First Federal Savings Bank of Iowa
Employment Agreement
This
Employment Agreement (“Agreement”)
made and entered into as of December
14, 2007 by and between
First Federal Savings Bank of Iowa ,
a savings bank organized and operating under the federal laws of
the United States and having an office at 825 Central Avenue, Fort
Dodge, Iowa 50501 (“Bank”) and C. Thomas Chalstrom, an
individual residing at 1020 N 19th St., Fort Dodge, Iowa
(“Mr. Chalstrom”).
W i t n e s s e t h
:
Whereas ,
Mr. Chalstrom currently serves the Bank in the capacity of
President and Chief Operating Officer; and
Whereas ,
the Bank is a wholly owned subsidiary of North Central Bancshares,
Inc. (“Holding Company”); and
Whereas ,
the Bank desires to employ Mr. Chalstrom in the capacity of
President and Chief Operating Officer and desires to assure for
itself the services of Mr. Chalstrom for the period provided in
this Agreement; and
Whereas ,
Mr. Chalstrom is willing to continue to serve the Bank on the terms
and conditions hereinafter set forth; and
Whereas ,
Mr. Chalstrom and the Bank are parties to an Employment Agreement
made and entered into as of March 29, 2005 (“Original
Agreement”); and
Whereas ,
pursuant to section 25 of the Original Agreement, the parties wish
to amend the Original Agreement;
Now, Therefore ,
in consideration of the premises and the mutual covenants and
conditions hereinafter set forth, the Bank and Mr. Chalstrom hereby
agree as follows:
Section 1.
Employment
.
The
Bank agrees to continue to employ Mr. Chalstrom, and Mr.
Chalstrom hereby agrees to such continued employment, during
the period and upon the terms and conditions set forth in this
Agreement.
Section 2.
Employment Period; Remaining Unexpired Employment
Period
.
The
terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this
section 2 (“Employment Period”). The Employment
Period shall be for an initial term of three years beginning
on the date of this Agreement. Prior to the first anniversary
of the date of this Agreement and on each anniversary date
thereafter (each, an “Anniversary Date”), the
Board of Directors of the Bank (“Board”) shall
review the terms of this Agreement and Mr. Chalstrom’s
performance of services hereunder and may, in the absence of
objection from Mr. Chalstrom, approve an extension of the
Employment Agreement. In such event, the Employment Agreement
shall be extended to the third anniversary of the relevant
Anniversary Date.
For
all purposes of this Agreement, the term “Remaining
Unexpired Employment Period” as of any date shall mean
the period beginning on such date and ending on the
Anniversary Date on which the Employment Period (as extended
pursuant to section 2(a) of this Agreement) is then scheduled
to expire.
Nothing
in this Agreement shall be deemed to prohibit the Bank at any
time from terminating Mr. Chalstrom’s employment during
the Employment Period with or without notice for any
reason;
provided, however ,
that the relative rights and obligations of the Bank and Mr.
Chalstrom in the event of any such termination shall be determined
under this Agreement.
Section 3.
Duties
.
Mr.
Chalstrom shall serve as President and Chief Operating Officer
of the Bank, having such power, authority and responsibility
and performing such duties as are prescribed by or under the
By-Laws of the Bank and as are customarily associated with
such position. Mr. Chalstrom shall devote his full business
time and attention (other than during weekends, holidays,
approved vacation periods, and periods of illness or approved
leaves of absence) to the business and affairs of the Bank and
shall use his best efforts to advance the interests of the
Bank.
Section 4.
Cash Compensation
.
In
consideration for the services to be rendered by Mr. Chalstrom
hereunder, the Bank shall pay to him a salary no less than the
rate in effect on the date of this agreement, payable in
approximately equal installments in accordance with the
Bank’s customary payroll practices for senior officers.
At least annually during the Employment Period, the Board
shall review Mr. Chalstrom’s annual rate of salary and
may, in its discretion, approve an increase therein. In
addition to salary, Mr. Chalstrom may receive other cash
compensation from the Bank for services hereunder at such
times, in such amounts and on such terms and conditions as the
Board may determine from time to time.
Section 5.
Employee Benefit Plans and Programs
.
During
the Employment Period, Mr. Chalstrom shall be treated as an
employee of the Bank and shall be eligible to participate in
and receive benefits under any and all qualified or
non-qualified retirement, pension, savings, profit-sharing or
stock bonus plans, any and all group life, health (including
hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans, and any other
employee benefit and compensation plans (including, but not
limited to, any incentive compensation plans or programs,
stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or
cover employees of, the Bank, in accordance with the terms and
conditions of such employee benefit plans and programs and
compensation plans and programs and consistent with the
Bank’s customary practices.
Section 6.
Indemnification and Insurance
.
(a)
During
the Employment Period and until the expiration of time
provided by law for the commencement of any judicial or
administrative proceeding on the basis of such service, the
Bank shall cause Mr. Chalstrom to be covered by and named as
an insured under any policy or contract of insurance obtained
by it to insure its directors and officers against personal
liability for acts or omissions in connection with service as
an officer or director of the Bank or service in other
capacities at the request of the Bank. The coverage provided
to Mr. Chalstrom pursuant to this section 6 shall be of the
same scope and on the same terms and conditions as the
coverage (if any) provided to other officers or directors of
the Bank.
(b)
To
the maximum extent permitted under applicable law, during the
Employment Period and until the expiration of the time
provided by law for the commencement of any judicial or
administrative proceeding on the basis of such service, the
Bank shall indemnify, and shall cause its subsidiaries and
affiliates to indemnify Mr. Chalstrom against and hold him
harmless from any costs, liabilities, losses and exposures to
the fullest extent and on the most favorable terms and
conditions that similar indemnification is offered to any
director or officer of the Bank or any subsidiary or affiliate
thereof. This section 6(b) shall not be applicable where
section 19 is applicable. [No indemnification shall be paid
that would violate 12 U.S.C. 1828(k) or any regulations
promulgated thereunder, or 12 C.F.R. 545.121.]
Section 7.
Outside Activities
.
Mr.
Chalstrom may serve as a member of the boards of directors of
such business, community and charitable organizations as he
may disclose to and as may be approved by the Board (which
approval shall not be unreasonably withheld);
provided, however ,
that such service shall not materially interfere with the
performance of his duties under this Agreement. Mr. Chalstrom may
also engage in personal business and investment activities which do
not materially interfere with the performance of his duties
hereunder;
provided, however ,
that such activities are not prohibited under any code of conduct
or investment or securities trading policy established by the Bank
and generally applicable to all similarly situated executives. Mr.
Chalstrom may also serve as an officer or director of the Holding
Company on such terms and conditions as the Bank and the Holding
Company may mutually agree upon, and such service shall not be
deemed to materially interfere with Mr. Chalstrom’s
performance of his duties hereunder or otherwise result in a
material breach of this Agreement.
Section 8.
Working Facilities and Expenses
.
Mr.
Chalstrom’s principal place of employment shall be at
the Bank’s executive offices at the address first above
written, or at such other location within Webster County, Iowa
at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and Mr.
Chalstrom may mutually agree upon. The Bank shall provide Mr.
Chalstrom at his principal place of employment with a private
office, secretarial services, and other support services and
facilities suitable to his position with the Bank and
necessary or appropriate in connection with the performance of
his assigned duties under this Agreement. The Bank shall
provide to Mr. Chalstrom for his exclusive use an automobile
owned or leased by the Bank and appropriate to his position,
to be used in the performance of his duties hereunder,
including commuting to and from his personal residence. The
Bank shall reimburse Mr. Chalstrom for his ordinary and
necessary business expenses, including, without limitation,
all expenses associated with his business use of the
aforementioned automobile, fees for memberships in such clubs
and organizations as Mr. Chalstrom and the Bank shall mutually
agree are necessary and appropriate for business purposes, and
his travel and entertainment expenses incurred in connection
with the performance of his duties under this Agreement, in
each case upon presentation to the Bank of an itemized account
of such expenses in such form as the Bank may reasonably
require.
Section 9.
Termination of Employment with Severance
Benefits
.
(a)
Mr.
Chalstrom shall be entitled to the severance benefits
described herein in the event that his employment with the
Bank terminates during the Employment Period under any of the
following circumstances:
(i)
Mr.
Chalstrom’s voluntary resignation from employment with
the Bank within ninety (90) days following:
(A)
the
failure of the Board to appoint or re-appoint or elect or
re-elect Mr. Chalstrom to the office of President and Chief
Operating Officer (or a more senior office) of the
Bank;
(B)
the
failure of the stockholders of the Bank to elect or re-elect
Mr. Chalstrom or the failure of the Board (or the nominating
committee thereof) to nominate Mr. Chalstrom for such election
or re-election;
(C)
the
expiration of a thirty (30) day period following the date on
which Mr. Chalstrom gives written notice to the Bank of its
material failure, whether by amendment of the Bank’s
Charter or By-laws, action of the Board or the Bank’s
stockholders or otherwise, to vest in Mr. Chalstrom the
functions, duties, or responsibilities prescribed in section 3
of this Agreement, unless, during such thirty (30) day period,
the Bank fully cures such failure in a manner determined by
Mr. Chalstrom, in his discretion, to be satisfactory;
or
(D)
the
expiration of a thirty (30) day period following the date on
which Mr. Chalstrom gives written notice to the Bank of its
material breach of any term, condition or covenant contained
in this Agreement (including, without limitation any reduction
of Mr. Chalstrom’s rate of base salary in effect from
time to time and any change in the terms and conditions of any
compensation or benefit program in which Mr. Chalstrom
participates which, either individually or together with other
changes, has a material adverse effect on the aggregate value
of his total compensation package), unless, during such thirty
(30) day period, the Bank fully cures such failure;
or
(ii)
the
termination of Mr. Chalstrom’s employment with the Bank
for any other reason not described in section
10(a).
In
such event, then, the Bank shall provide the benefits and pay
to Mr. Chalstrom the amounts described in section
9(b).
(b)
Upon
the termination of Mr. Chalstrom’s employment with the
Bank under circumstances described in section 9(a) of this
Agreement, the Bank shall pay and provide to Mr. Chalstrom
(or, in the event of his death, to his estate):
(i)
his
earned but unpaid compensation as of the date of the
termination of his employment with the Bank, such payment to
be made at the time and in the manner prescribed by law
applicable to the payment of wages but in no event later than
thirty (30) days after termination of employment;
(ii)
the
benefits, if any, to which he is entitled as a former employee
under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the
Bank’s officers and employees;
(iii)
continued
group life, health (including hospitalization, medical and
major medical), dental, accident and long-term disability
insurance benefits, in addition to that provided pursuant to
section 9(b)(ii), and after taking into account the coverage
provided by any subsequent employer, if and to the extent
necessary to provide for Mr. Chalstrom, for the Remaining
Unexpired Employment Period, coverage equivalent to the
coverage to which he would have been entitled under such plans
(as in effect on the date of his termination of employment,
or, if his termination of employment occurs after a Change of
Control, on the date of such Change of Control, whichever
benefits are greater), if he had continued working for the
Bank during the Remaining Unexpired Employment Period at the
highest annual rate of compensation achieved during that
portion of the Employment Period which is prior to Mr.
Chalstrom’s termination of employment with the
Bank;
(iv)
thirty
(30) days following his termination of employment with the
Bank, a lump sum payment, in an amount equal to the present
value of the salary that Mr. Chalstrom would have earned if he
had continued working for the Bank during the Remaining
Unexpired Employment Period at the highest annual rate of
salary achieved during that portion of the Employment Period
which is prior to Mr. Chalstrom’s termination of
employment with the Bank, where such present value is to be
determined using a discount rate equal to the applicable
short-term federal rate prescribed under section 1274(d) of
the Internal Revenue Code of 1986 (“Code”) (the
“Short Term AFR”), compounded using the
compounding period corresponding to the Bank’s regular
payroll periods for its officers, such lump sum to be paid in
lieu of all other payments of salary provided for under this
Agreement in respect of the period following any such
termination;
(v)
thirty
(30) days following his termination of employment with the
Bank, a lump sum payment in an amount equal to the product of
(A) the Bank’s “normal cost” for its
tax-qualified defined benefit plan for the most recently
completed fiscal year of the plan (expressed as a percentage
of the compensation recognized in the plan’s benefit
formula and determined by, or on the basis of information
furnished by, the plan’s actuary) multiplied by (B) the
amount payable under section 9(b)(iv);
(vi)
thirty
(30) days following his termination of employment with the
Bank, a lump sum payment in an amount equal to the present
value of the additional employer contributions (or if greater
in the case of a leveraged employee stock ownership plan or
similar arrangement, the additional assets allocable to him
through debt service, based on the fair market value of such
assets at termination of employment) to which he would have
been entitled under any and all qualified and non-qualified
defined contribution plans maintained by, or covering
employees of, the Bank, if he were 100% vested thereunder and
had continued working for the Bank during the Remaining
Unexpired Employment Period at the highest annual rate of
compensation achieved during that portion of the Employment
Period which is prior to Mr. Chalstrom’s termination of
employment with the Bank, and making the maximum amount of
employee contributions, if any, required under such plan or
plans, such present value to be determined on the basis of a
discount rate, compounded using the compounding period that
corresponds to the frequency with which employer contributions
are made to the relevant plan, equal to the Short Term
AFR;
(vii)
the
payments that would have been made to Mr. Chalstrom under any
cash bonus or long-term or short-term cash incentive
compensation plan maintained by, or covering employees of, the
Bank if he had continued working for the Bank during the
Remaining Unexpired Employment Period and had earned the
maximum bonus or incentive award in each calendar year that
ends during the Remaining Unexpired Employment Period, each
annual payment to be equal to the product of:
(A)
the
maximum percentage rate at which an award was ever available
to Mr. Chalstrom under such incentive compensation plan;
multiplied by
(B)
the
salary that would have been paid to Mr. Chalstrom during each
such calendar year at the highest annual rate of salary
achieved during that portion of the Employment Period which is
prior to Mr. Chalstrom’s termination of employment with
the Bank;
where
such payments are to be made (without discounting for early
payment) thirty (30) days following Mr. Chalstrom’s
termination of employment;
(viii)
Mr.
Chalstrom shall be deemed fully vested in all options and
appreciation rights under any stock option or appreciation
rights plan or program maintained by, or covering employees
of, the Bank, even if he is not vested under such plan or
program;
(ix)
Mr.
Chalstrom shall be deemed fully vested in all shares awarded
under any restricted stock plan maintained by, or covering
employees of, the Bank, even if he is not vested under such
plan.
The
Bank and Mr. Chalstrom hereby stipulate that the damages which
may be incurred by Mr. Chalstrom following any such
termination of employment are not capable of accurate
measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b)
constitute reasonable damages under the circumstances and
shall be payable without any requirement of proof of actual
damage and without regard to Mr. Chalstrom’s efforts, if
any, to mitigate damages. The Bank and Mr. Chalstrom further
agree that the Bank may condition the payments and benefits
(if any) due under sections 9(b)(iii), (iv), (v), (vi) and
(vii) on the receipt, not later than thirty (30) days after
termination of employment, of Mr. Chalstrom’s
resignation from any and all positions which he holds as an
officer, director or committee member with respect to the
Bank, the Holding Company or any subsidiary or affiliate of
either of them; provided that the Bank requests such
resignations in writing not later than twenty (20) days after
termination of employment.
Section 10.
Termination without Additional Bank
Liability
.
(a)
In
the event that Mr. Chalstrom’s employment with the Bank
shall terminate during the Employment Period on account
of:
(i)
the
discharge of Mr. Chalstrom for
