EMPLOYMENT AGREEMENT
This Agreement made and effective this day, July 1, 2005, (the "Effective
Date"), by and between IOWA FIRST BANCSHARES CORP. and its successors, an Iowa
corporation ("Employer"), and Patrick N. Hurley ("Executive").
W I T N E S S E T H:
WHEREAS, Employer and its subsidiaries and affiliates are engaged in the banking
and financial services business;
WHEREAS, Executive has expertise, experience and capability in the business of
Employer and its affiliates and the banking and financial services business in
general;
WHEREAS, Executive is now serving Employer as President and CEO of First
National Bank in Fairfield, a subsidiary of Iowa First Bancshares Corp.;
WHEREAS, an employment agreement would ensure Employer and Executive of a stable
employment arrangement and provide severance and other benefits comparable to
those provided by competing financial institutions for Executive as well as
obtain confidentiality and noncompetition agreements for Employer and its
affiliates; and
WHEREAS, Employer desires hereafter to continue to employ Executive in said
respective executive capacities, and Executive is willing to continue in such
employment, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which consideration is mutually acknowledged by the parties, it
is hereby agreed as follows:
1. Recitals. The recitals hereinbefore set forth constitute an integral part of
this Agreement, evidencing the intent of the parties in executing this
Agreement, and describing the circumstances surrounding its execution. Said
recitals are by express reference made a part of the covenants hereof, and this
Agreement shall be construed in the light thereof.
2. Duties and Responsibilities.
(a) The duties and responsibilities of Executive are and shall continue to
be of an executive nature as shall be required by Employer in the conduct of its
business. Executive's powers and authority shall be as prescribed by the by-laws
of Employer, if applicable, and shall include all those presently delegated to
him, together with the performance of such other duties and responsibilities as
from time to time may be assigned to him by the Board of Directors of Employer
or its subsidiary, First National Bank in Fairfield, consistent with the
positions of President and CEO of First National Bank in Fairfield. Executive
recognizes that during the period of his employment hereunder, he owes an
undivided duty of loyalty to Employer, and agrees to devote his entire business
time and attention to the performance of said duties and responsibilities and to
use his best efforts to promote and develop the business of Employer. Executive
will not perform any duties for any other business without the prior written
consent of Employer.
(b) Notwithstanding that this Agreement provides for the employment of
Executive in his present capacity as Employer's President and CEO of First
National Bank in Fairfield, nothing herein contained shall assure Executive, nor
in any manner be construed to constitute an agreement by Employer to continue
the employment of Executive after the expiration of the Employment Term or any
Successive Employment Term (as hereinafter defined) in such capacity or in any
other capacity.
3. Employment Term. For a period commencing on the Effective Date hereof and
ending on the second anniversary from the Effective Date hereof (the "Employment
Term"), Employer hereby agrees to continue to employ Executive in the executive
capacities of President and CEO of First National Bank in Fairfield. Executive
agrees, pursuant to the terms hereof, to continue to serve in said executive
capacities for the Employment Term.
This Agreement and the Employment Term shall be automatically extended for
consecutive two (2) year periods ("Successive Employment Term") unless not less
than ninety (90) days prior to the expiration of the Employment Term or any
Successive Employment Term a party, by written notice, notifies the other party
that there shall be no extension or further extension of this Agreement.
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4. Compensation and Benefits.
(a) Base Annual Salary. Employer agrees to pay Executive, on the 15th and
the last day of each month, a base salary at the rate of One Hundred Twenty
thousand dollars ($120,000.00) per year ("Base Annual Salary"). It is understood
that Executive's performance will be reviewed annually by Employer, which review
shall be conducted in accordance with the performance review policies and
procedures of Employer, applicable to similarly situated employees. At such
time, Employer, may (but is not required to) increase (but may not, without
Executive's consent, decrease) the Base Annual Salary in accordance with the
standard performance review criteria, policies and procedures of Employer,
applicable to similarly situated employees. The determination of whether to
increase the Base Annual Salary shall include a review of standard criteria,
including without limitation, Executive's performance, cost of living changes
and comparability with other executives in similar positions with financial
institutions in the banking business.
(b) Expenses. Employer shall reimburse Executive's reasonable expenses
incurred in performing services hereunder, which are incurred and accounted for
in accordance with the policies and procedures of Employer.
(c) Vacations. Executive is entitled to 20 days of vacation with pay during
each calendar year of the term of this Agreement. Vacation in any year shall be
taken prior to the end of the calendar year, and any vacation time not taken for
such year shall be forfeited.
(d) Other Benefits. Executive shall be eligible to participate in all
employee incentive, medical, dental, life, sick pay, long-term disability and
qualified retirement and profit-sharing benefit plans and all other employee
benefit plans or arrangements of Employer, in effect on the date hereof, or
adopted during the Employment Term. Executive shall be covered by any officers'
and directors' liability insurance and/or indemnification plans maintained or
adopted by Employer.
5. Perquisites. Employer will furnish Executive with such other perquisites as
are in effect on the Effective Date hereof or which may from time to time be
provided by Employer and which are suitable to his position and adequate for the
performance of his duties hereunder and reasonable in the circumstances.
6. Voluntary Resignation by Executive or Termination for Cause by Employer.
(a) Voluntary Resignation by Executive. At any time during the Employment
Term or any Successive Employment Term, Executive has the right, by written
notice to Employer, to terminate his services hereunder ("Voluntary
Resignation"), effective as of thirty (30) days after such notice.
(b) Termination for Cause by Employer. At any time during the Employment
Term or any Successive Employment Term, Employer may terminate this Agreement
upon the occurrence of any of the following acts ("Termination for Cause"):
(i) The continued refusal by Executive after written notice by Employer to
make himself available for performance of Executive's duties hereunder (other
than as the result of physical or mental disability). The term "continued" shall
mean a period of not less than twenty (20) consecutive business days (other than
while Executive is taking his vacation) and the term "available" shall mean the
failure of Executive to be personally present at the offices of Employer and to
be immediately willing and able to perform his duties.
(ii) Conviction of a felony for a matter related to or affecting the
business of Employer as reasonably determined by the Board of Directors of
Employer in its sole judgment.
For Termination for Cause, written notice of the termination of this Agreement
and Executive's employment hereunder by Employer shall be served upon Executive
and shall be effective as of the date of such service. Such notice given by
employer shall specify the act or acts of Executive underlying such termination.
Upon termination of this Agreement by either Voluntary Resignation or
Termination for Cause, Employer shall have no obligations and Executive shall
have no rights or obligations under this Agreement, other than Executive's
obligations under Sections 12 and 13 hereof.
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7. Other Termination by Employer. If Employer terminates this Agreement and
Executive's employment during the Employment Term or any Successive Employment
Term, other than pursuant to Section 6 hereof, Executive shall, subject to the
other provisions of this Section 7, be entitled to the following:
(a) to continue to receive for a period of twelve (12) months (the
"Severance Period") compensation in the amount equal to his Base Annual Salary;
(b) any vacation pay accrued by Executive in the calendar year of
termination for vacation not yet taken as of the date of termination of
employment; and
(c) a pro rata portion of Executive's award under the Incentive Plan, the
amount of such pro rata portion to be determined as follows:
(i) the annual average received for the past three years.
(d) reimbursement of a portion of the premiums paid by Executive for COBRA
continuation coverage of group medical insurance benefits such that Executive
maintains such group medical insurance benefits on the same "cost-sharing" basis
provided at the date of termination of this Agreement throughout the Severance
Period.
Employer shall pay or cause to be paid the amounts payable under paragraph (a)
above in equal installments, on the 15th and last day of each month, the amount
payable under paragraphs (b) and (c) above in a lump sum within thirty (30) days
of termination (except that any amounts of any vacation pay paid to Executive
for vacation taken but not yet accrued as of the date of termination of
employment shall be deducted from the first, and if necessary, subsequent,
installments payable under paragraph (a) above), and the amounts payable under
paragraph (d) monthly at the time such premiums are otherwise payable by
Executive. All payments pursuant to this Section 7 shall be subject to
applicable federal and state income and other withholding taxes.
In the event Executive becomes employed during the Severance Period, the
reimbursement of a portion of the cost of the group medical insurance benefit
described in paragraph (d) above shall immediately cease, provided Executive
shall retain any rights to continue such coverage under the COBRA continuation
provisions of the group medical insurance plan by paying the applicable premium
therefor.
The payments and benefits provided for in this Section 7 shall be in addition to
all other sums then payable and owing to Executive hereunder and, except as
expressly provided herein, shall not be subject to reduction for any amounts
received by Executive for employment or services provided after termination of
employment hereunder, and shall be in full settlement and satisfaction of all of
Executive's claims and demands. Upon such termination of this Agreement,
Employer shall have no rights or obligations and, Executive shall have no rights
or obligations under this Agreement, other than Executive's obligations under
Sections 12 and 13 hereof.
In all events, Executive's right to receive severance benefits pursuant to this
Section 7 shall cease immediately in the event Executive performs services of
any type for a competing financial institution located within the Market Area
(as defined in Section 13 hereof) during the Non-Compete Period (as defined in
Section 13 hereof).
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8. Resignation Following Constructive Discharge. If at any time during the
Employment Term or any Successive Employment Term, except in connection with a
termination pursuant to Section 6 or 7, Executive is Constructively Discharged
(as hereinafter defined) then Executive shall have the right, by written notice
to Employer within sixty (60) days of such Constructive Discharge, to terminate
his services hereunder, effective as of thirty (30) days after such notice, and
Executive shall have no obligations under this Agreement other than as provided
in Section 12 hereof. Executive shall in such event be entitled to the
continuation of compensation and benefits as if such termination of his
employment was pursuant to Section 7 of this Agreement.
For purposes of this Agreement, the Executive shall be "Constructively
Discharged" upon the occurrence of any one of the following events:
(a) Executive is not re-elected or is removed from the positions with
Employer set forth in Section 2(a) hereof, other than as a result of Executive's
election or appointment to positions of equal or superior scope and
responsibility; or
(b) Executive shall fail to be vested by Employer with the powers and
authority of any of said offices; or
(c) Employer shall notify Executive that the Employment Term or Successive
Employment Term of Executive will not be extended or further extended, as set
forth in Section 3 hereof (provided, however, that the period between the
service of notice and termination of his employment shall constitute a
transitional period during which Employer may designate a person who will
succeed to the duties of Executive, and Executive shall cooperate with such
person in connection with the assumption of Executive's duties hereunder); or
(d) Employer changes Executive's primary employment location to a place
that is more than 100 miles from Executive's primary employment location as of
the Effective Date of this Agreement; or
(e) Employer otherwise commits a material breach of its obligations under
this Agreement.
9. Supplemental Compensation. If it is determined (in the reasonable opinion of
independent public accountants then regularly retained by Employer in
consultation with tax counsel acceptable to Executive), that any amount payable
to Executive by Employer under this Agreement or any other plan, program or
agreement under which Executive participates or is a party would constitute an
"Excess Parachute Payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"), subject to the
excise tax imposed by Section 4999 of the Code, as amended from time to time
(the "Excise Tax"), Employer shall pay to Executive the amount of such Excise
Tax and all Excise Tax, federal and state income or other taxes with respect to
the payment of the amount of such Excise Tax including all such taxes with
respect to any such additional amount. If at a later date, the Internal Revenue
Service assesses a deficiency against Executive for the Excise Tax with respect
to any amount paid to Executive under this Agreement or any other plan, program,
or agreement under which Executive participates or is a party greater than that
which was determined at the time such amounts were paid, Employer shall pay to
Executive the amount of such Excise Tax plus any interest, penalties,
professional fees or expenses incurred by Executive as a result of such
assessment, together with all Excise Tax, federal and state income or other
taxes with respect to the payment of the amount of such Excise Tax, interest,
penalties, professional fees or expenses, including all such taxes with respect
to any such additional amount. The highest marginal tax rate applicable to
individuals at the time of payment of such amounts will be used for purposes of
determining the federal and state income and other taxes with respect thereto.
Employer shall withhold from any amounts paid under this Agreement the amount of
any Excise Tax withholding or other federal, state or local taxes then required
to be withheld. Computations of the amount of any supplemental compensation paid
under this Section 9 shall be made by the independent public accountants then
regularly retained by Employer in consultation with tax counsel acceptable to
Executive. Employer shall pay all accountants' and tax counsel's fees and
expenses.
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10. Dispute Resolution. In the event any dispute arises and the parties after
good faith efforts are unable to agree as to the calculation of the amounts
payable under this Agreement, it shall be settled in accordance with the
majority opinion of a Committee consisting of an accountant chosen by Employer,
an accountant chosen by Executive and an independent accountant acceptable to
both Executive and Employer, as the case may be. The Committee's determination
shall be binding and conclusive on the parties hereto. Employer shall pay all
fees and expenses of the dispute resolution.
11. Enforcement. In the event Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, Employer agrees to pay interest
on such amounts at a rate of prime as listed in the Wall Street Journal per
annum. Employer agrees that Executive and any successor shall be entitled to
recover all costs of enforcing any provision of this Agreement, including
reasonable attorney fees and costs of litigation.
12. Confidential Information. Executive shall not at any time during or
following his employment hereunder, directly or indirectly, disclose or use on
his behalf or another's behalf, publish or communicate, except in the course of
his employment and in the pursuit of the business of Employer or any of its
subsidiaries or affiliates, any proprietary information or data of Employer or
any of its subsidiaries or affiliates, which is not generally known in the
banking business and which Employer may reasonably regard as confidential and
proprietary. Executive recognizes and acknowledges that all knowledge and
information which he has or may acquire in the course of his employment, such
as, but not limited to the business, developments, procedures, techniques,
activities or services of Employer or the business affairs and activities of any
customer, prospective customer, individual firm or entity doing business with
Employer are its sole valuable property, and shall be held by Executive in
confidence and in trust for their sole benefit. All records of every nature and
description which come into Executive's possession, whether prepared by him, or
otherwise, shall remain the sole property of Employer and upon termination of
his employment for any reason, said records shall be left with Employer as part
of its property.
13. Non-Competition. Executive acknowledges that Employer and its affiliates and
subsidiaries by nature of their respective businesses have a legitimate and
protectable interest in their clients and customers, with whom they have
established significant relationships as a result of a substantial investment of
time and money, and but for his employment hereunder, he would not have had
contact with such customers. Executive agrees that during the period of his
employment with Employer and for a period of two (2) years after termination of
his employment for any reason (other than termination of employment under
Section 8 hereof) (the "Non-Compete Period"), he will not (except in his
capacity as an employee of Employer) directly or indirectly, either as an
individual, on his own account, or as an agent, employee, director, shareholder,
consultant, or otherwise, own, manage, operate, control, be or remain employed
or retained by, participate in, solicit business for, or otherwise, be connected
in any manner whatsoever with the ownership, management, operation or control of
any corporation, firm, partnership, joint venture, syndicate, sole
proprietorship or other entity which: (a) has a place of business (whether as a
principal, division, subsidiary, affiliate, related entity, or otherwise)
located within the Market Area (as hereinafter defined) and (b) whose business
and activities, in the reasonable opinion of the Board of Directors of Employer,
are the same or similar to and competitive with business and activities
conducted by Employer or any of its subsidiaries or affiliates at the time of
the termination of this Agreement for the purposes of:
(i) soliciting or inducing, or attempting to solicit or induce any customer
of Employer or any of its subsidiaries or affiliates not to do business with
Employer or any of its subsidiaries or affiliates; or
(ii) soliciting or inducing, or attempting to solicit or induce, any
employee or agent of Employer or any of its subsidiaries or affiliates to
terminate his or her relationship with Employer or any of its subsidiaries or
affiliates.
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For purposes of this Agreement, "Market Area" shall be an area encompassed
within a fifty (50) mile radius surrounding any place of business of Employer or
of any of its subsidiaries or affiliates (existing or planned as of the date of
termination of employment).
The foregoing provisions shall not be deemed to prohibit (i) Executive's
ownership, not to exceed ten percent (10%) of the outstanding shares, of capital
stock of any corporation whose securities are publicly traded on a national or
regional securities exchange or in the over-the-counter market or (ii) Executive
serving as a director of other corporations and entities to the extent these
directorships do not inhibit the performance of his duties hereunder or conflict
with the business of Employer.
14. Remedies. Executive acknowledges that the restraints and agreements herein
provided are fair and reasonable, that enforcement of the provisions of Sections
12 and 13 will not cause him undue hardship and that said provisions are
reasonably necessary and commensurate with the need to protect Employer and its
legitimate and proprietary business interests and property from irreparable
harm. Executive acknowledges and agrees that (a) a breach of any of the
covenants and provisions contained in Sections 12 or 13 above, will result in
irreparable harm to the business of Employer, (b) a remedy at law in the form of
monetary damages for any breach by him of any of the covenants and provisions
contained in Sections 12 and 13 is inadequate, (c) in addition to any remedy at
law or equity for such breach, Employer shall be entitled to institute and
maintain appropriate proceedings in equity, including a suit for injunction to
enforce the specific performance by Executive of the obligations hereunder and
to enjoin Executive from engaging in any activity in violation hereof and (d)
the covenants on his part contained in Sections 12 and 13, shall be construed as
agreements independent of any other provisions in this Agreement, and the
existence of any claim, set off or cause of action by Executive against
Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense or bar to the specific enforcement by Employer of said
covenants. In the event of a breach or a violation by Executive of any of the
covenants and provisions of this Agreement, the running of the Non-Compete
Period (but not of Executive's obligation thereunder), shall be tolled during
the period of the continuance of any actual breach or violation.
15. Notices. Any notice or other communication required or permitted to be given
hereunder shall be determined to have been duly given to any party (a) upon
delivery to the address of such party specified below if delivered personally or
by courier; (b) within forty-eight (48) hours after deposit thereof in the U. S.
mail, postage prepaid, for delivery as certified mail, return receipt requested,
addressed, in any case to the party at the following address(es):
If to Executive:
Patrick N. Hurley
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If to Employer and/or Company:
Iowa First Bancshares Corp.
300 East Second Street
Muscatine, Iowa 52761
Attention: Chairman
or to such other address(es) as any party may designate by Written Notice in the
aforesaid manner.
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16. Representations and Warranties of Employer. Employer represents and warrants
that the execution of this Agreement by it has been duly authorized by the
resolution of its Board of Directors.
17. Indemnification. In the event that legal action is instituted against
Executive during or after the term by a third party (or parties) based on the
performance or nonperformance by Executive of his duties hereunder, Employer
will assume the defense of such action by its attorneys or attorneys selected by
Executive reasonably satisfactory to Employer and advance the costs and expenses
thereof (including reasonable attorneys' fees) without prejudice to or waiver by
Employer of its rights and remedies against Executive. In the event that there
is a final judgment entered against Executive in any such litigation, and
Employer's Board of Directors determines that Executive should, in accordance
with its charter, By-Laws, or insurance reimburse such entities, Executive shall
be liable to Employer for all such costs and expenses paid or incurred by them
in the defense of any such litigation (the "Reimbursement Amount"). The
Reimbursement Amount shall be paid by Executive within thirty (30) days after
rendition of the final judgment. Employer shall be entitled to set off the
reimbursement amount against all sums which may be owed or payable by Employer
to Executive hereunder or otherwise.
The parties shall cooperate in the defense of any asserted claim, demand or
liability against Executive or Employer or its subsidiaries or affiliates.
The term "final judgment" as used herein shall be defined to mean the decision
of a court of competent jurisdiction, and in the event of an appeal, then the
decision of the appellate court, after petition for rehearing has been denied,
or the time for filing the same (or the filing of further appeal) has expired.
The rights to indemnification under this Section 17 shall be in addition to any
rights which Executive may now or hereafter have under the charter or by-laws of
Employer, under any insurance contract maintained by Employer or any agreement
between Executive and Employer.
18. Entire Understanding. This Agreement constitutes the entire understanding
between the parties relating to Executive's employment hereunder and supersedes
and cancels all prior written and oral understandings and agreements with
respect to such matters, except for the terms and provisions of any employee
benefit or other compensation plans (or any agreements or awards thereunder),
referred to in this Agreement, or as otherwise expressly contemplated by this
Agreement.
19. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Executive's executors, administrators, legal representatives, heirs
and legatees and the successors and assigns of Employer.
20. Partial Invalidity. The various provisions of this Agreement are intended to
be severable and to constitute independent and distinct binding obligations.
Should any provision of this Agreement be determined to be void and
unenforceable, in whole or in part, it shall not be deemed to affect or impair
the validity of any other provision or part thereof, and such provision or part
thereof shall be deemed modified to the extent required to permit enforcement.
Without limiting the generality of the foregoing, if the scope of any provision
contained in this Agreement is too broad to permit enforcement to its full
extent, but may be made enforceable by limitations thereon, such provision shall
be enforced to the maximum extent permitted by law, and Executive hereby agrees
that such scope may be judicially modified accordingly.
21. Payment in the Event of Death. In the event payment is due and owing by
Employer to Executive under this Agreement upon the death of Executive, payment
shall be made to such beneficiary as Executive may designate in writing, or
failing such designation, then the executor of his estate, in full settlement
and satisfaction of all claims and demands on behalf of Executive, shall be
entitled to receive all amounts owing to Executive at the time of death under
this Agreement. Such payments shall be in addition to any other death benefits
of Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.
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22. Strict Construction. The language used in this Agreement will be deemed to
be the language chosen by Employer and Executive to express their mutual intent
and no rule of strict construction shall be applied against any person.
23. Waiver. The waiver of any party hereto or a breach of any provision of this
Agreement by any other party shall not operate or be construed as a waiver of
any subsequent breach.
24. Governing Law. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Iowa.
25. Gender and Number. Wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular or
plural, and the pronouns stated in either the masculine, the feminine or the
neuter gender shall include the masculine, feminine or neuter.
26. Headings. The headings of the Sections of this Agreement are for reference
purposes only and do not define or limit, and shall not be used to interpret or
construe the contents of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
at Muscatine, Iowa, on the date above set forth.
EXECUTIVE IOWA FIRST BANCSHARES CORP.
/s/ Patrick N. Hurley By: /s/ D. Scott Ingstad
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Name: Patrick N. Hurley D. Scott Ingstad
Title: President and CEO Title: Chairman, President & CEO
First National Bank in Fairfield
FIRST NATIONAL BANK IN FAIRFIELD
By: /s/ Kim Bartling
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Kim Bartling
Title: Director
ATTEST:
By: /s/ Patricia R. Thirtyacre
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Patricia R. Thirtyacre
Corporate Secretary
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