RETIREMENT, RESIGNATION AND RELEASE AGREEMENT
Exhibit 10.7
This Retirement, Resignation and Release Agreement (this “Agreement”) is entered into by and
between the Federal Home Loan Bank Des Moines (the “Bank”) and Xxxxxxx X. Xxxxxx (“Xx. Xxxxxx”) to
set forth the terms and conditions of Xx. Xxxxxx’x employment separation from the Bank, and his
retirement and resignation from his employment and position as an officer of the Bank.
RECITALS
A. Xx. Xxxxxx has been employed by the Bank as its President and Chief Executive Officer.
B. Xx. Xxxxxx has retired and resigned his position and employment with the Bank and wishes to
accept the severance payments described herein and to release the Bank from any and all claims
concerning his prior employment; and
C. The Bank is willing to provide Xx. Xxxxxx with xxxxxxxxx payments subject to the terms and
conditions contained in this Agreement.
AGREEMENT
To provide Xx. Xxxxxx with severance pay and to fully and finally resolve any and all issues
Xx. Xxxxxx may have regarding his prior employment with the Bank, including the separation of that
employment, Xx. Xxxxxx and the Bank agree as follows:
1. Retirement, Resignation and Severance Pay. Xx. Xxxxxx resigned as the Bank’s President and
Chief Executive Officer effective December 22, 2005 and retired and resigned his employment with
the Bank effective December 31, 2005 by submitting a letter of resignation to the Bank’s Board of
Directors in accordance with the Bank’s bylaws. The Bank has accepted Xx. Xxxxxx’x resignations
and retirement. In consideration of the releases contained herein, and for other good and valuable
consideration, the Bank shall pay Xx. Xxxxxx xxxxxxxxx payments equal to $380,000. Such severance
payments shall be made in the following manner: (a) $200,000 lump sum on the eighth day after this
Agreement is executed; and (b) six equal monthly payments of $30,000 with the first payment being
made on January 31, 2006 and the next five payments being made on the last day of each subsequent
month (the “Severance Period”). The Bank’s obligation to make any additional severance payments
during the Severance Period shall, however, cease if Xx. Xxxxxx materially breaches any of the
terms of this Agreement, including, but not limited to, his obligations contained in section 7
below. Xx. Xxxxxx agrees and stipulates that the severance payments described herein are being
paid to him as a special allowance, and that he is not entitled to receive said payments under any
contract between the Bank and him, or pursuant to any Bank policy or practice.
2. Retirement and Other Benefits. Xx. Xxxxxx shall receive appropriate payments pursuant to
the Pentegra Defined Contribution Plan for Financial Institutions, the Pentegra Defined Benefit
Plan for Financial Institutions, and the Benefit Equalization Plan determined as of December 31,
2005. In addition, Xx. Xxxxxx shall be paid for any vacation he has accrued, but not used, through
December 31, 2005 from the Bank.
3. No Additional Compensation. Xx. Xxxxxx and the Bank agree that, except as expressly set
forth in this Agreement, Xx. Xxxxxx shall not be entitled to receive any additional compensation,
bonuses, incentive compensation, employee benefits or other consideration from the Bank in
connection with or in any way related to his resignation from, or prior employment by, the Bank.
Xx. Xxxxxx and the Bank agree that he shall not be entitled to any retiree medical coverage
exclusively for his benefit or the benefit of his spouse. In addition, Xx. Xxxxxx shall not be
entitled to make contributions to the Pentegra Defined Contribution Plan for Financial
Institutions, the Pentegra Defined Benefit Plan for Financial Institutions, and the Benefit
Equalization Plan from the severance payments described in section 1 of this Agreement. For
purposes of clarity, Xx. Xxxxxx agrees to forfeit any bonus payments that were, or may be, due him
under the Bank’s Gainsharing Plan based on his, or the Bank’s, performance during 2005, or any
payments under the Bank’s Long-Term Incentive Plan. At Xx. Xxxxxx’x election and at his own
expense, the Bank shall permit Xx. Xxxxxx and his dependents to participate in the Bank’s group
health insurance plan on the same basis, and subject to the same terms, conditions, and
limitations, as other individuals who have retired from employment with the Bank. The parties
agree and recognize that the Bank is not obligated by law or contract to continue its current
practice of permitting retired employees and their dependents to participate, at their own expense,
in the Bank’s group health insurance plan, and that the Bank may, in its sole discretion, alter,
amend, or discontinue the practice at anytime; provided, however, that the Bank will not alter,
amend, or discontinue its practice in a manner that treats Xx. Xxxxxx differently than other
retired employees who are currently participating in the plan.
4. Return of Bank Property. Xx. Xxxxxx represents and warrants that he will immediately
return to the Bank all Bank property including, without limitation, any, keys, access cards,
parking pass, credit cards, books, manuals, files, computer software, disks and the like, as well
as all paper and electronic copies of materials and documents in his possession or under his direct
or indirect control relating to the Bank, its business, employees, and customers, and that he has
not retained copies, in whatever form, of any such materials or documents. Notwithstanding
anything to the contrary set forth herein, the Bank hereby acknowledges and agrees that Xx. Xxxxxx
may retain, as his own property, his copies of his individual personnel documents, such as his
payroll and tax records, and similar personal records.
5. Complete Release of Claims by Xx. Xxxxxx Against the Bank. In consideration of the
severance payments described in section 1 of this Agreement, and other good and valuable
consideration, which are given to Xx. Xxxxxx specifically in exchange for this release as a result
of negotiations between the Bank and him, Xx. Xxxxxx, on behalf of himself, his marital community,
and his and their heirs, successors and assigns, hereby releases and discharges the Federal Home
Loan Bank of Des Moines, its employee benefit plans, its current or former directors, officers,
employees, agents, insurers, attorneys, consultants, and auditors, and any and each of their
successors and assigns and predecessors (“Released Parties”), from any and all claims, charges,
causes of action and damages (including attorneys’ fees and costs actually incurred), known and
unknown (“Claims”), including those Claims related in any way to Xx. Xxxxxx’x employment with the
Bank, or the termination of his employment relationship or positions as an officer of the Bank,
arising on or prior to the effective date of this Agreement. It is understood and agreed that the
waivers in this Agreement are not intended to waive Xx. Xxxxxx’x rights: (a) to indemnification
from the Bank or its insurers pursuant to any applicable provision of the Bank’s bylaws or
policies, or pursuant to applicable law; (b) under
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ERISA to receive his accrued vested benefits and the benefits specifically reserved for him in
this Agreement; or (c) respecting the Bank’s obligations under this Agreement.
For the purposes of implementing a full and complete release and discharge of the Bank and the
other Released Parties, and each of them, Xx. Xxxxxx expressly acknowledges that this Agreement is
intended to include in its affect, without limitation, all Claims which he does not know or suspect
to exist in his favor at the time he signs this Agreement, and that this Agreement is intended to
fully and finally resolve any such Claim or Claims.
The release contained in this section 5 specifically includes, but is not limited to, rights
and claims under the local, state or federal laws prohibiting discrimination in employment,
including the Civil Rights Acts, the Americans with Disabilities Act, the Age Discrimination in
Employment Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act
(except as otherwise stated herein), the employee protection provisions of the Federal Deposit
Insurance Act (12 U.S.C. Section 1831j), Title VII of the Civil Rights Act of 1964, the
Xxxxxxxx-Xxxxx Act of 2002, Iowa’s Wage Payment Collection Act, as well as any other state or
federal laws or common law theories relating to discrimination in employment, the termination of
employment, or personal injury, including without limitation all claims for wrongful discharge,
breach of contract, fraud, defamation, loss of consortium, infliction of emotional distress,
additional compensation, back pay or benefits (other than as provided for in this Agreement), or
any claim that the termination of Xx. Xxxxxx’x employment violated a public policy or policies of
Iowa or the United States. The release contained in this section 5 does not include any claims Xx.
Xxxxxx has, or may have, pertaining to Xx. Xxxxxx’x right or entitlement to vested benefits under
the Pentegra Defined Contribution Plan for Financial Institutions, the Pentegra Defined Benefit
Plan for Financial Institutions, and the Benefit Equalization Plan.
6. Covenant Not to Xxx. Xx. Xxxxxx represents that he has not filed any Claim that was
released in this Agreement against the Bank or its Released Parties with any court or government
agency, and that he will not, to the extent allowed by applicable law, do so at any time in the
future; provided, however, that the covenants contained in this section will not prevent Xx. Xxxxxx
from filing a claim to enforce the terms of this Agreement. If any government agency brings any
claim or conducts any investigation against the Bank, nothing in this Agreement forbids Xx. Xxxxxx
from cooperating in such proceedings, but by this Agreement, Xx. Xxxxxx waives and agrees to
relinquish any damages or other individual relief that may be awarded as a result of any such
proceedings.
7. Future Cooperation.
(a) Xx. Xxxxxx agrees to make himself reasonably available to the Bank in connection with any
claims, disputes, investigations, regulatory examinations or actions, lawsuits or administrative
proceedings relating to matters in which he was substantially involved during the period in which
he was President and Chief Executive Officer of the Bank, and to provide information to the Bank,
and otherwise cooperate with the Bank in the investigation, defense or prosecution of such actions.
For any activities described in this section 7(a), upon submission of appropriate documentation,
the Bank shall compensate Xx. Xxxxxx at a rate of $275 per hour plus reasonable expenses for any
time he spends with the Bank or its representatives.
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(b) Apart from the activities described in section 7(a), the Bank, in its sole discretion may
request Xx. Xxxxxx to provide services that pertain to Xx. Xxxxxx’x former employment with the Bank
and do not exceed, on average, ten hours per week. With respect to matters that do not pertain to
Xx. Xxxxxx’x former employment with the Bank, the Bank in its sole discretion, may request the
services of Xx. Xxxxxx, as to which request, Xx. Xxxxxx shall be permitted to decline. Any such
activities described in this section 7(b) shall be compensated at a rate of $275 per hour plus
reasonable expenses upon submission of appropriate documentation.
(c) With respect to any activities under this section 7, Xx. Xxxxxx agrees and understands
that he will be treated as an independent contractor, and not as an employee, and that the Bank
will not make any federal, state, or local tax withholding or deductions from any fees paid to him
pursuant to this section. Xx. Xxxxxx further agrees and understands that as an independent
contractor, he is solely responsible to pay any and all federal, state or local income taxes that
apply to the fee described herein, and that the Bank shall not withhold taxes of any kind from the
fee. Xx. Xxxxxx also agrees that he is not entitled to any employee benefits in connection with
any of the activities described in this section 7. During the Severance Period, Xx. Xxxxxx shall
provide the Bank with advanced notice if he is going to be unavailable to provide assistance for
more than three business days. The Bank shall not request Xx. Xxxxxx provide assistance during
periods of extended absence if such advance notice is given provided the periods of extended
absence do not exceed fourteen business days in duration and do not exceed a total of twenty
business days.
8. Voluntary Agreement; Full Understanding; Advice of Counsel. Xx. Xxxxxx understands and
acknowledges the significance of this Agreement and acknowledges that this Agreement is voluntary
and has not been given as a result of any coercion. Xx. Xxxxxx also acknowledges that he has been
given full opportunity to review and negotiate this Agreement, that he has been specifically
advised to consult with legal counsel prior to signing it, that he has in fact carefully reviewed
it with his attorney before signing it, and that he executes this Agreement only after full
reflection and analysis.
9. No Representations. Xx. Xxxxxx acknowledges that, except as expressly set forth herein, no
representations of any kind or character have been made to him by the Bank or by any of the Bank’
agents, representatives or attorneys to induce the execution of this Agreement.
10. Review and Revocation Periods. Xx. Xxxxxx has 21 days to consider this Agreement before
signing it. Xx. Xxxxxx may use as much or as little of this 21-day period as he wishes before
signing. To accept this Agreement, Xx. Xxxxxx must return the signed Agreement to Mr. L. Xxxxx
Xxxxx Xx., General Counsel, on or before that day and time. Xx. Xxxxxx understands and
acknowledges that he has seven (7) days after signing this Agreement to revoke it. To revoke this
Agreement, Xx. Xxxxxx must deliver a written notice of revocation to Xx. Xxxxx at the Bank no later
than 5:00 pm, Central Standard Time, on the seventh day after this Agreement is executed. If Xx.
Xxxxxx revokes this Agreement, he will not receive any of the benefits described in this Agreement.
11. Nonadmission. This Agreement shall not be construed as an admission of wrongdoing or
evidence of any noncompliance with, or violation of, any statute or law by the Bank or by Xx.
Xxxxxx.
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12. Confidential Information.
(a) Acknowledgement of Receipt of Confidential Information. Xx. Xxxxxx acknowledges that he
has occupied, a position of the highest trust and confidence with the Bank, and during Xx. Xxxxxx’x
employment with the Bank, he has become familiar with the Bank’s trade secrets, business plans and
strategies, and with other proprietary and confidential information concerning the Bank, its
business, employees and members. Xx. Xxxxxx also understands that he may have access to such
information if he is called upon to provide services under section 7 of this Agreement. Xx. Xxxxxx
agrees that (a) the agreements and covenants contained in this section are essential to protect the
Bank and the goodwill of its business; (b) the Bank would be irreparably damaged if Xx. Xxxxxx were
to disclose confidential information in violation of these provisions of this Agreement; and (c)
the severance payments provided him under section 1 this Agreement are given to him in part in
exchange for his agreement to the restrictions set forth below. As used in this Agreement,
“Confidential Information” shall mean any information relating to the business or affairs of the
Bank or its customers, including but not 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 Xx. Xxxxxx. Xx. Xxxxxx acknowledges that the
Confidential Information is vital, sensitive, confidential and proprietary to the Bank.
(b) Agreement to Maintain Confidentiality of Bank Information. Xx. Xxxxxx shall keep secret
and retain in strictest confidence, and shall not, without the prior written consent of the Bank,
furnish, make available or disclose to any third party (except in furtherance of the Bank’s
business activities and for the sole benefit of the Bank) or use for the benefit of himself or any
third party, any Confidential Information.
(c) Remedies. Xx. Xxxxxx acknowledges and agrees that the covenants set forth in this section
12 are reasonable and necessary for the protection of the Bank’s business interests, that
irreparable injury will result to the Bank if Xx. Xxxxxx breaches any of his confidentiality
obligations under this Agreement, and that in the event of Xx. Xxxxxx’x actual or threatened breach
of such confidentiality obligations, the Bank will have no adequate remedy at law. Xx. Xxxxxx
accordingly agrees that in the event of any actual or threatened breach by him of any of his
confidentiality obligations under this section, the Bank shall be entitled to immediate temporary
injunctive and other equitable relief, without bond and without the necessity of showing actual
monetary damages, subject to hearing as soon thereafter as possible. Nothing contained herein
shall be construed as prohibiting the Bank from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it is able to prove.
(d) Future Employment. Parties agree and stipulate that the provisions contained in this
section 12 are not intended to prevent Xx. Xxxxxx from obtaining employment within banking,
finance, or any related industry.
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13. Confidentiality of Agreement; Non-Disparagement. Xx. Xxxxxx agrees that he will keep the
terms, conditions, and contents of this Agreement completely confidential and will not publicize or
disclose the terms, conditions, or contents of this Agreement in any manner, in writing or orally,
to any persons, directly or indirectly, or by or through an agent, representative, attorney, or any
other person unless required by law, regulation, or court order. Xx. Xxxxxx may, however, disclose
the terms of this Agreement to his spouse, his attorney, or to his tax advisors and accountants, as
necessary. If Xx. Xxxxxx is subpoenaed to testify in a matter that may cause Xx. Xxxxxx to
disclose any of the information this section requires Xx. Xxxxxx to keep confidential, Xx. Xxxxxx
agrees to promptly inform the Bank of the subpoena. With respect to any such testimony, Xx. Xxxxxx
agrees to respond to any inquiries that require him to disclose the terms, conditions, or contents
of this Agreement, or any Confidential Information as defined in section 12, by stating only that
the terms of this Agreement are confidential, or by stating that he is not authorized to release
the Bank’s Confidential Information. If Xx. Xxxxxx’x responses are challenged, the Bank, at its
sole election, shall do either of the following: (1) for purposes of the requested testimony only,
release Xx. Xxxxxx of his obligation to keep the requested information confidential, or (2) defend
Xx. Xxxxxx against said challenge. Except for any Required Disclosures by the Bank (as defined
below), the parties shall not, directly or indirectly, publish or make any statements to third
parties that are critical of, or in anyway adversely affect the other party, or the Bank’s current
or former directors, officers, employees, agents, attorneys, consultants, or auditors. For purposes
of this section, Required Disclosures shall mean any disclosures made by the Bank (1) to its senior
management, Board of Directors, attorneys, accountants or other employees, agents and advisors with
a need to know such information; (2) to any applicable stock exchange, the Securities and Exchange
Commission (the “SEC”), the Federal Housing Finance Board, or any other regulatory body or
governmental authority; (3) to the extent required by applicable law, rule or regulation, including
filing a copy of this Agreement in any public SEC filing; or (4) pursuant to an order issued by a
court or other tribunal or agency or authority of competent jurisdiction.
14. Applicable Law; Venue; Interpretation. 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 District Court, Southern District 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.
15. Attorney Fee Reimbursement. The Bank agrees to reimburse Xx. Xxxxxx for any attorney’s
fees or expenses he incurs as a result of any legal advice or counsel provided him regarding the
review and interpretation of this Agreement up to maximum total reimbursement of Seven Thousand
Five Hundred Dollars ($7,500).
16. Tax Withholdings and Deductions. All payments described herein (except for any fees paid
pursuant to section 7) shall be subject to applicable federal, state, and local tax withholdings
and deductions.
17. Complete Agreement. This Agreement represents and contains the entire understanding
between the parties in connection with the subject matter of this Agreement. This Agreement shall
not be modified or varied except by a written instrument signed by Xx. Xxxxxx and the Chairman of
the Board of the Bank. It is expressly acknowledged and recognized by all
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parties that all prior written or oral agreements, understandings or representations between
the parties are merged into this Agreement.
18. Invalidity. It is understood and agreed that if any provisions of this Agreement are held
to be invalid or unenforceable, the remaining provisions of the Agreement shall nevertheless
continue to be fully valid and enforceable.
19. Execution. This Agreement may be executed with duplicate original counterparts with faxed
signatures, each of which shall constitute an original and which together shall constitute one and
the same document.
PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
| FEDERAL HOME LOAN BANK | XXXXXXX X. XXXXXX | |||||||||
| OF DES MOINES | ||||||||||
By
|
/s/ Xxxxx X. Xxxxxx | By | /s/ Xxxxxxx X. Xxxxxx | |||||||
| Xxxxxxx X. Xxxxxx | ||||||||||
Date
|
January 3rd, 2006 | Date | 12-29-05 | |||||||
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