iroquois or Member Bank, employment shall be terminated
automatically with both Employers unless the non-terminating Employer
shall agree in writing to continue the terms of this Agreement solely
between the Executive and such non-terminating Employer.
(e) In the event this Agreement is not renewed at the discretion of the
Board and without cause pursuant to Section 2 above, the Executive shall
be entitled to:
(i) the compensation and benefits described in Sections 3 and 4
above, for the remainder of the term of this Agreement; and
(ii) if the Executive is no longer employed by the Employers or any
affiliates of the Employers, those benefits described in
Subsections (A), (B), (C) and (D) of Section 5(c)(iv) above.
6. SUSPENSION.
If the Executive is suspended or temporarily prohibited from participating in
the conduct or the
5
<PAGE>
affairs of Iroquois or Member Bank by action of any regulatory authority having
jurisdiction, the obligations of the Employers under this Agreement shall be
suspended as of the date of service of written notice of such suspension by such
regulatory agency, unless stayed by appropriate proceedings. If the charges
underlying such actions are dismissed, the Executive shall be entitled to
reinstatement and any compensation withheld while the Employers' obligations
under this Agreement were suspended.
7. CONFIDENTIAL INFORMATION AND BUSINESS MATERIALS.
(a) During the term of this Agreement and for a period of two years
following the termination or non-renewal of this Agreement, the
Executive agrees to receive confidential and proprietary information of
Employers and any affiliates in confidence, and not to disclose such
information to others except as authorized by the relevant Employer or
affiliate. Confidential and proprietary information shall mean
information not generally known to the public that is disclosed to the
Executive and is a consequence of employment by either Employer, whether
or not pursuant to this Agreement.
(b) The Executive further covenants and agrees that every document, computer
disc, computer software program, notation, record, diary, memorandum,
development, investigation, file, or the like, and any method or manner
of doing business of either Employer or any affiliate made or acquired
by the Executive during employment, is and shall be the sole and
exclusive property of such Employer or affiliate. The Executive will
deliver the same (and every copy, disc, abstract, summary or
reproduction of same made by or for the Executive or acquired by the
Executive) whenever either Employer may so require and in any event
prior to or at the termination of said employment.
(c) Employers and the Executive hereby acknowledge that the restrictions
stated herein above are reasonably necessary for the protection of
Employers' legitimate proprietary interests and Employers may enforce
such provisions through action for specific performance.
8. CHANGE OF CONTROL.
(a) In the event the Executive's employment is terminated (x) by the
Employers for any reason other than for Cause, death or Disability, or
(y) by the Executive for Good Reason (as defined in Section 8(d) below),
within twenty-four (24) months following a Change Of Control (as defined
in Section 8(b) below, or (z) by the Executive for any reason during the
thirty (30) day period beginning on the first anniversary of a Change of
Control, then:
(i) The Employers shall pay the Executive, within thirty (30) days
after the Date of Termination:
(A) any accrued but unpaid base salary earned through the Date
of Termination; and
(B) a pro-rata incentive award in an amount equal to the
product of (x) the target
6
<PAGE>
incentive amount which the Executive could earn for the
year in which the Date of Termination occurs pursuant to
the Iroquois Annual Management Incentive Plan, and (y) a
fraction, the numerator of which is the number of days in
the fiscal year through the Date of Termination, and the
denominator of which is 365; and
(C) a lump-sum cash payment equal to 2.99 times the sum of:
(x) the Executive's base salary immediately preceding the
Date of Termination, or immediately preceding the Change
of Control, whichever is greater, and (y) the average
annual incentive received by the Executive during the
three years immediately preceding the Date of Termination
(such cash payment being in lieu of any further base
salary and annual incentive payments the Executive may
have been entitled to pursuant to this Agreement).
(ii) The Employer shall continue all Welfare Benefits received by the
Executive for the Severance Period; provided, however, that such
Welfare Benefits shall cease upon the Executive becoming eligible
to receive substantially similar benefits from a new employer.
(iii) For the period of months set forth in Schedule B attached, the
Employers shall reimburse all reasonable expenses (as determined
in the sole discretion of the appropriate board of directors)
incurred by the Executive for professional outplacement services;
provided, however, that such reimbursement shall not exceed that
percentage of the Executive's annual base salary set forth in
Schedule B and that such reimbursement shall be discontinued once
the Executive attains employment in a position with duties,
responsibilities and level of compensation substantially similar
to his or her duties, responsibilities and level of compensation
with the Employers.
(b) For the purposes of this Agreement, a "Change Of Control" shall mean:
(i) any "person," including a "group" as determined in accordance with
the Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of Iroquois representing 20% or more of the combined voting
power of the then outstanding securities of Iroquois; (ii) as a result
of, or in connection with, any tender offer or exchange offer, merger or
other business combination (a "Transaction"), the persons who were
directors of Iroquois before the Transaction shall cease to constitute a
majority of the board of directors of Iroquois or any successor of
Iroquois, (iii) Iroquois is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 80%
of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
shareholders of Iroquois, other than (A) affiliates within the meaning
of the Exchange Act, or (B) any party to the merger or consolidation;
(iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of Iroquois representing 20% or more of the
combined voting power of Iroquois' then outstanding voting securities;
or (v) Iroquois transfers substantially all of its assets to another
corporation which is not controlled by Iroquois.
(c) Iroquois agrees that during the term of this Agreement, any options
granted to the Executive
7
<PAGE>
under the 1988 Stock Option Plan, as amended, or the 1996 Stock Option
Plan, as amended, or any other similar plan subsequently instituted by
the Employers (collectively the "Plans"), shall provide that the
Executive may, upon a Change Of Control of Iroquois, and without regard
to any restrictions on exercise that may otherwise apply, within twelve
(12) months of the date the Executive receives written notice of such
Change Of Control, (i) surrender such option or options for a cash
payment equal to the difference between the aggregate option exercise
price and the aggregate fair market value of the shares of stock subject
to the option, as such fair market value is determined in accordance
with the Plan, or (ii) exercise such option or options, whether or not
such options are exercisable pursuant to the terms of the Plans.
(d) For purposes of this Section 8, "Good Reason" shall mean:
(i) assignment to the Executive of any duties inconsistent with his
or her status as an executive officer of Iroquois or a Member
Bank, or a substantial adverse alteration in the nature or status
of the Executive's responsibilities from those in effect
immediately prior to the Change Of Control;
(ii) reduction of the Executive's base salary as in effect immediately
preceding the Change of Control, or any reduction in the
Executive's normative incentive award percentage or any change in
the method for applying the normative incentive award percentage
to determine the Executive's incentive award, which would
materially reduce such incentive award;
(iii) failure by the Employers to continue to provide the Executive
with Welfare Benefits substantially similar to those received by
the Executive immediately preceding the Change of Control; or
(iv) the relocation of the Employers principal executive offices and
the principal offices occupied by the Executive more than a
reasonable distance from their current location.
In the event the Executive terminates employment for Good Reason, the
Date of Termination shall mean the date on which the Executive notifies
the Employers of such termination.
(e) Notwithstanding anything contained in this Agreement to the contrary, to
the extent that the payments and benefits provided under this Agreement
or provided for the benefit of the Executive under any other plan or
agreement of or with the Employers (each such payment of benefit, a
"Payment," and such payments and benefits collectively, the "Payments"),
would be subject to the excise tax imposed under Sections 4999 and 280G
of the Internal Revenue Code, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties are hereinafter collectively referred to as the "Excise Tax"),
the Payments shall be reduced to the maximum amount which may be paid so
that no such Payment shall be subject to the Excise Tax. If necessary,
the Employers shall reduce or eliminate the Payments by first reducing
or eliminating the payments due under Section 8(a)(i)(B) above, then by
reducing or eliminating the amounts payable under
8
<PAGE>
Section 8(a)(i)(C), and then by reducing or eliminating benefits which
are not payable in cash, in each case, in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the
Date of the Termination.
9. COMPLIANCE WITH LAWS.
Any payments made to the Executive pursuant to this Agreement, or otherwise, by
Iroquois or a Member Bank, are subject to and conditioned upon compliance with
all federal and state laws and regulations as may be applicable at the time to
Iroquois, the Member Bank or any other affiliate for which the Executive has
been assigned direct duties or responsibilities, including without limitation,
Section 18(k) of the Federal Deposit Insurance Act.
10. BINDING EFFECT; BENEFITS.
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, except that insofar as the Executive is concerned, this
Agreement, being personal, cannot be assigned.
11. NOTICES.
All notices and other communications which are required or permitted hereunder
shall be in writing and shall be sufficient if delivered or mailed by registered
or certified mail, postage prepaid, to the following addresses or such other
address as any party hereto shall have specified by a notice in writing to the
other parties hereto:
If to the Executive: Marianne O'Connor
2131 Sarr Road Box 401
Weedsport, New York 13166
If to Iroquois: Iroquois Bancorp, Inc.
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
If to Member Bank: Cayuga Savings Bank
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
All such notices and communications shall be deemed to have been received on the
date of delivery thereof or the fifth business day after the mailing thereof,
whichever is earlier. A copy of any notice to either Iroquois or to Member Bank
shall be sent promptly by the Executive to the other.
9
<PAGE>
12. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties hereto and
supersedes all other discussions and understandings, oral or written, between
the parties hereto with respect to the subject matter hereof.
13. AMENDMENT AND WAIVERS.
This Agreement may not be modified or amended except by an instrument or
instruments in writing signed by the party against whom enforcement or any such
modification or amendment is sought. The waiver by any party hereto of a breach
of any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach.
14. SECTION AND OTHER HEADINGS.
This section and other headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
control or affect the meaning or construction of any provision of this
Agreement.
15. SEVERABILITY.
If any term or provision of this Agreement is held or deemed to be invalid or
unenforceable, in whole or in part, by a court of competent jurisdiction, this
Agreement shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforeceable the remaining terms
and provisions of this Agreement.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of
the date first above written.
IROQUOIS BANCORP, INC.
By: /s/ Richard D. Callahan /s/ Marianne R. O'Connor
------------------------------ -------------------------------
Its: President & CEO [the Executive]
Member Bank
By: /s/ Richard D. Callahan
-------------------------------
Its: President & CEO
11
<PAGE>
SCHEDULE A
In accordance with Section 4(d) of the Agreement, the Executive shall be
entitled to the following "special fringe benefits" in addition to his or her
regular benefits:
1) Bi-annual physical examination per the Iroquois Bancorp Physical
Examination Policy
<PAGE>
SCHEDULE B
In accordance with Sections 5(c)(iv)(C) and 8(a)(iii) of the Agreement, the
Executive shall be entitled, based upon his or her position, to the
reimbursement of outplacement expenses for the number of months set forth in the
table below and up to the percentage (also set forth below) of the Executive's
annual base salary immediately preceding his or her Date of Termination:
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
POSITION MONTHS BASE SALARY
- --------------------------------------------------------------------------------
Chief Financial Officer of
Iroquois Bank 12 12%
<PAGE>
EXHIBIT 10(D)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 1ST day of JANUARY, 1997, by and
among Iroquois Bancorp, Inc., a New York corporation ("Iroquois"), CAYUGA
SAVINGS BANK ("Member Bank") (Iroquois and Member Bank each an "Employer" and
collectively, "Employers") and ANTHONY Shay, a New York State resident (the
"Executive").
WHEREAS, the services of the Executive and the Executive's managerial
experience is of great value to the Employers; and
WHEREAS, the Employers and the Executive desire and agree to enter into
and/or continue the employment relationship by means of this Employment
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. EMPLOYMENT AND DUTIES.
(a) Iroquois and Member Bank each hereby employ the Executive as VICE
PRESIDENT, OPERATIONS AND SUPPORT SERVICES of CAYUGA SAVINGS BANK, with
all the powers and duties customary to such position in similar
corporations and banking institutions, and the Executive hereby accepts
such employment. The Executive shall perform such other duties and have
such other powers and responsibilities as may be assigned to the
Executive by the Employers and which are commensurate with the
Executive's position. The Executive shall report directly to the
president/chief executive officer of Iroquois or such other executive
officer as the president/chief executive officer may designate or to the
board of directors of the Employers, as appropriate.
(b) During the term of this Agreement, the Executive shall devote his or her
entire time and attention to the business and affairs of the Employers
and shall do all that is reasonably in his or her power to promote,
develop, and extend the business of Iroquois and its affiliates. The
Executive shall at all times during employment hereunder, conduct
himself or herself faithfully and diligently in a manner consistent with
the position and shall not knowingly perform any act contrary to the
best interests of the Employers or any affiliate thereof.
2. TERM.
Unless sooner terminated as provided by Section 5 herein, the term of this
Agreement shall be one year commencing as of January 1, 1997. The term may be
renewed annually by affirmative action of the boards of directors of the
Employers upon the same terms and conditions and at such compensation level
determined appropriate by the boards of directors at the time of renewal.
Employers shall notify the Executive of the Employers' intention not to renew
this Agreement not less than thirty (30) days prior to expiration of the initial
term of this Agreement or any renewal of such term.
3. COMPENSATION.
(a) The annual base salary of the Executive during the initial term of this
Agreement shall be $85,300.00, subject to adjustment at the time of
renewal by the appropriate board of directors.
1
<PAGE>
The Executive will be advised of any adjustment to base salary not later
than forty-five (45) days after the commencement of the renewal term.
Any such adjustment in base salary however, shall be made in the sole
discretion of such board of directors, and nothing herein contained
shall be construed to provide the Executive with any assurance that base
salary will be increased upon affirmative renewal of this Agreement.
(b) The Executive, if otherwise eligible under any particular program or
plan, shall participate in any bonus or incentive compensation plan,
stock purchase or stock option plan, profit sharing plan, retirement
plan, supplemental retirement plan or other plan or program designed for
or available generally to senior management of Iroquois and its
affiliates.
4. ADDITIONAL BENEFITS.
(a) The Executive shall be entitled to reimbursement of reasonable expenses
incurred in the performance of the duties required hereunder in
furtherance of the business of the Employers and affiliates of the
Employers, upon submission of appropriate invoices or vouchers
documenting such expenses and provided such expenditures were consistent
with the Employers' policies.
(b) The Executive shall be eligible for FOUR (4) weeks of paid vacation in
any calendar year, to be taken at such time or times as the Executive
shall elect in accordance with Employers' policies then in effect.
Unused vacation may not be accrued or carried over from year to year.
(c) The Executive shall be eligible to receive full salary during any period
of disability, subject to a limitation of eighteen (18) months of
continued salary and benefits with respect to any single disability. In
the event that the Executive is entitled to payments under any
disability insurance policy during such period of disability, the
aggregate payments from such disability insurance coverage and from the
Employers for salary and benefits shall not exceed an amount equal to
the Executive's full salary and benefits for such period.
(d) The Executive shall be eligible to participate in any Employer group
medical or hospitalization insurance plan and in any other fringe
benefit plan generally available to employees of the Employers. The
Executive may also be entitled to special fringe benefits, if
applicable, as identified on Schedule A attached hereto, which Schedule
may be amended by the appropriate board of directors at the time of
renewal or such other time as such boards of directors deem appropriate
under the circumstances. The foregoing benefits and special benefits
described in clauses (a) through (d) of this Section 4 shall be known
collectively as the "Welfare Benefits."
2
<PAGE>
5. TERMINATION.
(a) Termination Events: the Executive's employment shall terminate during
------------------
the term of this Agreement upon the occurrence of any of the following
events:
(i) the Executive's death;
(ii) termination by the Employers of the Executive's employment for
reasons of Disability (as hereinafter defined) upon fifteen (15)
days written notice to the Executive;
(iii) termination by the Employers of the Executive's employment for
Cause (as hereinafter defined) upon written notice to the
Executive;
(iv) termination by the Employers of the Executive's employment other
than for Cause (as hereinafter defined) upon thirty (30) days
written notice to the Executive; or
(v) resignation of the Executive.
(b) Termination Definitions: The following words and phrases shall have the
-----------------------
meanings indicated below:
(i) Disability. "Disability" shall mean the Executive's incapacity or
inability to further perform services contemplated under this
Agreement for a period of at least eighteen (18) months because
of an impairment of his or her physical or mental health so as to
make it impossible or impractical for the Executive to perform
the duties and responsibilities contemplated hereunder.
(ii) Cause. "Cause" shall mean personal dishonesty, willful or
negligent misconduct, breach of fiduciary duty, intentional
failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar
minor offenses) or court or administrative order, or any removal
or permanent prohibition of the Executive from participating in
the conduct or affairs of Iroquois or a Member Bank by an order
of any regulatory authority having jurisdiction.
(iii) Date of Termination. "Date of Termination" shall mean:
- with respect to termination due to the death or resignation of
the Executive, the date of death or resignation;
- with respect to termination due to Disability, fifteen (15)
days following the giving of notice as referred to in Section
5(a)(ii) above;
- with respect to termination by the Employers for Cause, the
date notice is given to the Executive, as referred to in
Section 5(a)(iii) above;
- with respect to termination by the Employers other than for
Cause, thirty (30) days following the giving of notice as
referred to in Section 5(a)(iv) above.
(c) Employers' Obligations Upon Termination:
---------------------------------------
(i) Death. If the Executive's employment is terminated by reason of
the Executive's death during the term of this Agreement, this
Agreement shall terminate without
3
<PAGE>
further obligation to any legal representative of the Executive,
other than for any obligations accrued prior to the Executive's
death, which shall be payable (in a lump sum) within thirty (30)
days of the Date of Termination. Notwithstanding such
termination, the Executive's legal representative shall be
obligated to return Employer's property pursuant to Section 7
herein.
(ii) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the term of this Agreement,
this Agreement shall terminate (with the exception of Section 7
herein) without further obligation to the Executive, other than
for any obligations accrued prior to the Executive's Date of
Termination, which shall be payable (in a lump sum) within thirty
(30) days of the Date of Termination.
(iii) Cause. If the Executive's employment is terminated for Cause
during the term of this Agreement, this Agreement shall terminate
(with the exception of Section 7 herein) without further
obligation to the Executive other than for any obligations
accrued prior to the Executive's Date of Termination.
(iv) Termination by the Employers other than for Cause. If, during the
term of this Agreement, the Executive's employment shall be
terminated by Employers other than for Cause, or for reasons
other than the Executive's death, Disability or voluntary
resignation, then the Executive shall be entitled to the benefits
provided below:
(A) The Employers shall pay to the Executive any accrued but
unpaid base salary through the Date of Termination.
(B) In lieu of any further base salary and annual incentive
payments for periods subsequent to the Date of
Termination, the Employers shall pay to the Executive,
within thirty (30) days of the Date of Termination, a cash
payment in an amount equal to 50 percent (hereinafter the
"Severance Percentage") of the sum of (x) the Executive's
annual base salary for the year in which the Executive is
terminated and the two years immediately preceding the
year of termination, divided by three, and (y) the
Executive's target annual incentive (under the Iroquois
Annual Management Incentive Compensation Plan) for the
year in which the Executive is terminated and the annual
incentive earned by the Executive over the two years
immediately preceding the year of termination, divided by
three.
(C) The Employers shall continue to provide the Executive with
Welfare Benefits in the amounts and upon the terms and
conditions present immediately prior to the Date of
Termination (and only to the extent the benefit is
permissible under such contract or plan), for a Severance
Period consisting of a number of months calculated based
on the Severance Percentage applicable to the Executive
where a Severance Percentage of 50% results in a Severance
Period of SIX (6) months (the "Severance Period");
provided, however, that such Welfare Benefits shall cease
upon the Executive's becoming eligible to receive
substantially similar Welfare Benefits from a new
employer.
(D) For the period of months set forth in Schedule B attached,
the Employers shall reimburse all reasonable expenses (as
determined in the sole discretion of the appropriate board
of directors) incurred by the Executive for professional
4
<PAGE>
outplacement services; provided, however, that such
reimbursement shall not exceed that percentage of the
Executive's annual base salary set forth in Schedule B and
that such reimbursement shall be discontinued once the
Executive attains employment in a position with duties,
responsibilities and level of compensation substantially
similar to his or her duties, responsibilities and level
of compensation with the Employers.
(v) Resignation. If the Executive's employment is terminated by
reason of the Executive's voluntary resignation during the term
of this Agreement, this Agreement shall terminate (with the
exception of Section 7 herein) without further obligation to the
Executive, other than for any obligations accrued prior to the
Executive's resignation, which shall be payable (in a lump sum)
within thirty (30) days of the Date of Termination.
(d) In the event the Executive's employment is terminated for any reason
with either Iroquois or Member Bank, employment shall be terminated
automatically with both Employers unless the non-terminating Employer
shall agree in writing to continue the terms of this Agreement solely
between the Executive and such non-terminating Employer.
(e) In the event this Agreement is not renewed at the discretion of the
Board and without cause pursuant to Section 2 above, the Executive shall
be entitled to:
(i) the compensation and benefits described in Sections 3 and 4
above, for the remainder of the term of this Agreement; and
(ii) if the Executive is no longer employed by the Employers or any
affiliates of the Employers, those benefits described in
Subsections (A), (B), (C) and (D) of Section 5(c)(iv) above.
6. SUSPENSION.
If the Executive is suspended or temporarily prohibited from participating in
the conduct or the affairs of Iroquois or Member Bank by action of any
regulatory authority having jurisdiction, the obligations of the Employers under
this Agreement shall be suspended as of the date of service of written notice of
such suspension by such regulatory agency, unless stayed by appropriate
proceedings. If the charges underlying such actions are dismissed, the Executive
shall be entitled to reinstatement and any compensation withheld while the
Employers' obligations under this Agreement were suspended.
5
<PAGE>
7. CONFIDENTIAL INFORMATION AND BUSINESS MATERIALS.
(a) During the term of this Agreement and for a period of two years
following the termination or non-renewal of this Agreement, the
Executive agrees to receive confidential and proprietary information of
Employers and any affiliates in confidence, and not to disclose such
information to others except as authorized by the relevant Employer or
affiliate. Confidential and proprietary information shall mean
information not generally known to the public that is disclosed to the
Executive and is a consequence of employment by either Employer, whether
or not pursuant to this Agreement.
(b) The Executive further covenants and agrees that every document, computer
disc, computer software program, notation, record, diary, memorandum,
development, investigation, file, or the like, and any method or manner
of doing business of either Employer or any affiliate made or acquired
by the Executive during employment, is and shall be the sole and
exclusive property of such Employer or affiliate. The Executive will
deliver the same (and every copy, disc, abstract, summary or
reproduction of same made by or for the Executive or acquired by the
Executive) whenever either Employer may so require and in any event
prior to or at the termination of said employment.
(c) Employers and the Executive hereby acknowledge that the restrictions
stated herein above are reasonably necessary for the protection of
Employers' legitimate proprietary interests and Employers may enforce
such provisions through action for specific performance.
8. CHANGE OF CONTROL.
(a) In the event the Executive's employment is terminated (x) by the
Employers for any reason other than for Cause, death or Disability, or
(y) by the Executive for Good Reason (as defined in Section 8(d) below),
within twenty-four (24) months following a Change Of Control (as defined
in Section 8(b) below, or (z) by the Executive for any reason during the
thirty (30) day period beginning on the first anniversary of a Change of
Control, then:
(i) The Employers shall pay the Executive, within thirty (30) days
after the Date of Termination:
(A) any accrued but unpaid base salary earned through the Date
of Termination; and
(B) a pro-rata incentive award in an amount equal to the
product of (x) the target incentive amount which the
Executive could earn for the year in which the Date of
Termination occurs pursuant to the Iroquois Annual
Management Incentive Plan, and (y) a fraction, the
numerator of which is the number of days in the fiscal
year through the Date of Termination, and the denominator
of which is 365; and
(C) a lump-sum cash payment equal to 2.99 times the sum of:
(x) the Executive's base salary immediately preceding the
Date of Termination, or immediately preceding the Change
of Control, whichever is greater, and (y) the average
annual incentive received by the Executive during the
three years immediately preceding the Date of Termination
(such cash payment being in lieu of any further base
salary and annual incentive payments the Executive may
have been entitled to pursuant to this Agreement).
6
<PAGE>
(ii) The Employer shall continue all Welfare Benefits received by the
Executive for the Severance Period; provided, however, that such
Welfare Benefits shall cease upon the Executive becoming eligible
to receive substantially similar benefits from a new employer.
(iii) For the period of months set forth in Schedule B attached, the
Employers shall reimburse all reasonable expenses (as determined
in the sole discretion of the appropriate board of directors)
incurred by the Executive for professional outplacement services;
provided, however, that such reimbursement shall not exceed that
percentage of the Executive's annual base salary set forth in
Schedule B and that such reimbursement shall be discontinued once
the Executive attains employment in a position with duties,
responsibilities and level of compensation substantially similar
to his or her duties, responsibilities and level of compensation
with the Employers.
(b) For the purposes of this Agreement, a "Change Of Control" shall mean:
(i) any "person," including a "group" as determined in accordance with
the Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of Iroquois representing 20% or more of the combined voting
power of the then outstanding securities of Iroquois; (ii) as a result
of, or in connection with, any tender offer or exchange offer, merger or
other business combination (a "Transaction"), the persons who were
directors of Iroquois before the Transaction shall cease to constitute a
majority of the board of directors of Iroquois or any successor of
Iroquois, (iii) Iroquois is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 80%
of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
shareholders of Iroquois, other than (A) affiliates within the meaning
of the Exchange Act, or (B) any party to the merger or consolidation;
(iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of Iroquois representing 20% or more of the
combined voting power of Iroquois' then outstanding voting securities;
or (v) Iroquois transfers substantially all of its assets to another
corporation which is not controlled by Iroquois.
(c) Iroquois agrees that during the term of this Agreement, any options
granted to the Executive under the 1988 Stock Option Plan, as amended,
or the 1996 Stock Option Plan, as amended, or any other similar plan
subsequently instituted by the Employers (collectively the "Plans"),
shall provide that the Executive may, upon a Change Of Control of
Iroquois, and without regard to any restrictions on exercise that may
otherwise apply, within twelve (12) months of the date the Executive
receives written notice of such Change Of Control, (i) surrender such
option or options for a cash payment equal to the difference between the
aggregate option exercise price and the aggregate fair market value of
the shares of stock subject to the option, as such fair market value is
determined in accordance with the Plan, or (ii) exercise such option or
options, whether or not such options are exercisable pursuant to the
terms of the Plans.
(d) For purposes of this Section 8, "Good Reason" shall mean:
(i) assignment to the Executive of any duties inconsistent with his
or her status as an executive officer of Iroquois or a Member
Bank, or a substantial adverse alteration in the nature or status
of the Executive's responsibilities from those in effect
immediately prior to the Change Of Control;
(ii) reduction of the Executive's base salary as in effect immediately
preceding the Change of Control, or any reduction in the
Executive's normative incentive award
7
<PAGE>
percentage or any change in the method for applying the normative
incentive award percentage to determine the Executive's incentive
award, which would materially reduce such incentive award;
(iii) failure by the Employers to continue to provide the Executive
with Welfare Benefits substantially similar to those received by
the Executive immediately preceding the Change of Control; or
(iv) the relocation of the Employers principal executive offices and
the principal offices occupied by the Executive more than a
reasonable distance from their current location.
In the event the Executive terminates employment for Good Reason, the
Date of Termination shall mean the date on which the Executive notifies
the Employers of such termination.
(e) Notwithstanding anything contained in this Agreement to the contrary, to
the extent that the payments and benefits provided under this Agreement
or provided for the benefit of the Executive under any other plan or
agreement of or with the Employers (each such payment of benefit, a
"Payment," and such payments and benefits collectively, the "Payments"),
would be subject to the excise tax imposed under Sections 4999 and 280G
of the Internal Revenue Code, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties are hereinafter collectively referred to as the "Excise Tax"),
the Payments shall be reduced to the maximum amount which may be paid so
that no such Payment shall be subject to the Excise Tax. If necessary,
the Employers shall reduce or eliminate the Payments by first reducing
or eliminating the payments due under Section 8(a)(i)(B) above, then by
reducing or eliminating the amounts payable under Section 8(a)(i)(C),
and then by reducing or eliminating benefits which are not payable in
cash, in each case, in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Date of the
Termination.
8
<PAGE>
9. COMPLIANCE WITH LAWS.
Any payments made to the Executive pursuant to this Agreement, or otherwise, by
Iroquois or a Member Bank, are subject to and conditioned upon compliance with
all federal and state laws and regulations as may be applicable at the time to
Iroquois, the Member Bank or any other affiliate for which the Executive has
been assigned direct duties or responsibilities, including without limitation,
Section 18(k) of the Federal Deposit Insurance Act.
10. BINDING EFFECT; BENEFITS.
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, except that insofar as the Executive is concerned, this
Agreement, being personal, cannot be assigned.
11. NOTICES.
All notices and other communications which are required or permitted hereunder
shall be in writing and shall be sufficient if delivered or mailed by registered
or certified mail, postage prepaid, to the following addresses or such other
address as any party hereto shall have specified by a notice in writing to the
other parties hereto:
If to the Executive: Anthony Shay
9 Hawthorne Woods
Skaneateles, New York 13152
If to Iroquois: Iroquois Bancorp, Inc.
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
If to Member Bank: Cayuga Savings Bank
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
All such notices and communications shall be deemed to have been received on the
date of delivery thereof or the fifth business day after the mailing thereof,
whichever is earlier. A copy of any notice to either Iroquois or to Member Bank
shall be sent promptly by the Executive to the other.
12. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties hereto and
supersedes all other discussions and understandings, oral or written, between
the parties hereto with respect to the subject matter hereof.
9
<PAGE>
13. AMENDMENT AND WAIVERS.
This Agreement may not be modified or amended except by an instrument or
instruments in writing signed by the party against whom enforcement or any such
modification or amendment is sought. The waiver by any party hereto of a breach
of any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach.
14. SECTION AND OTHER HEADINGS.
This section and other headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
control or affect the meaning or construction of any provision of this
Agreement.
15. SEVERABILITY.
If any term or provision of this Agreement is held or deemed to be invalid or
unenforceable, in whole or in part, by a court of competent jurisdiction, this
Agreement shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforeceable the remaining terms
and provisions of this Agreement.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of
the date first above written.
IROQUOIS BANCORP, INC.
By: /s/ Richard D. Callahan /s/ W. Anthony Shay
--------------------------------- -------------------------------
Its: President & CEO [the Executive]
Member Bank
By: /s/ Richard D. Callahan
--------------------------------
Its: President & CEO
10
<PAGE>
SCHEDULE A
In accordance with Section 4(d) of the Agreement, the Executive shall be
entitled to the following "special fringe benefits" in addition to his or her
regular benefits:
1) Bi-annual physical examination per the Iroquois Bancorp Physical
Examination Policy
<PAGE>
SCHEDULE B
In accordance with Sections 5(c)(iv)(C) and 8(a)(iii) of the Agreement, the
Executive shall be entitled, based upon his or her position, to the
reimbursement of outplacement expenses for the number of months set forth in the
table below and up to the percentage (also set forth below) of the Executive's
annual base salary immediately preceding his or her Date of Termination:
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
POSITION MONTHS BASE SALARY
- --------------------------------------------------------------------------------
Other Executives 6 10%
<PAGE>
EXHIBIT 10(E)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made as of this 1ST day of JANUARY, 1997, by and
between Iroquois Bancorp, Inc., a New York corporation ("Employer") and HENRY
O'REILLY, a New York State resident (the "Employee").
WHEREAS, the services of the Employee and the Employee's managerial
experience is of great value to the Employer; and
WHEREAS, the Employer and the Employee desire and agree to enter into
and/or continue the employment relationship by means of this Employment
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:
1. EMPLOYMENT AND DUTIES.
(a) Iroquois hereby employs the Employee as DIRECTOR, INTERNAL AUDIT, with
all the powers and duties customary to such position in similar
corporations and banking institutions, and the Employee hereby accepts
such employment. The Employee shall perform such other duties and have
such other powers and responsibilities as may be assigned to the
Employee by the Employer and which are commensurate with the Employee's
position. The Employee shall report directly to the president/chief
executive officer of Iroquois or such other executive officer as the
president/chief executive officer may designate or to the board of
directors of the Employer, as appropriate.
(b) During the term of this Agreement, the Employee shall devote his or her
entire time and attention to the business and affairs of the Employer
and shall do all that is reasonably in his or her power to promote,
develop, and extend the business of Iroquois and its affiliates. The
Employee shall at all times during employment hereunder, conduct himself
or herself faithfully and diligently in a manner consistent with the
position and shall not knowingly perform any act contrary to the best
interests of the Employer or any affiliate thereof.
2. TERM.
Unless sooner terminated as provided by Section 5 herein, the term of this
Agreement shall be one year commencing as of January 1, 1997. The term may be
renewed annually by affirmative action of the board of directors of the Employer
upon the same terms and conditions and at such compensation level determined
appropriate by the boards of directors at the time of renewal.
1
<PAGE>
Employer shall notify the Employee of the Employer's intention not to renew this
Agreement not less than thirty (30) days prior to expiration of the initial term
of this Agreement or any renewal of such term.
3. COMPENSATION.
(a) The annual base salary of the Employee during the initial term of this
Agreement shall be $57,000.00, subject to adjustment at the time of
renewal by the board of directors. The Employee will be advised of any
adjustment to base salary not later than forty-five (45) days after the
commencement of the renewal term. Any such adjustment in base salary
however, shall be made in the sole discretion of the board of directors,
and nothing herein contained shall be construed to provide the Employee
with any assurance that base salary will be increased upon affirmative
renewal of this Agreement.
(b) The Employee, if otherwise eligible under any particular program or
plan, shall participate in any bonus or incentive compensation plan,
stock purchase or stock option plan, profit sharing plan, retirement
plan, supplemental retirement plan or other plan or program designed for
or available generally to senior management of Iroquois and its
affiliates.
4. ADDITIONAL BENEFITS.
(a) The Employee shall be entitled to reimbursement of reasonable expenses
incurred in the performance of the duties required hereunder in
furtherance of the business of the Employer and affiliates of the
Employer, upon submission of appropriate invoices or vouchers
documenting such expenses and provided such expenditures were consistent
with the Employer's policies.
(b) The Employee shall be eligible for FOUR (4) weeks of paid vacation in
any calendar year, to be taken at such time or times as the Employee
shall elect in accordance with Employer's policies then in effect.
Unused vacation may not be accrued or carried over from year to year.
(c) The Employee shall be eligible to receive full salary during any period
of disability, subject to a limitation of eighteen (18) months of
continued salary and benefits with respect to any single disability. In
the event that the Employee is entitled to payments under any disability
insurance policy during such period of disability, the aggregate
payments from such disability insurance coverage and from the Employer
for salary and benefits shall not exceed an amount equal to the
Employee's full salary and benefits for such period.
(d) The Employee shall be eligible to participate in any Employer group
medical or hospitalization insurance plan and in any other fringe
benefit plan generally available to employees of the Employer. The
Employee may also be entitled to special fringe benefits, if applicable,
as identified on Schedule A attached hereto, which Schedule may be
amended by the board of directors at the time of renewal or such other
time as the board of directors deems appropriate under the
circumstances. The foregoing benefits and
2
<PAGE>
special benefits described in clauses (a) through (d) of this Section 4
shall be known collectively as the "Welfare Benefits."
5. TERMINATION.
(a) Termination Events: the Employee's employment shall terminate during the
------------------
term of this Agreement upon the occurrence of any of the following
events:
(i) the Employee's death;
(ii) termination by the Employer of the Employee's employment for
reasons of Disability (as hereinafter defined) upon fifteen (15)
days written notice to the Employee;
(iii) termination by the Employer of the Employee's employment for
Cause (as hereinafter defined) upon written notice to the
Employee;
(iv) termination by the Employer of the Employee's employment other
than for Cause (as hereinafter defined) upon thirty (30) days
written notice to the Employee; or
(v) resignation of the Employee.
(b) Termination Definitions: The following words and phrases shall have the
meanings indicated below:
(i) Disability. "Disability" shall mean the Employee's incapacity or
inability to further perform services contemplated under this
Agreement for a period of at least eighteen (18) months because
of an impairment of his or her physical or mental health so as to
make it impossible or impractical for the Employee to perform the
duties and responsibilities contemplated hereunder.
(ii) Cause. "Cause" shall mean personal dishonesty, willful or
negligent misconduct, breach of fiduciary duty, intentional
failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar
minor offenses) or court or administrative order, or any removal
or permanent prohibition of the Employee from participating in
the conduct or affairs of Iroquois or a Member Bank by an order
of any regulatory authority having jurisdiction.
(iii) Date of Termination. "Date of Termination" shall mean:
- with respect to termination due to the death or resignation of
the Employee, the date of death or resignation;
- with respect to termination due to Disability, fifteen (15)
days following the giving of notice as referred to in Section
5(a)(ii) above;
3
<PAGE>
- with respect to termination by the Employer for Cause, the
date notice is given to the Employee, as referred to in
Section 5(a)(iii) above;
- with respect to termination by the Employer other than for
Cause, thirty (30) days following the giving of notice as
referred to in Section 5(a)(iv) above.
(c) Employer's Obligations Upon Termination:
---------------------------------------
(i) Death. If the Employee's employment is terminated by reason of
the Employee's death during the term of this Agreement, this
Agreement shall terminate without further obligation to any legal
representative of the Employee, other than for any obligations
accrued prior to the Employee's death, which shall be payable (in
a lump sum) within thirty (30) days of the Date of Termination.
Notwithstanding such termination, the Employee's legal
representative shall be obligated to return Employer's property
pursuant to Section 7 herein.
(ii) Disability. If the Employee's employment is terminated by reason
of the Employee's Disability during the term of this Agreement,
this Agreement shall terminate (with the exception of Section 7
herein) without further obligation to the Employee, other than
for any obligations accrued prior to the Employee's Date of
Termination, which shall be payable (in a lump sum) within thirty
(30) days of the Date of Termination.
(iii) Cause. If the Employee's employment is terminated for Cause
during the term of this Agreement, this Agreement shall terminate
(with the exception of Section 7 herein) without further
obligation to the Employee other than for any obligations accrued
prior to the Employee's Date of Termination.
(iv) Termination by the Employer other than for Cause. If, during the
term of this Agreement, the Employee's employment shall be
terminated by Employer other than for Cause, or for reasons other
than the Employee's death, Disability or voluntary resignation,
then the Employee shall be entitled to the benefits provided
below:
(A) The Employer shall pay to the Employee any accrued but
unpaid base salary through the Date of Termination.
(B) In lieu of any further base salary and annual incentive
payments for periods subsequent to the Date of
Termination, the Employer shall pay to the Employee,
within thirty (30) days of the Date of Termination, a cash
payment in an amount equal to 100 percent (hereinafter the
"Severance Percentage") of the sum of (x) the Employee's
annual base salary for the year in which the Employee is
terminated and the two years immediately preceding the
year of termination, divided by three, and (y) the
Employee's target annual incentive (under the Iroquois
Annual Management Incentive Compensation Plan) for the
year in which the Employee is terminated and
4
<PAGE>
the annual incentive earned by the Employee over the two
years immediately preceding the year of termination,
divided by three.
(C) The Employer shall continue to provide the Employee with
Welfare Benefits in the amounts and upon the terms and
conditions present immediately prior to the Date of
Termination (and only to the extent the benefit is
permissible under such contract or plan), for a Severance
Period consisting of a number of months calculated based
on the Severance Percentage applicable to the Employee
where a Severance Percentage of 100% results in a
Severance Period of TWELVE (12) months (the "Severance
Period"); provided, however, that such Welfare Benefits
shall cease upon the Employee's becoming eligible to
receive substantially similar Welfare Benefits from a new
employer.
(D) For the period of months set forth in Schedule B attached,
the Employer shall reimburse all reasonable expenses (as
determined in the sole discretion of the board of
directors) incurred by the Employee for professional
outplacement services; provided, however, that such
reimbursement shall not exceed that percentage of the
Employee's annual base salary set forth in Schedule B and
that such reimbursement shall be discontinued once the
Employee attains employment in a position with duties,
responsibilities and level of compensation substantially
similar to his or her duties, responsibilities and level
of compensation with the Employer.
(v) Resignation. If the Employee's employment is terminated by reason
of the Employee's voluntary resignation during the term of this
Agreement, this Agreement shall terminate (with the exception of
Section 7 herein) without further obligation to the Employee,
other than for any obligations accrued prior to the Employee's
resignation, which shall be payable (in a lump sum) within thirty
(30) days of the Date of Termination.
(d) In the event this Agreement is not renewed at the discretion of the
board and without cause pursuant to Section 2 above, the Employee shall
be entitled to:
(i) the compensation and benefits described in Sections 3 and 4
above, for the remainder of the term of this Agreement; and
(ii) those benefits described in Subsections (A), (B), (C) and (D) of
Section 5(c)(iv) above.
5
<PAGE>
6. SUSPENSION.
If the Employee is suspended or temporarily prohibited from participating in the
conduct or the affairs of Iroquois or any affiliate by action of any regulatory
authority having jurisdiction, the obligations of the Employers under this
Agreement shall be suspended as of the date of service of written notice of such
suspension by such regulatory agency, unless stayed by appropriate proceedings.
If the charges underlying such actions are dismissed, the Employee shall be
entitled to reinstatement and any compensation withheld while the Employer's
obligations under this Agreement were suspended.
7. CONFIDENTIAL INFORMATION AND BUSINESS MATERIALS.
(a) During the term of this Agreement and for a period of two years
following the termination or non-renewal of this Agreement, the Employee
agrees to receive confidential and proprietary information of Employer
and any affiliates in confidence, and not to disclose such information
to others except as authorized by the relevant Employer or affiliate.
Confidential and proprietary information shall mean information not
generally known to the public that is disclosed to the Employee and is a
consequence of employment by Employer, whether or not pursuant to this
Agreement.
(b) The Employee further covenants and agrees that every document, computer
disc, computer software program, notation, record, diary, memorandum,
development, investigation, file, or the like, and any method or manner
of doing business of either Employer or any affiliate made or acquired
by the Employee during employment, is and shall be the sole and
exclusive property of such Employer or affiliate. The Employee will
deliver the same (and every copy, disc, abstract, summary or
reproduction of same made by or for the Employee or acquired by the
Employee) whenever Employer may so require and in any event prior to or
at the termination of said employment.
(c) Employer and the Employee hereby acknowledge that the restrictions
stated herein above are reasonably necessary for the protection of
Employer's legitimate proprietary interests and Employer may enforce
such provisions through action for specific performance.
8. CHANGE OF CONTROL.
(a) In the event the Employee's employment is terminated (x) by the Employer
for any reason other than for Cause, death or Disability, or (y) by the
Employee for Good Reason (as defined in Section 8(d) below), within
twenty-four (24) months following a Change Of Control (as defined in
Section 8(b) below, or (z) by the Employee for any reason during the
thirty (30) day period beginning on the first anniversary of a Change of
Control, then:
(i) The Employer shall pay the Employee, within thirty (30) days
after the Date of Termination:
6
<PAGE>
(A) any accrued but unpaid base salary earned through the Date
of Termination; and
(B) a pro-rata incentive award in an amount equal to the
product of (x) the target incentive amount which the
Employee could earn for the year in which the Date of
Termination occurs pursuant to the Iroquois Annual
Management Incentive Plan, and (y) a fraction, the
numerator of which is the number of days in the fiscal
year through the Date of Termination, and the denominator
of which is 365; and
(C) a lump-sum cash payment equal to 2.99 times the sum of:
(x) the Employee's base salary immediately preceding the
Date of Termination, or immediately preceding the Change
of Control, whichever is greater, and (y) the average
annual incentive received by the Employee during the three
years immediately preceding the Date of Termination (such
cash payment being in lieu of any further base salary and
annual incentive payments the Employee may have been
entitled to pursuant to this Agreement).
(ii) The Employer shall continue all Welfare Benefits received by the
Employee for the Severance Period; provided, however, that such
Welfare Benefits shall cease upon the Employee becoming eligible
to receive substantially similar benefits from a new employer.
(iii) For the period of months set forth in Schedule B attached, the
Employer shall reimburse all reasonable expenses (as determined
in the sole discretion of the board of directors) incurred by the
Employee for professional outplacement services; provided,
however, that such reimbursement shall not exceed that percentage
of the Employee's annual base salary set forth in Schedule B and
that such reimbursement shall be discontinued once the Employee
attains employment in a position with duties, responsibilities
and level of compensation substantially similar to his or her
duties, responsibilities and level of compensation with the
Employer.
(b) For the purposes of this Agreement, a "Change of Control" shall mean:
(i) any "person," including a "group" as determined in accordance with
the Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of Iroquois representing 20% or more of the combined voting
power of the then outstanding securities of Iroquois; (ii) as a result
of, or in connection with, any tender offer or exchange offer, merger or
other business combination (a "Transaction"), the persons who were
directors of Iroquois before the Transaction shall cease to constitute a
majority of the board of directors of Iroquois or any successor of
Iroquois, (iii) Iroquois is merged or consolidated with another
corporation and as a result of the merger or consolidation less than 80%
of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
shareholders of Iroquois, other than (A) affiliates within the meaning
of the Exchange Act, or (B) any party to the merger or consolidation;
(iv) a tender offer or exchange offer is made and consummated for the
ownership of securities of Iroquois representing 20% or more of the
combined voting
7
<PAGE>
power of Iroquois' then outstanding voting securities; or (v) Iroquois
transfers substantially all of its assets to another corporation which
is not controlled by Iroquois.
(c) Iroquois agrees that during the term of this Agreement, any options
granted to the Employee under the 1988 Stock Option Plan, as amended, or
the 1996 Stock Option Plan, as amended, or any other similar plan
subsequently instituted by the Employer (collectively the "Plans"),
shall provide that the Employee may, upon a Change of Control of
Iroquois, and without regard to any restrictions on exercise that may
otherwise apply, within twelve (12) months of the date the Employee
receives written notice of such Change of Control, (i) surrender such
option or options for a cash payment equal to the difference between the
aggregate option exercise price and the aggregate fair market value of
the shares of stock subject to the option, as such fair market value is
determined in accordance with the Plan, or (ii) exercise such option or
options, whether or not such options are exercisable pursuant to the
terms of the Plans.
(d) For purposes of this Section 8, "Good Reason" shall mean:
(i) assignment to the Employee of any duties inconsistent with his or
her status as an officer of Iroquois, or a substantial adverse
alteration in the nature or status of the Employee's
responsibilities from those in effect immediately prior to the
Change of Control;
(ii) reduction of the Employee's base salary as in effect immediately
preceding the Change of Control, or any reduction in the
Employee's normative incentive award percentage or any change in
the method for applying the normative incentive award percentage
to determine the Employee's incentive award, which would
materially reduce such incentive award;
(iii) failure by the Employer to continue to provide the Employee with
Welfare Benefits substantially similar to those received by the
Employee immediately preceding the Change of Control; or
(iv) the relocation of the Employer's principal executive offices and
the principal offices occupied by the Employee more than a
reasonable distance from their current location.
In the event the Employee terminates employment for Good Reason, the
Date of Termination shall mean the date on which the Employee notifies
the Employer of such termination.
(e) Notwithstanding anything contained in this Agreement to the contrary, to
the extent that the payments and benefits provided under this Agreement
or provided for the benefit of the Employee under any other plan or
agreement of or with the Employers (each such payment of benefit, a
"Payment," and such payments and benefits collectively, the "Payments"),
would be subject to the excise tax imposed under Sections 4999 and 280G
of the Internal Revenue Code, or any interest or penalties with respect
to such excise tax (such excise tax, together with any such interest and
penalties are hereinafter collectively referred to as the
8
<PAGE>
"Excise Tax"), the Payments shall be reduced to the maximum amount which
may be paid so that no such Payment shall be subject to the Excise Tax.
If necessary, the Employer shall reduce or eliminate the Payments by
first reducing or eliminating the payments due under Section 8(a)(i)(B)
above, then by reducing or eliminating the amounts payable under Section
8(a)(i)(C), and then by reducing or eliminating benefits which are not
payable in cash, in each case, in reverse order beginning with payments
or benefits which are to be paid the farthest in time from the Date of
the Termination.
9. COMPLIANCE WITH LAWS.
Any payments made to the Employee pursuant to this Agreement, or otherwise, by
Iroquois, are subject to and conditioned upon compliance with all federal and
state laws and regulations as may be applicable at the time to Iroquois or any
other affiliate for which the Employee has been assigned direct duties or
responsibilities, including without limitation, Section 18(k) of the Federal
Deposit Insurance Act.
10. BINDING EFFECT; BENEFITS.
This Agreement shall inure to the benefit of, and shall be binding upon, the
parties hereto and their respective successors, assigns, heirs, and legal
representatives, except that insofar as the Employee is concerned, this
Agreement, being personal, cannot be assigned.
11. NOTICES.
All notices and other communications which are required or permitted hereunder
shall be in writing and shall be sufficient if delivered or mailed by registered
or certified mail, postage prepaid, to the following addresses or such other
address as any party hereto shall have specified by a notice in writing to the
other parties hereto:
If to the Employee: Henry O'Reilly
6761 Mandy Rue
Auburn, New York 13021
If to Iroquois: Iroquois Bancorp, Inc.
115 Genesee Street
Auburn, New York 13021
Attn: Chairman of the Board
9
<PAGE>
All such notices and communications shall be deemed to have been received on the
date of delivery thereof or the fifth business day after the mailing thereof,
whichever is earlier.
12. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties hereto and
supersedes all other discussions and understandings, oral or written, between
the parties hereto with respect to the subject matter hereof.
13. AMENDMENT AND WAIVERS.
This Agreement may not be modified or amended except by an instrument or
instruments in writing signed by the party against whom enforcement or any such
modification or amendment is sought. The waiver by any party hereto of a breach
of any term or provision of this Agreement shall not be construed as a waiver of
any subsequent breach.
14. SECTION AND OTHER HEADINGS.
This section and other headings contained in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement or to
control or affect the meaning or construction of any provision of this
Agreement.
15. SEVERABILITY.
If any term or provision of this Agreement is held or deemed to be invalid or
unenforceable, in whole or in part, by a court of competent jurisdiction, this
Agreement shall be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforeceable the remaining terms
and provisions of this Agreement.
16. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement as of
the date first above written.
IROQUOIS BANCORP, INC.
By: /s/ Richard D. Callahan /s/ Henry M. O'Reilly
----------------------------- -------------------------
Its: President & CEO [the Employee]
11
<PAGE>
SCHEDULE A
In accordance with Section 4(d) of the Agreement, the Employee shall be entitled
to the following "special fringe benefits" in addition to his or her regular
benefits:
1) Bi-annual physical examination per the Iroquois Bancorp Physical
Examination Policy
<PAGE>
SCHEDULE B
In accordance with Sections 5(c)(iv)(C) and 8(a)(iii) of the Agreement, the
Employee shall be entitled, based upon his or her position, to the reimbursement
of outplacement expenses for the number of months set forth in the table below
and up to the percentage (also set forth below) of the Employee's annual base
salary immediately preceding his or her Date of Termination:
- --------------------------------------------------------------------------------
NUMBER OF PERCENTAGE OF
POSITION MONTHS BASE SALARY
- --------------------------------------------------------------------------------
Other Executives 6 10%
<PAGE>
Exhibit 10(F)
SEPARATION AGREEMENT
AGREEMENT made this 11th day of March, 1997 between James H. Paul ("Paul"),
----
Iroquois Bancorp, Inc. ("Iroquois") and Cayuga Bank ("Cayuga").
WHEREAS, Iroquois and Cayuga (collectively referred to as the "Company")
have employed Paul at their facilities in Auburn, New York; and
WHEREAS, the parties now wish to provide for the orderly dissolution of
Paul's relationship with Iroquois and Cayuga in a final, amicable, and mutually
beneficial manner; and
WHEREAS, the parties have had an adequate opportunity to consider the terms
of this Separation Agreement and to consult with legal counsel or other persons
about it;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Release of Claims - Paul. Simultaneously with the execution of this
------------------------
Separation Agreement, Paul and the Company each agree to execute releases, in
the forms attached as Exhibits "A" and "B", releasing and waiving certain claims
which they now have or may have against each other or against their officers,
directors, employees and other agents, or their related, affiliated or successor
corporations. As consideration for these releases and for the other promises
which Paul makes in this Separation Agreement, Iroquois and Cayuga agree to pay
Paul his base annual salary ($106,100) and to continue certain other employee
benefits which he has received until December 31, 1998, as more specifically
defined in this paragraph. Payments made under this agreement shall be subject
to all deductions required by law.
<PAGE>
Paul will continue to receive the health, dental and life insurance
benefits he currently enjoys, subject to the terms and conditions of the
applicable policies and plan documents, as amended from time to time. Paul will
continue to participate in the Iroquois Bancorp Stock Purchase Incentive Plan,
the Iroquois Bancorp Section 401(k) Savings Plan, the Iroquois Bancorp Money
Purchase Pension Plan, the Iroquois Bancorp Employee Stock Ownership Plan, and
the Iroquois Bancorp Supplemental Retirement Plan through December 31, 1998,
subject to the terms and conditions of the applicable policies and plan
documents, as amended from time to time. Paul will be entitled to four weeks
paid vacation for 1997, and any unused vacation he has accumulated as of June
30, 1997 will be paid to him at his normal salary rate. Paul is not eligible to
participate in any other fringe benefit plans or receive any other form of
fringe benefits, including, without limitation, vacation, sick leave, or other
benefits providing for paid time-off, except as required by law. Paul also is
not eligible to participate in any bonus or incentive compensation plans for
1997, 1998, or beyond, and is not eligible to receive stock option grants under
the 1996 Stock Option Plan or any subsequent plan.
Paul acknowledges and agrees that the payments made to him under this
Separation Agreement exceed payments he otherwise would be entitled to receive
and that he is responsible for any income tax, whether federal, state or local,
owed as a result of these payments. Paul agrees to cooperate with Iroquois or
Cayuga to secure judicial or administrative approval of the general releases
that he has executed in their favor, should it be determined that such approval
is required to effectuate the release.
2
<PAGE>
2. Protection of Confidential and Proprietary Information.
------------------------------------------------------
a. Paul recognizes and acknowledges that during his employment with
Iroquois and Cayuga, he received, had access to, and, in some cases, prepared
and created confidential and proprietary business information for the Company,
including, but not limited to, client and customer information, customer lists,
information about the Company's products, services, operation methods and
systems, personnel information, and other information not available to outside
parties, all of which are of substantial value to Iroquois and Cayuga in their
business.
b. Without the Company's express prior written consent, Paul agrees not to
use or cause to be used for his own benefit or for the benefit of any third
parties or to disclose to any third party in any manner, directly or indirectly,
any information of a confidential or proprietary nature acquired during his
employment or the subsequent period of salary continuance, except that
information which the Company has disclosed publicly.
c. Paul shall return to Iroquois and Cayuga either before or immediately
upon the termination of his employment any and all written information,
materials, or equipment that constitutes, contains, or relates in any way to the
Company's proprietary or confidential information and any other documents,
equipment, and materials of any kind relating in any way to the Company's
business which are or may be in his possession, custody, and control and which
are or may be the Company's property, whether confidential or not, including any
and all copies of such materials.
3
<PAGE>
d. Paul understands and agrees that if he discloses to third parties, uses
for his own benefit or for the benefit of third parties, or copies or makes
notes of any confidential and proprietary information at any time, except as may
be required by the performance of his duties, this conduct shall constitute a
breach of the confidence and trust bestowed upon him by the Company and he
expressly agrees that injunctive relief, in addition to any other remedies
provided by law or equity, shall be available to the Company to enforce this
agreement and redress its violation.
3. Covenant Not to Compete. During Paul's employment and the subsequent
-----------------------
period of salary continuation provided to him by the terms of this Agreement,
Paul agrees that he shall not accept employment or self-employment with any
financial institution of any nature or type which provides services and products
that are the same or in any way similar to the services and products provided by
Iroquois and Cayuga. Paul further agrees that during his employment and the
subsequent period of salary continuation, he will not directly or indirectly
call on, solicit, or otherwise deal with any current account or customer of
Iroquois or Cayuga or any person or entity who may become an account or customer
of Iroquois or Cayuga during the subsequent salary continuation period.
4. Covenant Not to Sue. Paul agrees, promises, and covenants that neither
-------------------
he, nor any person, organization, or other entity acting on his behalf, will
file, charge, claim, sue, or cause or permit to be filed, charged, or claimed,
any action for damages or other relief (including injunctive, declaratory,
monetary relief or other) against Iroquois or Cayuga, their officers, directors,
employees, and other agents, or their
4
<PAGE>
related, affiliated, or successor companies concerning any matter occurring on
or before the date of this Separation Agreement or concerning Paul's employment
or his retirement and the termination of his employment in any way. Paul
further agrees to discontinue and withdraw with prejudice any and all claims,
charges or petitions which he may have filed against Iroquois or Cayuga, their
officers, directors, employees and other agents, or their related, affiliated,
or successor companies, with any administrative agency or bureau, any court or
any tribunal of any nature.
Iroquois and Cayuga agree that neither company, nor any person,
organization, or entity acting on their behalf, will file, charge, claim, sue or
cause or permit to be filed, charged or claimed, any action for damages or other
relief (including injunctive, declaratory, monetary relief or other) against
Paul, based on claims which either company has released under the terms of this
Agreement. Iroquois and Cayuga further agree to discontinue and withdraw with
prejudice any and all claims, charges or petitions which they may have filed
against Paul, or his agents or representatives, with any administrative agency
or bureau, any court or tribunal of any nature, based on claims which either
company has released under the terms of this Agreement.
5. Confidentiality. The parties agree that this Separation Agreement,
---------------
including the releases and other documents executed as part of this Separation
Agreement, shall be treated as confidential and shall not be disclosed to any
other persons, other than Paul's present attorneys, accountants, or immediate
family, and the Board of Directors, executive staff, attorneys and accountants
of Iroquois and Cayuga unless required or compelled to do so by law or legal
process. Persons to
5
<PAGE>
whom information about this Separation Agreement is disclosed as provided in
this paragraph shall treat the information as confidential, and any further
disclosure by those persons shall be considered a breach of this confidentiality
provision. The parties agree that they will not publish, or cause or permit to
be published, any information which relates to the terms of this Separation
Agreement. The parties further agree that the terms of this Separation
Agreement shall not be admissible in any proceeding for any purpose other than
to secure its enforcement.
6. Non-Admission Clause. The parties agree that this Agreement is not and
--------------------
shall not be construed as an admission by Iroquois or Cayuga or any of their
directors, officers, employees or other agents, that Iroquois or Cayuga breached
any contractual obligations owed Paul or violated any federal, state or local
law concerning their treatment of Paul.
7. Miscellaneous Terms.
-------------------
a. Paul will retire and cease to be employed on or around June 1, 1997 or
earlier if the parties mutually agree. Paul also agrees to resign from any
assigned or elected position or office of the Iroquois or Cayuga Board of
Directors on that date. Paul states that he has no present interest in future
employment with Iroquois or Cayuga, or their related, affiliated and successor
companies and agrees that these organizations have no obligation now or in the
future, to rehire him or consider him for re-employment in any capacity.
b. This Separation Agreement is the entire agreement between the parties
and supersedes any and all prior agreements or understandings between them
6
<PAGE>
which pertain to its subject matter, including, without limitation, any prior
employment agreements between Paul and Iroquois or Cayuga. Paul specifically
releases and waives, without limitation of the foregoing waiver, any and all
benefits which he might be entitled to receive under the Iroquois Bancorp
Separation Plan.
c. This Separation Agreement can only be amended, modified, rescinded or
otherwise altered by a writing signed by the parties or their representatives.
d. This Separation Agreements shall be governed by the laws of the State
of New York.
e. Paul represents and warrants: (i) that he has been advised by the
Company to consult legal counsel and to consider the terms of this Separation
Agreement for at least twenty-one (21) days before signing it; and (ii) that he
has executed this Separation Agreement only after having had adequate time and
opportunity to consult with legal counsel about its terms. Paul further
represents and warrants that he has carefully read this Separation Agreement in
its entirety, that he understands the terms and conditions of the Agreement,
that he voluntarily assents to all of the terms and conditions it contains, and
that he is signing the agreement of his own free will.
f. This Separation Agreement shall not become effective until the eighth
day following Paul's execution of this Agreement, and Paul may, at any time
prior to the effective date, revoke this Separation Agreement by giving notice
of such
7
<PAGE>
revocation to Melissa Komanecky, Vice President and Director of Human Resources
for Cayuga Bank.
g. This Separation Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors, legal
representatives and assigns.
THE PARTIES RECOGNIZE THAT THEY ARE NOT LEGALLY REQUIRED TO ENTER INTO THIS
AGREEMENT AND FURTHER STATE THAT THEY HAVE HAD ADEQUATE OPPORTUNITY TO REVIEW
AND TO STUDY THE TERMS OF THIS SEPARATION AGREEMENT WITH COUNSEL OR OTHER
PERSONS AND HAVE DECIDED VOLUNTARILY TO ENTER THIS AGREEMENT.
IROQUOIS BANCORP, INC.
By: /s/Richard D. Callahan
-----------------------------
STATE OF NEW YORK )
COUNTY OF CAYUGA ) SS:
On March 11, 1997, before me personally appeared Richard Callahan, who,
being duly sworn, said that he is the President and Chief Executive Officer of
Iroquois Bancorp, Inc. the Corporation executing the above instrument, and that
he signed his name to this instrument with the authority of the Iroquois Bancorp
Board of Directors.
/s/Kathleen A. Manley
---------------------------
Notary Public
CAYUGA BANK
KATHLEEN A. MANLEY
Notary Publc, State of New York
No. 01MA5069037 By: /s/Richard D. Callahan
Qualified in Cayuga County ----------------------------
Commission Expires November 12, 1998
8
<PAGE>
STATE OF NEW YORK )
COUNTY OF CAYUGA ) SS:
On March 11, 1997, before me personally appeared Richard Callahan, who,
being duly sworn, said that he is the President and Chief Executive Officer of
Cayuga Savings Bank, the Corporation executing the above instrument, and that he
signed his name to this instrument with the authority of the Cayuga Savings Bank
Board of Directors.
/s/Kathleen A. Manley
---------------------------
Notary Public
KATHLEEN A. MANLEY
Notary Publc, State of New York
No. 01MA5069037
Qualified in Cayuga County
Commission Expires November 12, 1998
/s/James H. Paul
-----------------------------------
JAMES H. PAUL
STATE OF NEW YORK )
COUNTY OF CAYUGA ) SS:
On this 11th day of March, 1997, before me personally came James H. Paul,
to me known to be the person described in and who executed the foregoing
instrument and he duly acknowledged to me that he executed the same.
/s/John P. McLane
---------------------------
Notary Public
JOHN JP. McLANE
Notary Public, State of New York
Reg. in Cayuga County, No. 1345
My Commission Expires July 31, 1998
9
<PAGE>
EXHIBIT A
GENERAL RELEASE OF CLAIMS
In consideration of the mutual promises made in a Separation Agreement
dated March 11, 1997, James H. Paul releases and forever discharges Iroquois
Bancorp, Inc. (the "Bank"), its officers, employees, directors, and agents, in
both their corporate and individual capacities, as well as the Bank's
affiliated, related or successor corporations, from all suits, actions, claims,
or damages whatsoever which he ever had, now has or may have against them. This
release applies, without limitation, to all suits, actions, claims or damages
arising from Paul's employment with the Bank and the termination of that
employment, claims arising from any employment agreements or other agreements
involving the parties, employment discrimination claims and claims regarding the
validity or enforceability of this release arising under local, state, federal
or international law (including, but not limited to, the Age Discrimination in
Employment Act, 29 U.S.C. (S)621 et seq., the Civil Rights Act of 1964, as
-- ---
amended, 42 U.S.C. (S)2000-e et seq., and New York Executive Law (S)296 et
-- --- --
seq.), claims for breach of contract or wrongful discharge, tort claims, and any
- ---
claims for attorney's fees, interest, disbursements or penalties related to
these released claims.
DATED: March 11 , 1997
----
/s/James H. Paul
-------------------------------
James H. Paul
<PAGE>
GENERAL RELEASE OF CLAIMS
In consideration of the mutual promises made in a Separation Agreement
dated March 11 , 1997 James H. Paul releases and forever discharges Cayuga
-----
Bank (the "Bank"), its officers, employees, directors, and agents, in both their
corporate and individual capacities, as well as the Bank's affiliated, related
or successor corporations, from all suits, actions, claims, or damages
whatsoever which he ever had, now has or may have against them. This release
applies, without limitation, to all suits, actions, claims or damages arising
from Paul's employment with the Bank and the termination of that employment,
claims arising from any employment agreements or other agreements involving the
parties, employment discrimination claims and claims regarding the validity and
enforceability of this release arising under local, state, federal or
international law (including, but not limited to, the Age Discrimination in
Employment Act, 29 U.S.C. (S)621 et seq., the Civil Rights Act of 1964, as
-- ---
amended, 42 U.S.C. (S)2000-e et seq., and New York Executive Law (S)296 et
-- --- --
seq.), claims for breach of contract or wrongful discharge, tort claims, and any
- ---
claims for attorney's fees, interest, disbursements or penalties related to
these released claims.
DATED: March 11 , 1997
-----
/s/James H. Paul
-----------------------------------
James H. Paul
<PAGE>
EXHIBIT B
RELEASE OF CLAIMS
In consideration of the mutual promises made in the Separation
Agreement dated March 11, 1997, Cayuga Bank (the "Bank"), releases and forever
discharges James H. Paul and his agents or representatives, from all suits,
actions, claims, damages whatsoever which it ever had, now has or may have
against him, provided that this Release shall not apply to: (1) claims based on
conduct which, when committed, violated the criminal laws of the State of New
York or the United States of America; (2) claims based on fraud,
misappropriation, theft, or any dishonest act; or (3) any claim for which the
Bank has or may have coverage or protection under any current or former policy,
bond or agreement insuring against losses for breach of fiduciary duty,
including, without limitation, the Fiduciary Liability Policy issued to the Bank
by Progressive Casualty Insurance Company on or about November 1, 1995. Should
any insurer of the Bank assert or claim that the execution of this Release voids
or in any way diminishes insurance coverage otherwise available to the Bank
against losses for fiduciary liability, then this Release shall be void and
unenforceable until a court of competent jurisdiction declares otherwise and all
avenues of appeal have been exhausted. If the execution of this Release voids
or otherwise diminishes insurance coverage or protection otherwise available to
the Bank against losses for fiduciary liability, Paul acknowledges and agrees to
hold the Bank harmless from any damage or injury which the Bank suffers as a
result.
DATED: March 11, 1997
CAYUGA BANK
By: /s/Richard D. Callahan
---------------------------------
STATE OF NEW YORK )
COUNTY OF CAYUGA ) SS:
On March 11, 1997, before me personally appeared Richard Callahan,
who, being duly sworn, said that he is the President and Chief Executive Officer
of Cayuga Bank, the Corporation executing the above instrument, and that he
signed his name to this instrument with the authority of the Cayuga Bank Board
of Directors.
/s/Kathleen A. Manley
----------------------------------
Notary Public
KATHELEEN A . MANLEY
Notary Public, State of New York
No. 01MA5069037
Qualified in Cayuga County
Commission Expires November 12, 1998
<PAGE>
RELEASE OF CLAIMS
In consideration of the mutual promises made in the Separation
Agreement dated March 11, 1997, Iroquois Bancorp (the "Bank"), releases and
forever discharges James H. Paul and his agents or representatives, from all
suits, actions, claims, damages whatsoever which it ever had, now has or may
have against him, provided that this Release shall not apply to: (1) claims
based on conduct which, when committed, violated the criminal laws of the State
of New York or the United States of America or any government regulations
applicable to the Bank; (2) claims based on fraud, misappropriation, theft, or
any dishonest act; or (3) any claim for which the Bank has or may have coverage
or protection under any current or former policy, bond or agreement insuring
against losses for breach of fiduciary duty, including, without limitation, the
Fiduciary Liability Policy issued to the Bank by Progressive Casualty Insurance
Company on or about November 1, 1995. Should any insurer of the Bank assert or
claim that the execution of this Release voids or in any way diminishes
insurance coverage otherwise available to the Bank against lossess for fiduciary
liability, then this Release shall be void and unenforceable until a court of
competent jurisdiction declares otherwise and all avenues of appeal have been
exhausted. If the execution of this Release voids or otherwise diminishes
insurance coverage or protection otherwise available to the Bank against losses
for fiduciary liability, Paul acknowledges and agrees to hold the Bank harmless
from any damage or injury which the Bank suffers as a result.
DATED: March 11, 1997
IROQUOIS BANCORP, INC.
By: /s/Richard D. Callahan
------------------------------
STATE OF NEW YORK )
COUNTY OF CAYUGA ) SS:
On March 11, 1997, before me personally appeared Richard Callahan,
who, being duly sworn, said that he is the President and Chief Executive Officer
of Iroquois Bancorp, Inc. the Corporation executing the above instrument, and
that he signed his name to this instrument with the authority of the Iroquois
Bancorp Board of Directors.
/s/Kathleen A. Manley
-----------------------------------
Notary Public
KATHLEEN A. MANLEY
Notary Publc, State of New York
No. 01MA5069037
Qualified in Cayuga County
Commission Expires November 12, 1998
