FIRST FEDERAL SAVINGS BANK OF SIOUXLAND
EMPLOYMENT AGREEMENT
This Agreement is made as of this 16th day of October, 1997, by and between
First Federal Savings Bank of Siouxland (the "Bank"), a federally chartered
savings institution, with its principal administrative office at 000 Xxxxxx
Xxxxxx, Xxxxx Xxxx, Xxxx 00000 and Xxxxxx X. Xxxxx (the "Employee").
WHEREAS, Employee is, as of the date hereof, employed as President and
Chief Executive Officer of Grinnell Federal Savings Bank, Grinnell, Iowa
("Grinnell"), which institution has entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") with the Bank as of the date hereof (all
capitalized terms used herein without definition shall be defined as in the
Merger Agreement);
WHEREAS, the Bank wishes to retain the services of Employee as an employee
of the Bank following the Effective Time for the period provided in this
Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Bank on a
full-time basis for said period;
WHEREAS, in consideration of the waiver and relinquishment of any rights of
the Employee under that certain employment agreement between the Employee and
Grinnell dated January 5, 1994 and subsequently amended and restated on January
19, 1996, including but not limited to rights under Section 8 thereof relating
to the change of control of Grinnell, the Bank desires to enter into this
Agreement with the Employee;
WHEREAS, the Bank desires to employ Employee and Employee desires to be
employed by the Bank upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES
As of the Effective Time, the Bank agrees to employ Employee as Executive
Vice President of the Bank and President and Chief Executive Officer of Xxxxxxxx
Federal Savings Bank, a division of First Federal Savings Bank of Siouxland
("Grinnell Federal") and Employee agrees to accept employment by the Bank upon
the terms and conditions herein set forth. The Bank further agrees to appoint
Employee as a Director of the Bank as of the Effective Time and agrees to
nominate Employee for re-election as a Director of the Bank at the next
scheduled meeting of shareholders at which Directors are elected, coincident
with or immediately following the Effective Time.
2. TERMS AND DUTIES
(a) The period of Employee's employment under this Agreement shall begin
as of the Effective Time and shall continue for a period of thirty-six (36) full
calendar months thereafter subject to earlier termination as provided herein
(the "term of employment"). Following the expiration of the thirty-six (36)
month term of this Agreement, if not earlier terminated, Employee and the Bank
shall enter into a severance agreement with the Bank that is consistent with
severance agreements made available to other
executive officers of the Bank and that provides for a benefit only in the event
of a Change in Control (as hereinafter defined).
(b) During the term of employment, except for periods of absence
occasioned by illness, reasonable vacation periods, and reasonable leaves of
absence, Employee shall devote substantially all his business time, attention,
skill, and efforts to the faithful performance of his duties as Executive Vice
President of the Bank and President and Chief Executive Officer of Grinnell
Federal and shall have such other powers and duties as the Bank's Chief
Executive Officer may prescribe from time to time; provided, however, that,
except with the approval of the Board, as evidenced by a resolution of such
Board, from time to time, Employee may not serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which, in such Board's judgment, present a conflict of interest
with the Bank, or may materially affect the performance of Employee's duties
pursuant to this Agreement. Nothing in this Section shall be construed as
preventing the Employee from serving from time to time on boards, committees, or
holding positions of non-profit or governmental organizations, including
religious and civic groups, without the need for Board approval.
3. COMPENSATION AND BENEFITS
(a) SALARY. The Bank agrees to pay the Employee during the term of
employment, not less frequently than on a monthly basis, a minimum annual salary
of $110,000 ("Base Salary").
Adjustments in Base Salary or other compensation shall not limit or reduce
any other obligation of the Bank under this Agreement. The Employee's Base
Salary in effect from time to time during the term of employment shall not
thereafter be reduced.
(b) EXPENSES. The Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Employee in performing
services under this Agreement, including for the attendance of seminars on
topics related to the business of the Bank, in accordance with the policies and
procedures applicable to the executive officers of the Bank, PROVIDED THAT the
Employee accounts for such expenses as required under such policies and
procedures.
(c) PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Employee shall be
entitled, while employed hereunder, to participate in all plans relating to
group life and disability insurance, medical and dental coverage, education, or
other fringe benefits to the extent to which the Bank's employees participate.
The Bank further agrees to cause to be awarded to the Employee within
sixty (60) days following the Effective Time, Two Thousand (2,000) shares of
restricted stock under the Bank's Recognition and Retention Plan and Trust
Agreement and Four Thousand (4,000) options under the Bank's 1992 Incentive
Stock Option Plan. It is expected that such shares and options will vest in
four equal annual installments commencing on the first anniversary of the date
of award and continuing each year until all shares and options are fully vested.
Said shares and options shall be subject to the terms of the respective plans
under which they are granted.
(d) VACATIONS; LEAVE. The Employee shall be entitled to a minimum of
four (4) weeks annual paid vacation in accordance with the policies established
by the Bank's Board of Directors. The Employee shall also be entitled to
reasonable leave to attend seminars on topics related to the business of the
Bank.
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(e) ADDITIONAL BENEFITS From and after the Effective Time and during
the term of this Agreement, the Bank shall provide the following additional
benefits to the Employee:
(1) COUNTRY CLUB MEMBERSHIP The Bank shall provide the
Employee with the funds neccessary to maintain the Employee as a member of a
country club located in the Bank's market area and customarily joined by
executives in the banking industry for purposes related to the business of the
Bank.
(2) AUTOMOBILE The Bank shall provide the Employee with the
use of a Bank-owned automobile. The Bank shall pay (or reimburse the Employee)
for all maintenance costs related to the use of such automobile for business
purposes.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION
(a) INVOLUNTARY TERMINATION. The Board of Directors may terminate the
Employee's employment at any time, but, except in the case of Termination for
Cause, death or disability, termination of employment shall not prejudice the
Employee's right to compensation under this Agreement, as set forth herein. In
the event of Involuntary Termination, other than Termination for Cause, death or
disability, or in connection with or within twelve (12) months after a Change in
Control, the Employee shall be entitled to receive, as a severance benefit, his
then applicable Base Salary for the then-remaining term of this Agreement, in a
lump sum payment, payable within thirty days of such termination of employment.
The term "Involuntary Termination" means termination of the employment of
Employee without the Employee's express written consent, and shall include a
material diminution of or interference with the Employee's duties,
responsibilities and benefits including (without limitation) any of the
following actions unless consented to in writing by the Employee: (1) a change
in the principal workplace of the Employee to a location outside of a 30 mile
radius from any office of Grinnell, as determined immediately prior to the
Effective Time, (2) a material change in Employee's function, duties, or
responsibilities, which change would cause Employee's position to become one of
lesser responsibility, importance, or scope from the position and attributes
described in Section 1 hereof, (3) liquidation or dissolution of the Bank other
than liquidations or dissolutions that are caused by reorganizations that do not
affect the status of Employee, (4) failure to re-elect or re-apppoint Employee
as a Director of the Holding Company, or (5) breach of this Agreement by the
Bank. Upon the occurrence of any event described in clauses (1),(2), (3), (4),
or (5) of this Section 4(a), Employee shall have the right to elect to terminate
his employment under this Agreement by resignation upon sixty (60) days prior
written notice given within a reasonable period of time not to exceed four
calendar months after the initial event giving rise to said right to elect.
Notwithstanding the preceding sentence, in the event of a continuing breach of
this Agreement by the Bank, the Employee, after giving due notice within the
prescribed time frame of an initial event specified above, shall not waive any
of his rights solely under this Agreement and this Section 4 by virtue of the
fact that Employee has submitted his resignation but has remained in the
employment of the Bank and is engaged in good faith discussions to resolve any
occurrence of an event described in clauses (1), (2), (3) or (4) of this Section
4(a). The term "Involuntary Termination" does not include Termination for Cause
or termination of employment due to retirement, death, disability or suspension
or temporary or permanent prohibition from participation in the conduct of the
Bank's affairs pursuant to any of Sections 12(a) through 12(e) hereof.
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(b) TERMINATION FOR CAUSE. In the event of Termination for Cause, the
Bank shall pay the Employee the Employee's salary through the date of
termination, and the Bank shall have no further obligation to the Employee under
this Agreement.
The terms "Termination for Cause" and "Terminated For Cause" mean
termination of the employment of the Employee because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of a fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. The Employee shall not be deemed to have been
Terminated for Cause unless and until there shall have been delivered to the
Employee a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors of the
Bank at a meeting of the Board called and held for such purpose (after
reasonable notice to the Employee and an opportunity for the Employee, together
with the Employee's counsel, to be heard before the Board), stating that in the
good faith opinion of the Board the Employee has engaged in conduct described in
the preceding sentence and specifying the particulars thereof in detail.
(c) VOLUNTARY TERMINATION. The Employee's employment may be voluntarily
terminated by the Employee at any time upon 90 days written notice to the Bank
or upon such shorter period as may be agreed upon between the Employee and the
Chief Executive Officer of the Bank. In the event of such voluntary
termination, the Bank shall be obligated to continue to pay to the Employee the
Employee's Base Salary and benefits only through the date of termination, at the
time such payments are due, and the Bank shall have no further obligation to the
Employee under this Agreement.
5. TERMINATION UPON RETIREMENT, DISABILITY OR DEATH
In the event of the death of the Employee during the term of employment,
the Employee's estate, or such person as the Employee may have previously
designated in writing, shall be entitled to receive from the Bank the Base
Salary of the Employee through the last day of the calendar month in which the
Employee died.
If during the term of employment hereunder the Employee shall become
disabled or incapacitated to the extent that he is unable to perform the
principal duties of his employment, he shall be entitled to receive disability
benefits of the type provided for other employees of the Bank. The Bank, in its
discretion, based on competent medical advice, shall determine whether Employee
is and continues to be, disabled for purposes of this paragraph.
If Employee's employment with the Bank shall terminate due to retirement on
or after age 65, the Employee shall be entitled to receive from the Bank the
Base Salary of the Employee through the last day of the calendar month in which
the Employee retired.
6. CHANGE IN CONTROL
(a) Involuntary Termination. Notwithstanding any provision herein to the
contrary, if the Employee's employment is involuntarily terminated (other than
for cause, death or disability, or pursuant to any of Sections 12(a) - (e)
hereof) in connection with or within 12 months after a Change in Control which
occurs at any time during the term of employment, the Bank shall pay to the
Employee in a lump sum in cash within 30 days after the date of termination of
employment an amount equal to 299% of the
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Employee's "base amount" of compensation, as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) Voluntary Termination. If the Employee voluntarily terminates his
employment hereunder in connection with or within 30 days following a Change in
Control which occurs at any time during the term of employment, the Employee
shall be entitled to receive the payment provided by Section 6(a) hereof in the
manner provided by Section 6(a) hereof.
(c) Definitions. The term "Change in Control" means (1) an event of a
nature that (i) results in a change in control of the Bank or Bancorp within the
meaning of the Home Owners' Loan Act of 1933 and 12 C.F.R. Part 574 as in effect
on the date hereof; or (ii) would be required to be reported in response to Item
1 of the current report on Form 8-K, as in effect on the date hereof, pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx
Xxx"); (2) any person (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly of securities of the Bank or Bancorp
representing 25% or more of the Bank's or Bancorp's outstanding securities; (3)
individuals who are members of the board of directors of the Bank or Bancorp on
the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, shall be
considered a member of the Incumbent Board; or (4) the acquisition of a
controlling influence over the management or policies of the Bank or Bancorp by
any person or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934). The term "Change in Control"
shall not include an acquisition of securities by an employee benefit plan of
the Bank or Bancorp. In the application of 12 C.F.R. Part 574 to a
determination of a Change in Control, determinations to be made by the OTS or
its Director under such regulations shall be made by the Board of Directors.
7. CERTAIN REDUCTION OF PAYMENTS BY THE BANK.
(a) Notwithstanding any other provision of this Agreement, if
payments under this Agreement, together with any other payments received or to
be received by the Employee in connection with a Change in Control would be
deemed to include an "excess parachute payment" pursuant to Section 280G of the
Code, then benefits under this Agreement shall be reduced (not less than zero)
to the extent necessary to avoid the payment of an excess parachute payment by
the Bank.
(b) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 36 U.S.C.
Section 1828(k) and any regulations promulgated thereunder.
8. POST-TERMINATION OBLIGATIONS
(a) All payments and benefits to Employee under this Agreement shall be
subject to Employee's compliance with paragraph (b) of this Section 8 during the
term of employment and for one (1) full year after the expiration or termination
thereof.
(b) Employee shall, upon reasonable notice, furnish such information and
assistance to the Bank as may reasonably be required by the Bank in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
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9. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Bank, any predecessor
of the Bank, or Grinnell and Employee.
10. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Employee and the Bank and their respective successors and assigns.
11. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
12. REQUIRED PROVISIONS
(a) The Bank may terminate the Employee's employment at any time, but any
termination by the Bank, other than Termination for Cause, shall not prejudice
Employee's right to compensation benefits under this Agreement. Employee shall
not have the right to receive compensation or other benefits for any period
after Termination for Cause as defined in Section 4 hereof.
(b) If the Employee is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) (12 U.S.C. Sections 1818(e)(3)) or 8(g) (12 U.S.C. Section
1818(g)) of the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 (relating to the
violation of any law, unsafe or unsound practice, breach of fiduciary duty or
criminal violation), the Bank's obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion (i)
pay the Employee all or part of the compensation withheld while their contract
obligations were suspended and (ii) reinstate (in whole or in part) any of the
obligations which were suspended.
(c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e) (12 U.S.C. Sections 1818(e)) or 8(g) (12 U.S.C. Section 1818(g))
of the Federal Deposit Insurance Act, as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (relating to the violation of any
law, unsafe or unsound practice,
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breach of fiduciary duty or criminal violation), all obligations of the Bank
under this contract shall terminate as of the effective date of the order, but
vested rights of the contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x) (12 U.S.C.
Section 1813(x)(1)) of the Federal Deposit Insurance Act, as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 (relating to
the adjudication of a court or public authority pursuant to which a conservator,
receiver, or other legal custodian is appointed), all obligations of the Bank
under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Bank under this Agreement shall be terminated,
except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the institution, (i) by the Federal Deposit
Insurance Corporation ("FDIC"), at the time FDIC enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) (12 U.S.C. Section 1823(c)) of the Federal Deposit Insurance Act,
as amended by the Financial Institutions Reform, Recovery and Enforcement Act of
1989; or (ii) when the Bank is determined by the FDIC to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
13. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
14. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
15. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Iowa, but only
to the extent not superseded by federal law.
16. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Employee shall be entitled to seek specific performance of his
right to be paid until the date of termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
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17. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by Employee pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Employee and the Bank or resolved in the Employee's favor.
18. SUCCESSOR TO THE BANK
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
17. CONTINGENT ON CLOSING
The duties and obligations of the Employee and the Bank hereunder, and the
relinquishment of the Employee's rights under the employment agreement between
the Employee and Grinnell, are expressly conditioned on the closing of the
merger between the Bank and Grinnell ("Merger"). In the event that the Merger
is not consummated on the Effective Time, this Agreement shall be null and void.
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