Exhibit
10.5
FIRST FEDERAL BANKSHARES,
INC.
CHANGE IN CONTROL
AGREEMENT
This Agreement is made effective as of the 2nd
day of January, 2007, by and between First Federal Bankshares,
Inc., a Delaware corporation (the “Company”), with its
principal administrative office at 329 Pierce Street, Sioux City,
Iowa 51101 and First Federal Bank, the federal stock savings bank
subsidiary of the Company (the “Bank”) and Scott S.
Sehnert (“Executive”).
WHEREAS , Executive is employed as the Commercial
Banking Manager of the Bank; and
WHEREAS , the Company and the Bank recognize the
substantial contribution that Executive makes or will make to the
Company and the Bank; and
WHEREAS, the Company and the Bank wish to provide
Executive with certain protections and benefits in the event of a
Change in Control of the Company or the Bank, as provided in this
Agreement
NOW, THEREFORE , in consideration of Executive’s
contributions to the Company and the Bank, and upon the other terms
and conditions hereinafter provided, the parties hereto agree as
follows:
The “term” of this Agreement shall
be twelve (12) full calendar months from the effective date of this
Agreement set forth above, and shall include any extension or
renewal made pursuant to this Section. Commencing on January 2,
2007, and continuing on January 2nd of each year thereafter (the
“Anniversary Date”), this Agreement shall renew for an
additional year such that the remaining term shall be one year
unless written notice of non-renewal (“Non-Renewal
Notice”) is provided to Executive at least thirty (30) days
and not more than sixty (60) days prior to any such Anniversary
Date, that this Agreement shall terminate at the end of twelve (12)
months following such Anniversary Date.
(a) Upon the occurrence of either the
Executive’s involuntary termination of employment or the
Executive’s voluntary termination of employment for
“Good Reason” (as defined below), either occurring
within eighteen (18) months following the effective date of a
“Change in Control” (as defined below)
(“Termination of Employment”), the Company or the Bank
shall pay Executive (or in the event of his subsequent death, his
estate), his base salary in effect on the date of Executive’s
Termination of Employment (“Base Salary”) for eighteen
(18) months following the date of such Termination of Employment,
provided, however, (i) that such Termination of Employment must
qualify as a “Separation from Service” as defined
below; and (ii) to the extent that Executive is a “Specified
Employee” (as defined below), payments shall not begin
hereunder until the first day of the seventh month following
Executive’s Separation from
Service and the
first payment owed to the Executive shall equal the first six (6)
months of accumulated payments owed to Executive hereunder, and
thereafter regular payments owed to Executive shall be made
starting with the seventh month after the Executive’s
Separation from Service. To the extent amounts payable under this
Agreement are determined by the Bank, in good faith, to be subject
to federal, state or local income tax, the Bank may withhold from
each such payment an amount necessary to meet the Bank’s
obligation to withhold amounts under the applicable federal, state
or local law.
(b) In addition, upon the occurrence of
Executive’s Termination of Employment, Executive will have
such rights as specified in any other employee benefit plan
(including, but not limited to, equity compensation plans and COBRA
rights under the Bank’s group health plan).
(c) Voluntary Termination of Employment for
“Good Reason” following a Change in Control shall mean
Executive’s resignation from the Bank’s employ within
one hundred and twenty (120) days after the occurrence of any of
the following events, provided, however, that Executive must give
the Bank at least sixty (60) days prior written notice of intent to
terminate employment due to Good Reason:
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failure to
elect or reelect or to appoint or reappoint Executive to a position
or substantially equivalent position as that held by the Executive
prior to the effective date of the Change in Control,
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material change
in Executive’s functions, duties, or responsibilities, which
change would cause Executive’s position to become one of
lesser responsibility, importance, or scope from the position and
attributes thereof described in the opening paragraphs of this
Agreement,
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relocation of
the Executive’s principal place of business with the Company
or the Bank to a location that is more than 50 miles from his
current principal place of business with the Company or the Bank,
without the Executive’s consent;
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liquidation or
dissolution of the Company or the Bank other than liquidations or
dissolutions that are caused by reorganizations that do not affect
the status of Executive, or
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material breach
of this Agreement by the Company.
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(d) “Change in Control” of the Bank or
the Company shall mean a change in control
of a nature that:
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would be
required to be reported in response to Item 5.01 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 1934
(the“Exchange Act”); or
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results in a
Change in Control of the Bank or the Company within the meaning of
the Home Owners’ Loan Act and the Rules and Regulations
promulgated by the Office of Thrift Supervision (or its predecessor
agency), as in effect on the date hereof; or
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without
limitation such a Change in Control shall be deemed to have
occurred at such time as:
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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 the Company
representing 25% or more of the Bank’s or the Company’s
outstanding securities; or
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individuals who
constitute the Board on the date hereof (the “Incumbent
Board”) cease for any reason to constitute at least a
majority thereof, provided, however, that this
subsection (b) shall not apply if the Incumbent Board is replaced
by the appointment by a Federal banking agency of a conservator or
receiver for the Bank and, provided further that any
person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least two-thirds of the
directors comprising the Incumbent Board or whose nomination for
election by the Company’s stockholders was approved by the
same Nominating Committee serving under an Incumbent
Board, shall be, for purposes of this clause (b), considered
as though he were a member of the Incumbent Board;
or
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a proxy
statement soliciting proxies from stockholders of the Company, by
someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or
consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or
securities not issued by the Bank or the Company shall be
distributed and the requisite number of proxies approving such plan
of reorganization, merger or consolidation of the Company or Bank
are received and voted in favor of such transactions; or
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a tender offer
is made for 25% or more of the outstanding securities of the Bank
or Company and shareholders
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owning
beneficially or of record 25% or more of the outstanding
securities of the Bank or Company have tendered or offered to
sell their shares pursuant to such tender offer and such
tendered shares have been accepted by the tender
offeror.
(e) “Separation from Service” shall
mean the date of cessation of the employment relationship (other
than an approved leave of absence) between Executive and the Bank
and its affiliates and subsidiaries (including any successor in
interest, if applicable), and shall be construed to comply with
Code Section 409A and Proposed Treasury Regulations Section
1.409A-1(h).
(f) “Specified Employee” shall mean a
key employee of the Bank within the meaning of Code Section 416(i)
without regard to paragraph 5 thereof, determined in accordance
with Code Section 409A and Proposed Treasury Regulations Section
1.409A-1(i).
(g) “Base Salary” as used in this
Agreement shall carry its commonly-accepted meaning and shall
exclude all cash bonuses, equity bonuses, incentive pay, retirement
contributions, employee health and dental benefits, allowances,
expense reimbursements, and other non-salary-related
payments.
It is intended by the parties hereto that all
payments provided in this Agreement shall be paid in cash or check
from the general funds of the Company or the Bank, provided,
however, that in the event that the payment of any amounts due
under Section 3 above is made by the Bank, such payment shall
offset the payment due from the Company hereunder.
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4.
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POST
TERMINATION OBLIGATIONS
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(a)
General . All payments under this Agreement shall be
subject to Executive’s compliance with this Section
5.
(b)
Litigation
Cooperation .
Executive shall, upon reasonable notice, furnish such information
and assistance to the Bank or the Company as may reasonably be
required by the Bank or the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is,
or may become, a party; provided, however, that Executive shall not
be required to provide information or assistance with respect to
any litigation between Executive and the Bank or the Company or any
of its subsidiaries or affiliates.
(c)
Confidentiality . Executive recognizes and acknowledges that the
knowledge of the business activities and plans for business
activities
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