North Central Bancshares, Inc.
Employment Agreement
This
Employment Agreement (“Agreement”)
is made and entered into as of December
14, 2007 by and between
North Central Bancshares, Inc
. ,
a publicly held business corporation organized and operating under
the laws of the State of Iowa and having an office at 825 Central
Avenue, Fort Dodge, Iowa 50501 (“Holding Company”) and
C. Thomas Chalstrom, an individual residing at 1020 N 19th St.,
Fort Dodge, Iowa 50501 (“Mr. Chalstrom”).
W i t n e s s e t h
:
Whereas ,
Mr. Chalstrom currently serves First Federal Savings Bank of Iowa
(“Bank”) in the capacity of President and Chief
Operating Officer; and
Whereas ,
the Bank is a wholly owned subsidiary of the Holding Company;
and
Whereas ,
the Holding Company desires to employ Mr. Chalstrom in the capacity
of Executive Vice President 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 Holding Company
on the terms and conditions hereinafter set forth; and
Whereas ,
Mr. Chalstrom and the Holding Company 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 Holding Company and Mr.
Chalstrom hereby agree as follows:
Section 1.
Employment.
The
Holding Company 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.
(a)
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 and ending on the third
anniversary date of this Agreement plus such extensions, if
any as are provided by the Board of Directors of the Holding
Company (“Board”) pursuant to section
2(b).
(b)
Beginning
on the date of this Agreement, the Employment Period shall
automatically be extended for one (1) additional day each day,
unless either the Holding Company or Mr. Chalstrom elects not
to extend the Agreement further by giving written notice to
the other party in which case the Employment Period shall end
on the third anniversary of the date on which such written
notice is given. 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: (i) if a notice of non-extension has been given in
accordance with this section 2(b), the third anniversary of
the date on which such notice is given; and (ii) in all other
cases, the third anniversary of the date as of which the
Remaining Unexpired Employment Period is being determined.
Upon termination of Mr. Chalstrom's employment with the
Holding Company for any reason whatsoever, any daily
extensions provided pursuant to this section 2(b), if not
therefore discontinued, shall automatically
cease.
(c)
Nothing
in this Agreement shall be deemed to prohibit the Holding
Company 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 Holding Company and
Mr. Chalstrom in the event of any such termination shall be
determined under this Agreement.
Section 3.
Duties.
Mr.
Chalstrom shall serve as Executive Vice President of the
Holding Company, having such power, authority and
responsibility and performing such duties as are prescribed by
or under the By-Laws of the Holding Company 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 Holding Company and shall use his best efforts
to advance the interests of the Holding Company.
Section 4.
Cash Compensation.
In
consideration for the services to be rendered by Mr. Chalstrom
hereunder, the Holding Company 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 Holding Company’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 Holding Company for services
hereunder at such times, in such amounts and on such terms and
conditions as the Board may determine from time to time. In
the event that Mr. Chalstrom receives a salary from the Bank
in addition to or in lieu of a salary from the Holding
Company, any reference herein to salary shall be a reference
to the aggregate of the salaries paid or payable by the Bank
and the Holding Company.
Section 5.
Employee Benefit Plans and Programs
.
During
the Employment Period, Mr. Chalstrom shall be treated as an
employee of the Holding Company 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 Holding Company, in accordance
with the terms and conditions of such employee benefit plans
and programs and compensation plans and programs and
consistent with the Holding Company’s customary
practices.
Section 6.
Indemnification and
Insurance.
(a)
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
Holding Company 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 Holding Company or
service in other capacities at the request of the Holding
Company. 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 Holding
Company.
(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
Holding Company 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 Holding Company 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
Holding Company and generally applicable to all similarly situated
executives. Mr. Chalstrom may also serve as an officer or director
of the Bank on such terms and conditions as the Holding Company and
the Bank 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 Holding Company’s executive offices at the address
first above written, or at such other location within Webster
County, Iowa at which the Holding Company shall maintain its
principal executive offices, or at such other location as the
Holding Company and Mr. Chalstrom may mutually agree upon. The
Holding Company 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 Holding Company and necessary or
appropriate in connection with the performance of his assigned
duties under this Agreement. The Holding Company shall provide
to Mr. Chalstrom for his exclusive use an automobile owned or
leased by the Holding Company and appropriate to his position,
to be used in the performance of his duties hereunder,
including commuting to and from his personal residence. The
Holding Company 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 Holding
Company 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
Holding Company of an itemized account of such expenses in
such form as the Holding Company 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
Holding Company terminates during the Employment Period under
any of the following circumstances:
(i)
Mr.
Chalstrom’s voluntary resignation from employment with
the Holding Company 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 Executive Vice
President (or a more senior office) of the Holding
Company;
(B)
the
failure of the stockholders of the Holding Company 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 Holding
Company of its material failure, whether by amendment of the
Holding Company’s Articles of Incorporation or By-laws,
action of the Board or the Holding Company’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 Holding Company 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 Holding
Company 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 Holding
Company fully cures such failure; or
(ii)
the
termination of Mr. Chalstrom’s employment with the
Holding Company for any other reason not described in section
10(a).
In
such event, then, the Holding Company 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
Holding Company under circumstances described in section 9(a)
of this Agreement, the Holding Company 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 Holding Company, 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 Holding
Company’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
Holding Company 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
Holding Company;
(iv)
thirty
(30) days following his termination of employment with the
Holding Company, 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 Holding Company
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 Holding Company, 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
Holding Company’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
Holding Company, 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
Holding Company, 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 Holding Company, if he were 100%
vested thereunder and had continued working for the Holding
Company 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 Holding
Company, 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
Holding Company if he had continued working for the Holding
Company 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 Holding Company;
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 Holding Company, 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 Holding Company, even if he is not vested
under such plan.
The
Holding Company 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 Holding Company and Mr.
Chalstrom further agree that the Holding Company 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&rs
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