EMPLOYMENT AGREEMENT
Exhibit 10.5
This Employment Agreement (the “Agreement”) is entered into as of February 10, 2006, between
the Federal Home Loan Bank of Des Moines (the “Bank”) and Xxxxx X. Xxxxxx (“Executive”).
A. The Bank currently has a vacancy in the office of Chief Financial Officer, and the Board of
Directors of the Bank (the “Board”) has commenced a search to fill that position.
B. The Board has determined that, until a permanent Chief Financial Officer is identified,
hired, and assumes office, it would be in the best interests of the Bank to fill that position on
an interim basis.
C. Executivehas held significant positions of leadership within the banking and financial
industries.
D. The Bank and Executive wish to establish certain terms and conditions of Executive’s
employment.
NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good
and valuable consideration the sufficiency and receipt of which is stipulated, the parties
therefore agree as follows:
1. Employment. The Bank employs Executive, and Executive accepts employment, on the terms and
conditions contained in this Agreement. Executive shall serve as the Chief Financial Officer
during the term of employment set forth in Section 2 below. Executive shall report to the Acting
President and Chief Executive Officer and his primary functions and major areas of accountability
are set forth in Exhibit A hereto. During the term of this Agreement, Executive agrees to devote
his full attention and working time to the business and affairs of the Bank. Notwithstanding this
Agreement, the parties agree that Executive is an employee-at-will and serves at the pleasure of
the Board.
2. Term. The term of this Agreement commenced on February 10, 2006. Unless modified by mutual
agreement of the parities or terminated pursuant to Section 6 below, the term of this Agreement
will continue until the Bank’s registration of a class of its equity securities on Form 10 with the
Securities and Exchange Commission becomes effective (“Term”); provided, however, the Bank shall
have the option of extending this Agreement for a period of 30 days beyond the Term by giving prior
notice to Executive before the Term otherwise would end. Notwithstanding the foregoing, this
Agreement will immediately terminate as of the date the Board of Directors hires a new Chief
Financial Officer and such person assumes his or her duties.
3. Compensation.
3.1 Salary and Benefits. During the Term, the Bank shall pay Executive a salary of Forty
Thousand Dollars ($40,000) per month, less all amounts required by law to be withheld, deducted, or
collected. Said salary will be paid in installments on regular payroll days applicable to other
employees of the Bank. This salary amount shall be due Executive in the event that Executive does
not serve the entire Term, where such failure to serve the entire Term is due to the fact that a
permanent Chief Financial Officer of the Bank other than Executive has been hired and has assumed
office during the Term. If this Agreement is renewed for an additional 30 day period in accordance
with Section 2, Executive shall be paid a salary of Forty Thousand ($40,000) for such period less
all amounts required by law to be withheld, deducted, or collected, payable in installments on
regular payroll days applicable to other employees of the Bank. In connection with any such
renewal, the salary amount due for any such 30 day period shall be due Executive in the event that
Executive does not serve the entire 30 day period where such failure to serve the Renewal Term is
due to the fact that a new Chief Financial Officer of the Bank (other than Executive) has been
hired and has assumed office during the Renewal Term. Executive shall be entitled to make
contributions to the Pentegra Defined Contribution Plan during the term of this Agreement and
authorizes the Bank to deduct any contributions to such Plan from the salary amount due Executive
during the term hereof; provided, however, that the Bank shall not be required to make any
contributions to such Plan on Executive’s behalf at any time as a result of providing such
opportunity to Executive pursuant to this Agreement. In addition, Executive may enroll in the
Bank’s flexible spending reimbursement plan in accordance with the terms and conditions thereof
during the term of this Agreement and authorizes the Bank to deduct any contributions to such plan
from the salary amount due Executive.
3.2 Business Expense Reimbursement. The Bank will reimburse Executive for necessary,
customary, and reasonable living, business, and travel expenses incurred by Executive that are
related to his employment with the Bank, in accordance with Bank policies.
3.3 No other Benefits. Except as specifically set forth in Sections 3.1 and 3.2 Executive
shall have no rights to any salary, bonuses, incentive compensation, employee benefits, severance,
or other compensation, benefits, fringe benefits, or payments from the Bank. The Executive
understands and agrees that he shall not be eligible to participate in the Gainsharing Plan or the
Long Term Incentive Compensation Plan. In addition, except as provided in Section 3.1, the
Executive shall not make contributions to, and waives any right he may have to, the Pentegra
Defined Benefit Plan for Financial Institutions, and the Benefit Equalization Plan from the salary
payments described in Sections 3.1 of this Agreement.
4. Confidentiality. Executive shall follow and be governed by all existing laws, regulations and
Bank policies regarding the unauthorized disclosure or dissemination of the Bank’s Confidential
Information. Executive acknowledges that the existing laws, regulations and Bank policies
regarding the unauthorized disclosure or dissemination of Confidential Information may change and,
to the extent they do change, Executive agrees to follow and be governed by such changed laws,
regulations and policies. As used in this Section, “Confidential Information” shall mean any
information relating to the business or affairs of the Bank or its customers, including, but not
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limited to, information relating to financial statements, identities of members and potential
members, employees, suppliers, software tools, business methods, equipment, programs,
methodologies, strategies and information, analyses, reports, models, calculations, profit margins,
exam findings, Board of Directors’ matters, or other proprietary information used by the Bank in
connection with its business; provided, however, that Confidential Information shall not include
any information which is in the public domain or becomes known in the industry through no wrongful
act on the part of Executive or that Executive is required to produce in accordance with applicable
law. Executive acknowledges that the Confidential Information is vital, sensitive, confidential
and proprietary to the Bank.
5. Disclosure of Conflicts of Interest. Executive represents and warrants to the Bank that
Executive has no current commitments or obligations that will conflict or otherwise interfere with
Executive’s ability to perform the services described in this Agreement, or that will conflict or
interfere with the rights or interests of the Bank. During the term of this Agreement, Executive
will disclose to the Bank any circumstance or activity that could result in any such conflict of
interest.
6. Termination. Either party may terminate this Agreement for any reason at any time. Upon
termination of this Agreement, the Bank will be liable to Executive only for salary and other
amounts payable under this Agreement that accrue before the effective date of termination, unless
the Executive’s employment terminates because the Bank hires a permanent Chief Financial Officer,
in which case Executive shall receive the entire salary for the Term.
7. Insurance and Indemnity. During the term of this Agreement, the Bank shall, to the extent
permitted by applicable law and regulations, include Executive under any director and officer
liability insurance policy maintained for its directors and officers, with coverage at least as
favorable to Executive in amount and every other material respect as the coverage afforded to other
executive officers covered thereby. The Bank shall indemnify and hold Executive harmless to the
fullest extent authorized by the Bank’s Bylaws. The Bank’s obligation to provide insurance and
indemnify Executive under this Section 7 shall survive expiration or termination of this Agreement
with respect to proceedings or threatened proceedings based on acts or omissions of Executive
acting in his capacity as Interim Chief Financial Officer of the Bank during the period of his
employment under this Agreement.
8. Miscellaneous.
8.1 Neither party may assign any of its rights or obligations under this Agreement without
the prior written approval of the other party.
8.2 This Agreement is subject to applicable provisions of the Federal Home Loan Bank Act and
regulations of the Federal Housing Finance Board. With respect to matters not covered by the
Federal Home Loan Bank Act or regulations of the Federal Housing Finance Board, this Agreement
shall be interpreted in accordance with the laws of the State of Iowa, without regard to its
conflict of laws. Any lawsuit between the parties arising out of this Agreement shall be brought
in the Iowa District Court in and for Polk County, or in the United States Xxxxxxxx Xxxxx,
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Xxxxxxxx Xxxxxxxx of Iowa, Central Division, if appropriate federal jurisdiction exists. The
language of this Agreement shall be construed as a whole according to its fair meaning.
8.3 This Agreement sets forth the entire agreement between the parties related to Executive’s
employment by the Bank, and supersedes any and all prior representations, proposals, discussions,
communications or agreements, written or otherwise, between the parties with respect thereto. No
amendment of any provision of this Agreement will be effective unless set forth in a written
instrument signed by both parties.
8.4 No provision in this Agreement shall be deemed waived unless such waiver is in a written
form, signed by Executive and the Chairman of the Bank.
8.5 All notices required or permitted under this Agreement shall be in writing addressed to
the respective parties as set forth herein.
8.6 This Agreement may be executed in counterparts.
8.7 It is understood and agreed that if any provisions of this Agreement are held to be
invalid or unenforceable, the remaining provisions of this Agreement shall nevertheless continue to
be fully valid and enforceable.
8.8 Executive acknowledges that he has read and understands this Agreement and all of the
provisions hereof, and that adequate opportunity has been afforded Executive to consult with his
own legal counsel before signing this Agreement.
Executed as of the date first above written.
| BANK: | EXECUTIVE: | |||||||
| FEDERAL HOME LOAN BANK OF | Xxxxx X. Xxxxxx | |||||||
| DES MOINES | ||||||||
By:
|
/s/ Xxxx X. Xxxxxxxx | /s/ Xxxxx X. Xxxxxx | ||||||
| (Signature) | ||||||||
| Address: 000 Xxxxxx Xxxxxx | Address: 0000 X X0X #000 | |||||||
| Xxx Xxxxxx, XX 00000 | Xxxx Xxxxxx, XX 00000 | |||||||
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EXHIBIT A
This Exhibit A to the Employment Agreement (the “Agreement) by and between the Federal Home
Loan Bank of Des Moines (the “Bank”) and Xxxxx X. Xxxxxx (“Executive”) sets forth what will be the
Executive’s primary functions and major areas of accountability during his employment as the Bank’s
Chief Financial Officer and supplements the more general duties and responsibilities as described
in paragraph 1 of the Agreement.
Primary Function:
To provide direction and leadership to the Bank and Bank staff toward achievement of the Bank’s
restatement of its financial statements and the effective registration of a class of the Bank’s
equity securities on Form 10 with the Securities and Exchange Commission.
Major Accountabilities:
| • | Leads, directs and manages the Accounting division, including the accounting and financial reporting departments. | ||
| • | Participates as a member of the senior management team. | ||
| • | Acts as a management representative at Board meetings and a Bank liaison to the Finance Board on issues related to functional responsibilities of the division. | ||
| • | Advises the Acting President and Chief Executive Officer on matters related to functional areas of responsibilities. | ||
| • | Performs other duties as assigned. |
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